RE: Legal Action26 Jun 2022 11:32
I think us small investors need to look at our own decision making.
It's fine to look to blame others but I was responsible for my decisions to invest in a small UK biotech. I thought I was getting a bargain buying a lot of stock when the Woodford fire sale was in full flow. And I was expecting a decent multibagger.
I felt some degree of confidence in terms of trusting the science as Baillie Gifford were a strong supporter until recently and they have fund managers who rely on input from experts in science and medicine.
Every time I had questions about the science I did some digging and tended to find answers that were reassuring. For example, there were some questions around the safety profile as they are basically dosing patients with bacteria that could cause antibiotic resistant infections. I did some digging into the 0518 strain, which is similar to e coli bacteria and found that it was fairly low risk species compared to others.
I thought I had tempered some of my expectations. Many of the things that seemed amazing at first were fairly standard. Big pharma often do deals with small biotechs with $1bn milestone payments but tiny upfront payments. Merck has dozens of Keytruda collaborations with early stage drugs.
Yet there was still plenty to feel confident about. The Keytruda trial was still going after nearly 4 years whereas others had stopped, the prolific delivery of new LBPs from the platform and what seemed like strong support from a lender who apparently had committed $12.5m.
I thought Oliveira was a fool for selling and believed it was caused entirely by his loss on Forte Biosciences. And yet I started to sense some orange flags. Talking about Merck being their friends, getting in bed with Oliveira who had a shady background, talking more about Asthma and Parkinsons than 0518, which we had been told was the core priority, the state of DP in interviews and him saying he was talking to people despite nothing ever coming of these talks. They said the 0518 data was delayed because they were collecting biomarker data and wanted to present all at the same time. When they did release 0518 readout there was no biomarker data.
As I said previously the 0518 data was a bit of a disappointment. About 10% of patients with RCC and no treatment options can still live for five years so there was no guarantee that the stable disease was caused by Keytruda/0518. Only tumour reduction would really have been notable in the absence of long term data on overall survival.
Then there was the revelation in the annual report about the restrictive loan covenant. All OF had provided was $5m and the rest had to be kept as cash. So it seemed to me that the year end cash balance would have to have $7.5m subtracted from it as it couldn't be spent.
That's when I decided to exit given the increasingly unlikely odds of being able to raise cash in the biotech Sahara discussed in an FT article a few days ago.
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