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Excellent post Borell - agree BOD on top of their game. DP was (clean shaven!) articulate & confident. DP's interview with Life Science Leader looked every bit like a pitch to big pharma. He needs to get the attention of other players to strengthen his negotiating hand with Merck. Parkinson's is clearly something he's both enthused & confident about. The progress 4D have made is impressive & shouldn't be a problem getting further funding/partners. I saw 4D twitter a/c recently followed Eli Lilly Gastroenterology account. AstraZeneca I think are strong candidate as they're currently out of the space after they withdrew collaboration after Seres fail. Gonna be a wild ride from here on in & time to add a few more before the fireworks starts.
I found this article which discusses what drives high price tags for innovative Biotechs in M&A
Audentes provides a useful example. Its sole product under development was for an ultra-rare neuromuscular disease known as X-linked myotubular myopathy (XLMTM), with an estimated target patient population of about 40 boys in the United States and potential revenues of $80 million. Yet, as indicated earlier, Astellas paid more than 37 times this amount ($3 billion) for the company in 2019. How can such an eye-popping multiple be justified? As one equity analyst from Piper Jaffray noted: “We’ve long viewed the scarcity value of Audentes’ fully integrated manufacturing and broad product portfolio as highly attractive.”
Juno Therapeutics was acquired by Celgene for a whopping $9 billion. At the time, Juno did not have a single approved product. Indeed, even by mid-2020, Juno still has no approved products, with its CAR-T therapy for certain types of cancer still awaiting approval from the FDA. At the time of the acquisition, Celgene explained that what drove the valuation was “a novel scientific platform and scalable manufacturing capabilities to position Celgene at the forefront of future advances in the science of cellular immunotherapy”
Plenty of similarities: 4D has a novel scientific discovery platform, broad & diverse pipeline & end to end manufacturing.
All that's holding 4D back is perhaps microbiome scepticism (4D are chipping away at that with each data readout) & inability to differentiate the approaches: single strain v consortia (Duncan did a good job of that in his video call). Things are going to get very interesting & sooner than you think.
I tend to agree with Porky. A milestone payment wouldn’t cause a delayed AGM notice & IR silence. But what it would do is act as a catalyst for talks on advancing the partnership. I mean think of it from Merck’s perspective: if, as MHB as has touched on, 518 is essential as an value adding agent to Keytruda; if they make the milestone payment extending 4D funding till 2024; they risk having to pay a lot more for us - or worse, end up losing us to Pfizer, Merck KGaA or AstraZeneca. I would imagine imminent 518 Bavencio patient dosing to inspire Merck to act as well.
Exciting few weeks ahead. GLA
Just came across this:
The bulk of milestone payment is allocated to when a drug moves into clinic i.e. phase 1 (which is where we are, Duncan has indicated as much in investors call in February when he said 4D had completed their work & now over to Merck to decide how they proceed).We know that each indication is worth up to $347 million. Let’s be conservative & say we get payment in just 1 indication. I think we could be looking at circa $100 million. Funding sorted till mid 2024. No raise needed & no dilution. Now that would really send SP north in short order! Fingers crossed
FWIW, I think Oxford Finance structured loan is a great chess move. With each conditions met 4D are moving the pieces forward one at a time. The shelf registration for $150 million acts as a back up in case SP goes on a tear. That could well happen as market sentiment towards microbiome space improves. Catalyst for that would be FDA approval for Seres SER-09 & Ferring's Rebiotix expected later this year.
$64,000 question is will Merck risk waiting for initial data (open-label) from Bavencio trial? If it flops, 4D’s negotiating hand is weakened to some extent. But decent initial data puts Pfizer & Merck KGaA firmly in our corner in what is an ultra-competitive bladder cancer market.
Merck will know that 4D have to start dosing as part of the conditions to receive next OF tranche. With 4D’s funding options probably now resting on a payment of some sort from Merck to allow 4D to progress MRx0518 + Keytruda into earlier lines of treatment; a sense of urgency mayb well developing. All speculation obviously but with no news that’s all we can do at this point. AIMHO. DYO.
The problem with valuing this business is that much of its true value is hidden in IP estate & confidential milestones payments. Any buyout price will be guided by those factors & not by current market cap. I very doubt they'd spend 10 years building up this business, go through Nasdaq listing & Oxford Finance etc to let it go for a for measly £1.50 a share. Also it ignores the likelihood that Duncan will look for other suitors - Merck Serono being one - which will bump up any buyout price. 2 broker analysts have a price target of £3.50 so I reckon they'd be looking at more like £3 a share.
DP: "Really enjoy working with Merck. I think they're a really smart company, innovative. Love the science and buy into it." -9:40
I've listened to this a few times & what stood out for me was that 4D & Merck are a collaborative partnership in its purest form. Duncan seems more confident & content with where the business is heading. I hold for whatever comes next.
Thanks Research. Overall I’d say that was a pretty decent interview. Duncan no fluff & science-led prudence is way to go. Merck payment or buyout most likely outcome from here. GLA
This is a small biotech in emerging field of science of which big pharma do not have the expertise which is presumably why they would be buying it in the first place. Why would you buy a life science company only fire its intellectual talent?
Since January 4D have hired 5 people: John Doyle CFO, Owen Vaughan VP Regulatory affairs, 3 more people in neuroscience, research & pharmacology. IS this what a company in financial difficulty does? No. It's company growing & team building. FWIW, digging around various M&A firms, consensus is that hiring before a merger is good practice in preparation for turbulence that goes with territory. You don't build a shelter after the storm has passed.
If a merger is not in the works then 4D must be expecting cash/payment of some sort. IMHO raising funds on the markets is not an option any more for reasons that has been well discussed.
credit to SoundsRisky on hiring info
Risky/Porky - On same page as well
It does seem like Oxford Finance first tranche was actually a bridging loan to take 4D to October which neatly coincides with expiration of Merck vaccine collaboration. MRx0518/Bavencio trial (listed as start date March 1st) has been delayed for unknown reasons. I know we've been advised dosing will start Q2 but perhaps that's being used to focus Merck's attention if takeover talks are in progress. AstraZeneca have mentioned SABA (ventolins) overuse leading to increased attacks. MRx0004 asthma data due to be released at ATS Conference in 10 days time. Getting further pharma interest would help raise any bid price.
Blautix cannot be relied upon. Seems to have gone stale. A capital raise only happens if SP rises significantly from here and, even with news, such is the negative sentiment within Biotech, I doubt it will provide the SP with sufficient rise needed. Options left are investment/payment from Merck but as discussed makes no sense strategically when they can have the whole company & patents for a bit of extra cash. GLA
Phil - speaking of coincidences, Keytruda in RCC gained FDA approval November 2021. 4D release data MRx0518 with Keytruda for RCC in March. Likely to have been under direction of Merck. More evidence, if we needed it, that 4D are working in lockstep with Merck. Buyout imminent IMHO.
‘We are now more than 18 months down the road since the announcement of phase II data for Blautix. That's already a long time and credibility questions will sooner or later start to arise.’
Not when you consider we were in middle of a global pandemic & FDA were busy approving covid vaccines & numerous other therapies. Not to mention all this under covid working restrictions & staff shortages
This was a trial testing MRx0518 monotherapy for solid tumours (primary completion date August 2021 & estimated study completion date February 2022).
“31 samples were collected across tumour groups including breast (n=13) prostate (n=8), uterine (n=6), melanoma (n=2) and bladder (n=2). Differential expression analysis showed significant (p<0.05) increases in genes and metagenes associated with anti-tumour activity”
I cannot find been ORR % DCR% for 31 patients. Does anyone know what they are?
casino - I doubt management are worried. 4D is still a speculative stock; dominated by shorters & day traders, replacing them with institutional holders takes time. It's all about supply & demand. With more positive data & press coverage comes more II's taking positions resulting in stock float reducing & the SP rising. Patience.