The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
A lot of positives to take here, think it’s finally turned a corner…
- Cash burn under control…down to £0.7m for the quarter, and with £3.7mn as of end of March, think it eliminates the raise question.
- Salistick is exclusive and should be huge, also Amazon opprtunity.
- CDMO cranked up and strong growing pipeline and margins look good
- Huge self test opprtunity with Lloyds - not name checked but live in Ireland and UK to follow.
Hi Neil,
Thanks for your reply…
I was thinking in terms of a commercial test - my understanding is that it has been shown to work in a lab based setting, and the assay optimisation work etc… was to be able to get to a similar level of efficacy in a commercial test. Happy to be corrected.
Not Galleri…these guys
https://guardanthealth.com/clinical-studies/#early-stage-studies--content
Think it’s fab from a cancer care perspective, developments in liquid biopsy is going to be a life changer…
From a Ciz investment perspective…Guardan currently $2.4bn (have been as high as $18bn), primarily testing focussed.
Stage 2 capable, but lab based test, different mechanism for testing for positive cancer presence, and post operative.
At stage 1, the Ciz mechanism of identifying protein fragments being mopped up by fibrinogen is a completely different action, far more sensitive and if can get this working in an ELISA test is just game changing…
It’s pipeline as far as I understand it…
C£300mn in the pipeline, with a weighted pipeline of £75m-£80m.
As contracts get further progressed e.g. qualified, shortlisted, negotiating contracts…the % likelihood of winning will go up.
So a £10mn contract that has been qualified as a potential opportunity might have a 20% weighting, so £2mn qualified pipeline, but some distance to go to close it.
One in negotiation might be 80% weighting, so £8mn in the weighted pipeline.
I don’t think the Conduit RTO will happen any time soon - they’ve got a rolling monthly agreement so not urgent - and given recent market turmoil not an ideal month to launch.
Ciz not burning cash at any significant rate so not a critical factor in the short term…think news on assay optimisation /LDT platform more of a key near term driver imho
We aren’t beholden to it, we can just sell and invest elsewhere…it can offer significant upside with the right company and for me Hvivo is low risk compared to 99% of Aim.
Agree, last month has been a tough watch…but SP had climbed > 100% in first six weeks of the year.
Still think there’s good value at this level imho…
At least Mo knows his potentially life changing LTIP isn’t a given… :-)
To quote AstraZeneca…
“AstraZeneca is working to bring patients closer to cure through the detection and treatment of early stage disease” .
It’s complimentary to treatment…
Indeed picked up earlier, more scope to treat rather than patient solely receiving procedure / palliative…
Hi Mazik…I would think they’ll get taken out at a point when the technology is proven, and one of the big guys come in for them - although AS has shown the ability to establish flexible commercial models so maybe they won’t do something as binary…
Is probably some trade off between nurturing business value and speed of getting it to market - manufacturing / distribution etc… for this product - needs an established industry leader, benefit is you get the asset out their quicker and therefore save lives quicker but potentially limit business valuation??…not sure…a few interested parties and who knows…
Personal view…they grow to c 30p a share in the next 12-24 months as they tick off milestones and they get bought at a multiple of that, so maybe 50p-75p a share, but some key proof points before they get to that point…so far so good…
(just imho)
Just offering a different view on SP potential…
I’m being a little fanciful…but take it for what it is :-)
- China tests 3mn pa at $100 per test, 10% royalty.
- US, let’s assume 250k tests pa at $500 per test, 15% royalty
- RoW, let’s assume 250k tests pa at $500 per test, 15% royalty
That gets us to $550mn in royalties per annum, EV multiplier of x10 gets us to $5.5bn or roughly £13 per share.
Given acquisitions are significantly above existing Market Cap, ignoring the big guns like Pfizer paying $43bn for Seagen this week - let’s look a little lower…Provention Bio bought this week by Sanofi for $2.9bn…SP at close day before $6.70, paid $24…
If we assume a 2x multiple, that gives an acquisition price of £26 per share.
As I say being a little glib…don’t think the China tests will be $100 each, think it’s unlikely they’ll do that volume either per annum at full flight, but even if we low ball all the above and say they’ll only achieve 10% of the above thats still £2.60…clearly have hurdles to clear with the LDT/ELISA tests and this isn’t a 6 month journey…but the potential is huge…
(Personal view, suspect CIZ will be acquired way before getting to this point)
Oh…and this doesn’t consider the bio marker testing for breast cancer / others…
Morning Trout…I “think” the £1m was for Ampligen cancellation…the Vaxart one would be incremental this FY - Only thing I would question is whether they had committed to a challenge study - I suspect not as it hadn’t been RNS’d, but worst case we’ve saved cash on the development of the agent and characterisation work as I thought Vaxart had funded that? (thought I’d seen reference to it in a contract somewhere)
(part 2)
Picking up on the Sunday roast podcast and the Stockbox event mid-Feb, some soundbites around near term inflection points…
Sunday roast 26 mins in re China: “A specialist group setting up a subsidiary purely to bring Cizzle biotechnology to market”
Sunday roast 39 mins in: “things are progressing extremely well so the best I can do is watch this space” (referencing that he can’t be more specific due to market restrictions).
Stockbox 16th Feb
“We are completing the optimisation work on that, not yet complete, we hope that will be done shortly”
“We hope to be able to ship our prototype platforms in the near future, but waiting for the final optimisation tests to be completed”
I don’t think you can go as far as saying news is imminent…it’s biotech…but think we have an interesting few weeks and months ahead…
Hi lmvfun - sorry for delay in replying … (part 1)
I don’t think I’d be brave (stupid) enough to get into future share price predictions but some general thoughts below…
- When Cizzle listed their broker Hardman suggested they were 78% undervalued at listing price compared to peers.
- The current MC of £10mn is below the £23mn valuation by Hardman last summer, and there’s clearly been significant progress since then…their next Broker note will be interesting!
- The decline to < 1.5p, in my mind was down to 3 key issues, neither company specific: 1) RTO carrying weight of legacy investors cutting losses 2) Sector is typically slow on news and needs patience, inevitably price can drift over time 3) Key one though for me was sector sentiment - struggle to think of any company in the sector whose SP grew in 2022…and on no bad news eg. Hvivo 48p down to 9p, Renalytix 1100p down to 110p…Cizzle were in good company…
- However, now seeing greater market interest and awareness - one key element for me here is Cizzle have strong commercial and industry engagement - belies their size. Even going back to the noughties they had grants from the Wellcome foundation.
- Chairing sessions and presenting at the recent Biomarker forum in Manchester, shows they are still engaging at the right level and the partnerships formed in the last 12 months add weight to AS’s ability to engage the right partners at the right level. Think this can be a weakness in scientist led companies, don’t see any weakness here with Ciz.
If we turn to acquisition, I’d like to see this to be at least a couple of years away, but the more milestones they hit, the greater the pressure will come to resist that.
In a very competitive pharma industry with a number seeing patents reaching end of life and needing new innovations to fill their place - a diagnostic product carries far less risk that a drug development and gives them another 20 year window of protection.
Abbvie’s Humira is worth $20bn per annum, patent expires this year, Merck’s Keytruda is worth $15bn, expires in 2027…they need replacement revenue once the patents expire.
One of the guys on here pulled out the following from AZ ref lung cancer
“AstraZeneca is working to bring patients closer to cure through the detection and treatment of early stage disease” . Diagnostics an increasingly hot topic.
https://www.bain.com/insights/life-sciences-tools-global-healthcare-private-equity-and-ma-report-2022/
In terms of the science, Gilead have invested hugely in this space and their product, while covering multiple cancers, (Ciz should aswell in time), is more expensive than Cizzle and critically only has a 42% success rate for Stage 1 vs 95% with Cizzle (lab result)
Re current valuations, while recognising it’s not yet revenue generating, there are many companies in the sector at £100mn+ without generating a revenue…so I don’t see that as a barrier to higher valuation… plus this is two decades in the making
So in the Feb stockbox interview, AS mentioned re the LDT test, they were waiting for US partner to complete that process. Corepath confirmed in November all on track in that respect.
Final optimisation of test, in his words “done shortly”, but that could be any time in the coming weeks, and then mentions shipping prototype platforms in near future.
Don’t think any CEOs would be foolish enough to give more definitive timescales as it can bite you on the backside.
Personally think next RNS will be additional commercial partner, then assay optimisation/platforms shipped, and Conduit after that (if timescales of UK SPACs are anything to go by)
Last week you said Hvivo had a great future Colin… a week of negative SP movement brings out that sentiment (understandably), but assume it will flip next week - if II’s were buying 2.5mn shares at 19.5 (from memory), I’m sure there will be interest at these levels, but quite a bit of nervousness across the markets this week.
Re the order book, I would expect them to convert 50% + given lack of competition (non conversion probably down to other factors - timing, inconclusive ph1 etc…), but some of those opportunities will be early days, and might be in pipeline for FY25 potentially.
I think Mo is very prudent, definitely a belt and braces mindset and doesn’t talk up the story, far more measured than CF…
We know they’ll be c £60mn this FY…thinking incremental news won’t be far off and sentiment flips again…
As mentioned earlier, SP tends to follow a similar pattern (not just here), when no news…
- Slowly recedes a few %
- Get a larger drop where some spooked at seeing red, think it will fall further, sell, amplifying the drop.
- Reaches a point where value seen and others wade in…hopefully around now…
- RNS’s land, price rises…
Given growth of order book, extending H-Lab services / Venn, think news will be more frequent than previous years, only been a 4-5 week hiatus…
Took the liberty of copying Jiggers note below re upcoming inflection points, think we’re in a good place generally despite today…
In no particular order:
- Completion of World’s First Omicron Human Challenge Study Model
- Announcement of one or more Omicron Human Challenge Trials valued c. £10+ million each
- Expansion of facilities & premises to accommodate demand for Human Challenge Trial work
- Disease In Motion IPO & monetisation
- Clinical efficacy of Imutex’s AGS-v PLUS against mosquito-borne diseases
- Development of a Broad-Spectrum ‘Universal’ Influenza Vaccine, FLU-v
- Shareholder Distribution to existing holders
- New Human Challenge Models being developed
- Expansion into traditional Phase 1 & 2 clinical trials
- Additional lab service offerings to third parties
- Increase in APAC Human Challenge Trial contracts valued c.£6 million each
- Repeat business from Big Pharma worldwide clients
- More RSV, Malaria , Influenza, Covid etc Muliti Million £ Human Challenge Trial contracts
- Significant increase in cash balance and over delivery of current revenue expectations
- Potential Nasdaq listing