Intensity Therapeutics31 Mar 2019 23:29
Hi Snoot, I certainly wasn't looking to argue the point either.
Anyone that's known me for any length of time knows my position on being overly optimistic with pharma.
We know it has high cash burn and we know it has high failure rates.
But since we're all invested let's look at the positives....
Exit Opportunities
We believe this company could have an IPO or be acquired in the near future. Although the CEO is targeting a potential liquidity event in the next few years, we are always conservative in our forecasts, especially when dealing with a therapeutic. There are four milestones which need to be reached in order to realize the ultimate return: (1) safety, which so far has been shown, (2) shrinking of the tumor, which with the proper dosage appears to be occurring, (3) killing of the metastases and, (4) the vaccine-like effect. The company, however, could have an exit event before the last two milestones have been achieved. Depending on results and data, a receipt of breakthrough therapy designation from the FDA could greatly expedite the timing for a liquidity event. While the company is likely to need to begin showing both safety and some efficacy in both Phase I and Phase II trials prior to a liquidity event, the current heated acquisition climate by big pharma may allow for a significant early liquidity event.
Pharma companies are searching for oncology drugs that can work synergistically with PD1 inhibitors (which take the brakes off the immune system). These companies have a compelling need for another compound or drug cocktail to combine with their PD1 inhibitors. Several of these companies are already familiar with Intensity and have been following their progress. A research paper from 2016 showed that approximately 50% of the R&D pipeline of multinational pharmaceutical companies come from external sources. This need for new drugs, together with low interest rates, has led to an increase in acquisitions. According to Dealogic, there has been more than $190b worth of global biotech and pharma acquisitions so far this year, which is on pace to beat the record set in 2015 of $315b. Furthermore, the average transaction value for a drug deal is $335m this year compared to $68m in 2011. Pharma companies are paying greater prices for unproven drugs. The external sourcing strategy has shown success: Gilead Sciences bought Pharmasset for $11b, acquiring what became its $56b hepatitis C drug.
There is also the possibility of a partnership with a major pharma company which would contribute to financing the clinical studies. For example, Novartis invested $170m in Surface Oncology in Jan. 2016. Surface Oncology went on to raise $108m in its IPO, putting its post-money valuation at $413m. Surface Oncology (like Intensity Therapeutics) has only one product in Phase I.
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