Company Brief Update - MBP - Metabolic
Team score of at least 4.0.
MBP has been severely (overly) punished for the failure of efficacy of its obesity drugs. For the company's point of view that the Ph IIB Options Study on the obesity drug has not shown commercial viability, is positive hence saving cost of Ph III and enable the company to focus on other drug candidates in the pipeline. The company notes that the trial of the obesity drug was "completed on time" and "within budget".
Recently, MBP shares were bought at much higher price in the capital raising - 14.6m shares for $0.72 each and 316,000 options for $0.55. Compare this with today's price of $0.15
Much of its assets are in cash - about $24m left in Feb 2007. Its Dec06 half year loss of $8.8m is high (due to extensive clinical trials) but not likely for the current half. Current cash levels can sustain at least 18 months. Price to NTA is currently about 2 times.
Products on the pipeline in include ACV1 for neuropathic pain, oral peptide delivery platform and animal studies of AOD9604 for osteoporosis. The most advanced in the pipeline is ACV1 with two Ph IIA studies commenced which targets sciatic, diabetic and post-herpetic neuralgia neuropathic pain. A successful Ph I Extension study has also shown ACV1 can be tolerated at higher doses.
Expect the first Ph IIA study of ACV1 to be compeleted soon (by mid year) and the second study to complete by early 2008.
Recommendation: Buy up to 20c. Expect 25c at successful Ph IIA study by June. Expect 30c on further positive news by Dec 07.
Monday, March 26, 2007
Sunday, March 11, 2007
Analysis - PEP - Peplin
Peplin - PEP
Price($) 0.8
NTA ($) 0.23
P/NTA 3.45
Team 7.2
BurnPeriod 9.54
ProductPipe 6.9
ForeignMarket 1.1
Cash:Debt DebtFree
PEP's goal is to develop and commercialize cancer therapeutics – especially Skin Cancer. Its lead compound PE Topical "works by killing most cancer cells and then recruiting and activating local immune system to clean up and kill any remaining dead cancer cells." The compound is based on "a single molecular entity isolated and purified from a rapidly growing non-indigenous plant. It is not botanical and extract for regulatory purposes."
Its lead product PEP005 Topical is targeted for skin cancer. It has two applications in Phase IIb trials which are expected to complete by mid 2007. These two lead applications are against actinic keratosis (pre-cancerous lesions) and basal cell carcinoma (a common form of skin cancer). PEP is also developing PEP005 for leukemia and bladder cancer. It is also developing a host of compounds EPUFAs which it purchased recently. Pipeline looks healthy, giving the company various products to develop.
Several years ago PEP secured a major deal with US based Allergen to develop its lead anti skin cancer product. This deal terminated in Oct 2004 with the developing rights returning back to PEP. The reason given by Allergen was that it did not have the resources to pursue PEP's drug development and they emphasised that the termination was not due to the quality, safety or efficacy of the PEP compound.
Management team - The team score for PEP is above average - showing the team has got very high scientific expertise (PhD, MBBS, etc). This score does not even include the scientific advisory board, which when included will raise the score to probably 15. The board has been quite stable with Cherrell Hirst AO as the Chairman since at least 2002, and possibly earlier. She was a director since 2000 or earlier. Her plan to step down in the near future is expected from a biotech which is moving from scientific exploration to commercialization. Through the last 7 years PEP may have a few as 2 CEOs.
Market exposure of PEP has a low score of 1.1. Although PEP is focussing on the US market and has opened a subsidiary in the US, its presence or networking in other markets appear to be weak. Given that its lead drug is against skin cancer, the fact that PEP is not targeting the Asian market may not have a significant impact on its business. Nevertheless, PEP acknowledged the challenge in breaking the US market and its narrow exposure is a weakness to consider.
Financially, PEP has been debt free for over 3 years. Over the years, PEP was successful in gaining several government grants as well as licensing its compound to Allergen. In the last 3 quarters, it raised over $35m equity based finance. We need to expect that current funds are sufficient for present clinical trials, as further equity raising would dilute existing shareholdings. Assuming the current cash burn rate continues, there is enough funds to last between 8 to 9 quarters.
The current price to NTA is about 3.5 which is acceptable. A more desirable P/NTA is 3.0 which implies a price of 69c. Over the last year, PEP's price has varied between 63c to 88c. Positive trial results has contributed to the price rise while investors are sensitive to the point of punishing the stock for employee share options. Given its volatility, a negative Ph IIb results may push the stock below 20c. On the other hand, a positive result can easily push it beyond $1.10. Most factors considered, a fair price would be 72c over the next 2 months.
Recommendation: Buy at 72c over next 2 months, sell at 1.05 on news of Ph IIb completion (before results are released).
Price($) 0.8
NTA ($) 0.23
P/NTA 3.45
Team 7.2
BurnPeriod 9.54
ProductPipe 6.9
ForeignMarket 1.1
Cash:Debt DebtFree
PEP's goal is to develop and commercialize cancer therapeutics – especially Skin Cancer. Its lead compound PE Topical "works by killing most cancer cells and then recruiting and activating local immune system to clean up and kill any remaining dead cancer cells." The compound is based on "a single molecular entity isolated and purified from a rapidly growing non-indigenous plant. It is not botanical and extract for regulatory purposes."
Its lead product PEP005 Topical is targeted for skin cancer. It has two applications in Phase IIb trials which are expected to complete by mid 2007. These two lead applications are against actinic keratosis (pre-cancerous lesions) and basal cell carcinoma (a common form of skin cancer). PEP is also developing PEP005 for leukemia and bladder cancer. It is also developing a host of compounds EPUFAs which it purchased recently. Pipeline looks healthy, giving the company various products to develop.
Several years ago PEP secured a major deal with US based Allergen to develop its lead anti skin cancer product. This deal terminated in Oct 2004 with the developing rights returning back to PEP. The reason given by Allergen was that it did not have the resources to pursue PEP's drug development and they emphasised that the termination was not due to the quality, safety or efficacy of the PEP compound.
Management team - The team score for PEP is above average - showing the team has got very high scientific expertise (PhD, MBBS, etc). This score does not even include the scientific advisory board, which when included will raise the score to probably 15. The board has been quite stable with Cherrell Hirst AO as the Chairman since at least 2002, and possibly earlier. She was a director since 2000 or earlier. Her plan to step down in the near future is expected from a biotech which is moving from scientific exploration to commercialization. Through the last 7 years PEP may have a few as 2 CEOs.
Market exposure of PEP has a low score of 1.1. Although PEP is focussing on the US market and has opened a subsidiary in the US, its presence or networking in other markets appear to be weak. Given that its lead drug is against skin cancer, the fact that PEP is not targeting the Asian market may not have a significant impact on its business. Nevertheless, PEP acknowledged the challenge in breaking the US market and its narrow exposure is a weakness to consider.
Financially, PEP has been debt free for over 3 years. Over the years, PEP was successful in gaining several government grants as well as licensing its compound to Allergen. In the last 3 quarters, it raised over $35m equity based finance. We need to expect that current funds are sufficient for present clinical trials, as further equity raising would dilute existing shareholdings. Assuming the current cash burn rate continues, there is enough funds to last between 8 to 9 quarters.
The current price to NTA is about 3.5 which is acceptable. A more desirable P/NTA is 3.0 which implies a price of 69c. Over the last year, PEP's price has varied between 63c to 88c. Positive trial results has contributed to the price rise while investors are sensitive to the point of punishing the stock for employee share options. Given its volatility, a negative Ph IIb results may push the stock below 20c. On the other hand, a positive result can easily push it beyond $1.10. Most factors considered, a fair price would be 72c over the next 2 months.
Recommendation: Buy at 72c over next 2 months, sell at 1.05 on news of Ph IIb completion (before results are released).
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