The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Yes, the cost of development is steep and the potential $1billion revenue figure I would not put a lot of weight on but 2-400 million? Possible after many years. The $250 to $350 million buyout figure I cited was just a random amount I'd be happy with taking but I wouldn't be upset making more money at a higher potential buyout price. I just think the recent changes to the presentation are interesting and could certainly be nothing considering MTFB has released no news about recruiting MSLs which I see as good. We all hope they are in discussions with a partner as we speak but being conservative in all your estimates prevents bad things from happening to your investments.
I'm sure many of you have seen this clip before but GL mentions that it's possible a partner could come in after approval. Given the changes to the most recent presentations, perhaps this is where things are heading. Regardless of when a potential partnership happens, as long as it happens (on decent terms) would likely result in a re-rate. I hope the team at Motif has been paying attention to what has happened to PRTK and will try to avoid going it alone at all costs. Even a less than ideal partnership would probably be better than the giant dilution needed to fund commercialization. A less than ideal partnership could bring a re-rate or a small selloff given the terms but a go alone strategy would almost certainly result in a large sell off.
Given the market for AB's presently, if a buyout offer ever materializes in the range of $250-$350 million, I hope the company would take it.
If they end up going it alone, the share price would be toast. Paratek is a shining example of that. Their share price has lost 67% this year. Approval meant nothing. The whole ball game is finding a partner to avoid massive dilution .
Keep it simple. A few variables to keep in mind. Amp is still selling so we have that. FDA acceptance is an afterthought. The whole ball game is how Iclaprim will be commercialised which, we don't yet know but is likely to be revealed quite soon. NDA acceptance had no impact on the share price, it's about how they will take it to market. Keep your eye on the ball.
Regards,
Yes, their preference has been to find a commercialization partner. They have mentioned they would like to find a partner already generating revenue in the hospital space. This is the million dollar question though, we don't know what the terms will be for a potential partnership. If they are able to find a partner, the purpose is to have them fund commercialization and manufacturing relieving MTFB of the burden of doing it themselves which would result in massive dilution/debt financing and tank the share price. Again, it all goes back to the terms of a potential partnership. This is the real catalyst I believe much more so than an "all clear" NDA submission and even approval. The market wants to be surprised.
They have mentioned several times that their preferred way to bring Iclaprim to market is to partner with a another company already producing revenue in the hospital space. They have had several discussions with companies of this mold. That said though, you never know but Id argue its likely they take this route
Thank you for your feedback from the AGM Ivy, much appreciated. I've gone back and re-listened to just about every presentation on youtube GL has given and I think you are correct that the most likely outcome is a partnership with a revenue generating company already in the space. GL mentioned this several times in his interviews. Much to look forward to, just hope the partnerships are structured favorably
Thanks for your input. Folks are understandably focused on getting the all clear with regard to the NDA and of course approval but right now how they will go about commercialisation is the real focus point.
Ivy, do you believe the probability is good that they will have a commercialisation partner for the U.S. market as opposed to going it alone? Many thanks for your contributions here.
The market wants to know the path to commercialisation more than anything. We'll have either great or awful news depending on how they structure that. July/August will be perhaps pivotal months for the company.
Approval will come after they decide the route to commercialisation of course so If they line up a favorable partnership, we certainly could see a big rerate. If , however, they have to give up half the company in order to get a deal done then approval likely will not have a positive impact on the sp. Let's hope for the former.
Good news but this is like saying you will be somewhere at 7 and show up at 930. Nobody is going to give you extra credit. The market expects the NDA to be submitted and to recieve no CLR back. It also expects the drug to be approved. I do not believe either of these will act as catalysts. What will? The unknown. Favorable partnerships for HABP trials and taking the drug to market are the real catalysts.
At the beginning of the Jefferies conference, GL said they will be submitting by the end of the month. Perhaps next week then. Been a frustrating few months.
If Paratek is any indication, MTFB will have to dilute more and more for the hapb trials and to ramp up if and when approved. The market expects the NDA to be submitted with no issues and also expects approval. Markets move based on unexpected news i.e. partnership, buyout, etc. PRTK didn't recieve a CRL from the FDA like the market expected and it didn't re-rate. Approval likely won't cause it to re-rate either as the market expects this. The same will likely hold true for MTFB. Only a partnership/buyout will result in share price appreciation in the short term. Looking out over the next few years is a different story as revenue, earnings, etc will then drive the stock price.
Neither Iclaprim or Omadacycline has to be to be adjusted for renal impairment as I previously wrote.
I'd say its quite accurate. Yes, we have two different drugs but both are focused on ABSSSI and HABP. PRTK is seeking approval for both indications and Omadacycline does not have to be adjusted for patients with renal impairment like Iclaprim. It is also an oral/IV combo. All in all, they deserve a higher market cap. and I have always thought of them as the tell tale as to what we investors possibly can expect. Perhaps they were talking with potential partners and it fell through, we don't know. They are both great and needed drugs and I'm hoping MTFB can line up a partner to fund HABP and to launch Iclaprim for ABSSSI but you can't look at PRTK as if they treating something totally different. If you look at it from that perspective you have tunnel vision.
If Paratek is any indication, MTFB will have to dilute for hapb trials and to ramp up if and when approved. Im hoping this is not the case but if prtk wasn't able to find partners, mtfb will have trouble too.
https://finance.yahoo.com/news/paratek-pharmaceuticals-inc-prices-140-124500725.html
Thanks for that Ivy, cheers.
I don't have a subscription to Barrons and I wasn't able to go back and paste the remaining portion of the article but the brunt of it is there and shows there are heavy hitters out there investing in the space.