2014 has been another disastrous year for Biota.

Over the last month or so, we've seen someone unwinding their major position/s on market. Significant lumpy tranches of shares have traded on a relatively frequent basis, with little else happening in between. Obviously, someone is on the other end of those trades. Hopefully, there is consolidation happening with an activist fund taking the running.

Going through the recent quarter results leaves a few questions.

1.      The Company spent $5 million in the quarter on VAP development. They indicated no result of this Phase 2b likely until mid 2016. Without a fixed budget estimate from the company,  it’s reasonable to assume therefore that VAP Phase 2b development will cost $25-30 million over the next 18 months.

2.      The company spent $2.4 million in general and administrative expenses, with a 100k increase recorded over last quarter. Looking forward, the annualised expenditure will be $9-10 million. The company previously announced that it would seek to closely align internal overhead costs with anticipated royalty revenues. It doesn’t seem possible. My most optimisitic estimate is BTA will earn  4 million pa, and that’s assuming the negative LANI trial results doesn’t have an impact in Japan.

3.      The cash burn approximates anywhere from 20-30 million per annum. A settlement with BARDA would modify that assumption.

4.      The company previously announced an aim of 20 internal employees. Why does a company with 20 employees need 7 directors?

5.      Biota sold its antibacterial program during the past quarter to TAXIS without an announcement. What were the terms for that divestment? Free to a good home? Cubist is being acquired for similar compounds.

6.      Further, regarding VAP, without a rapid rhinovirus diagnostic:

1.      Phase 3 trials will be long, and expensive; and

2.      FDA expert clinical subcommittees will not look favourably on it. If they limit registration to PCR proven rhinovirus in asthma, it will have limited value.

No partnering deal was made as a result of the first (apparently successful) VAP trial, implying there was no value in that compound with Big Pharma, or that Biota management were hubristic and held out for more than they would ever be offered.

If the company spends another 30 million on its development, that will bring total expenditure on the program to nearly 50 million.

Why is it better to spend 50 million than 20 million on a compound that has no expressed Pharma interest?

No-one has (ever) explained if there is actual Pharma interest in this (BOTA’s) VAP program and at what value that sits.

Given cash value is the only thing supporting the share price, it can only follow that if expenditures continue at the current rate, the share price will be 30-40% less than its current price in 12 months.

The Board hasn’t explained why the current plan will deliver outcomes. It is far riskier than LANI, which was also pursued without a partnership deal in place. We’ve seen the implications of that. If VAP isn’t partnered, and it fails, the company will be decimated.

The market’s current view is that the only possible salvation for shareholders is through partnering or merging. The company talked about both at the full year results, but neither were raised with the recent results. This company must partner VAP, or LANI, or RSV or if not merge the company while it still has assets.

Hopefully there is a major shareholder out there who agrees, or better yet, has a better plan. The Company should know that the still significant Australian shareholder base will not support it if it comes to a proxy fight.

Well, now there's something to talk about

Biota has announced it corporate update and 2014 year results. And board and management changes. And some guidance on strategy.

Very cheeky of Biota to seek an extension to the Relenza patent. Hopefully it succeeds, but both GSK and the USPTO will make it very difficult. This company finds it hard to catch a break, so on form it shouldn't be expected.

The generally positive sub-outcomes reported on the Igloo trial are interesting. Even the positive data on the smaller studies, including asthmatics. The combination data approach is worth taking. But the news on discussions with FDA on the Igloo trial and the future of LANI are no guarantee of anything. Problem for the FDA is that there is already pressure on the regulators about the quality of data behind registration of NIs. My reading is that Daiichi, who have suddenly become our partner again, are the only buyer for LANI. The comments about uncertainty around the ROW contract if the marketer is not a third party were initially referenced to Biota being the marketer, and now its clearly (in my view) directed at DS's role. DS have an interest in protecting LANI's reputation. All this would have been better avoided by using the same outcome instruments used by relenza and tamiflu.

Vapendavir has tested its new formulation, but has decided to proceed with the original formulation for the current Phase 2 trial. The new tab formulation will be used for subsequent trials after some enhancement to get more than 60% bioavailability of the original. The new formulation gives them a fresher patent, and thus a longer patent life.

Large institutions seem to have obtained the resignation or demotion of Mr. Fox and Mr. Plumb, as well as the withdrawal of some stock options, and renewed vigour for M&A. It's not clear what executive function Mr. Plumb will retain, but he is the Executive Chairman. Mr. Fox seems to have been given charge of finalising the BARDA extraction. We wonder which institutions were at that meeting.

Mr. Patti is talking up M&A. I guess the company has its cash reserves, unclaimed tax credits in Australia and UK, vapendavir in Phase 2, possibly RSV in IND, and a small residual on LANI (and an even smaller residual on relenza). M&A is the only method to recoup share value. I and other shareholders at our drinks event yesterday thought that it was not likely that the company would seriously pursue VAP as it's reason to continue as a stand alone company. His comments were, to our ears, fairly pointed about M&A.

It's hard to speculate where the merger interest will come from. However, a lot of cash poor speculative companies would love the cash pile. We'd prefer bigger companies with a good record.

Possibly after finalisation of a merger, Mr. Plumb and Fox and many of the rest of the Board will resign. There are, by my count, still 8 board members, if I assume Joe Patti will be on the board to replace Mr. Hill. That's quite a lot, for a company soon to have 20 employees on the direct payroll.

These things will take some time to pan out. No merger will be finalised until the FDA says something about LANI (determining how much DS will throw in the hat), BARDA is finalised, and Melbourne is completely shut down. So, another long wait until mid 2015, I guess.

It still causes us to shake our heads over a beer, while we count our losses. Right now though, our interests are shackled to the larger holders, because there is no market for us to sell into, much less them.

Thanks to those of you there last night.

OzBiota drinks

The Company will be offering some form of update on September 26.

I would like to invite anyone with an interest in Biota to drinks on Tuesday 30 September at 6pm.

I thought we could meet at the Market Lane Bar, which is apparently inside the Rialto Melbourne Intercontinental Hotel (495 Collins St)., the site of many previous Biota management presentations. Remember those presentations? All complete nonsense, an odd combination of deception, self or otherwise, and incompetence.

So, it's fitting to meet there without management.

It will be quite informal, so no agenda or presentations. I haven't even booked a table. Hopefully, the company update on 26th will give us something to talk about.

I will bring along a little sign. Come along, if only to save me from being the sad lonely little man sitting and drinking at a small table with a weird sign saying 'Biota'.

Nup-date

It's interesting that in the aftermath of the BARDA stop work and cancellation of contract, some funds and institutions were buyers. How do you figure that? In fact, aside from a couple of major holders selling out/down, the impact at that point seemed controlled.

It will take another three months, alas, to discover the damage to the register caused by the IGLOO trial failure. While Broadfin has bought since then, the selling might have been curtailed by the fact that the stock is so unknown and illiquid that they couldn't sell for cash backing. So they held. Welcome to our little club.

I wonder if BARDA will now feel obliged to offer any compensation for cancellation of the contract, given the Phase 2 result.

Well, the rest is conjecture, and because there is such an information vacuum at present, we'd be just whistling in the wind.

Jim Fox has taken over chairmanship of Genmark Diagnostics. It's a maker of diagnostic PCR tests, with a strong Australian background. Does PCR for influenza and HRV as a matter of fact, but hardly a portable device. A half a billion dollar company, Nasdaq listed.

In case anyone local reads this, I'm planning a Melbourne based Ozbiota shareholders (classy) pub meeting in September. Sorrow drowning, at least. More details later.

Flu-iiQ and you

It's interesting that symptom relief has been at the centre of many influenza trials. Because for many other drugs, it isn't. Influenza seems to have been selected out for special attention in this regard: whether it's the company's own marketing departments who want it, or whether the FDA directs it, I don't know.

For most other infectious diseases, hard outcomes are usually preferred. If I wanted to trial a new antibiotic to treat pneumonia, I'd look at fever, pulse , BP, respiratory rate, changes in blood counts, days in hospital, days off work and serious morbidity and mortality. We aren't usually that interested in whether the cough is still troublesome, or your muscles still hurt a bit or whether your appetite has returned or not. Those are subjective and less helpful in determining effectiveness.

If I was to apply hard outcomes to influenza trials they might be:
time till fever resolves
time to pulse, BP improves
time till bloods improve
(perhaps) days off work (although this is also subjective in many ways)
complication rates, including hospitalisation
mortality

Here is the paper introducing the Flu-iiQ test. It was published in May 2011 and sponsored by MSD. The paper, with its validation, was published just before the LANI trials started.

http://www.valueinhealthjournal.com/article/S1098-3015%2811%2900107-0/fulltext

It would be interesting to know where else this instrument has been used - because I can find only 1 reference in Pub Med to a paper looking at patient reported symptoms in Hep C.

By using soft data, like patient reported outcomes, rather than hard data, like objective clinical measurements, you are subject to the validity of the instrument.

It looks like Flu-iiQ is so new that it has not been used in significant studies. Before Biota's. Let me know if I'm incorrect.

Also, given other NIs trials didn't use it, it's hard to make comparisons between them.

Did Biota scientists select it? Did Barda? Why use it? This is the small stuff that needs sweat.

Well, it needs sweat before it's implemented. Too late now.

It's ironic that in his previous job Russell Plumb sold a compound for a lot of money that subsequently failed, and in this job he was handed a compound that failed and cost his company a lot of money.

It's hard to see a way forward. BOTA is a cashbox now, but 80 million buys very little in this still overvalued biotech market. And in any event, they didn't want to wade back into early stage compounds, which is really all they can afford. They can't fund a phase 3, and could only manage a straightforward Phase 2 depending on the patient population. But on the other hand, this company changes major strategy every 2 years, so nothing decided last year is worth anything.

In my experience managements with this much cash hold on tight. It's a decade of salaries. It's hard to know how these directors will handle shareholder pressure, but remember a big proportion are still you and me and we are invisible to them. It's so reminescent of NABI that it's almost eerie. I was kidding a few posts back about being the subject of a backdoor listing, but it's as likely as any other outcome right now.

Vapendavir and RSV are poor reasons at best for them to continue as a stand alone company. The new management team looked very unfavourably on VAP initially. The change of heart comes from having no plan B, or maybe someone in pharma told them they were interested. But neither have strong cases at present. VAP outcomes are all about symptoms in a subset of common colds, although asthma does come with some hard outcomes.

I guess it does offer something in addition to the cash that might let them give back what the funds paid in the capital raising in January.

Generic relenza? Not if the generic needs to be supplied in a rotahaler.Waste of time.

LANI is Daiichi's drug. But they never showed the slightest interest in ROW deals (or at least, none that Biota ever disclosed), so it's unclear they would bother or care now, except that government pressure may be brought to bear in Japan to account for this trial result.

Boy, what a mess.

Problem is there isn't a lot of faith in the large number of Directors gathered at the table. Management does have time and some money, but not enough of either to waste.

Goodbye LANI

well, I'm surprised by today's announcement that LANI's Phase 2b trial showed no improvement in symptom relief in influenza.

actually, stunned.

the impact on viral shedding was demonstrated

I'm not certain if the low recruitment numbers was the main issue

I will need to look at the instrument chosen to measure the outcome, but it's too late anyway.

this is a severe blow.

my guess is somehow BARDA knew this was the case and pulled the grant.

and announced at the beginning of a little bear market..I hate to think what the SP will finish at today

where does this poor company go? It really has few options. I'll think more before I write anything.

Once again, though, we should have made a deal the day after the BARDA grant was announced. That milk is spilling everywhere

hold that thought

whalewisdom seems to have changed it's statement on BOTA holdings for the June quarter. So, take the report in my previous post with some doubt until confirmed, probably in mid August. Wonder where they got the initial list of changes.

more sellers identified

JP Morgan sold 2.5 million
Blackrock sold over 1.2 million
Visium sold 600,000
No notices of institutional buys so far! Another month for full reporting.

We wait to see what Hunter Hall and Baker Bros did.

Outside sellers and inside buyers.

Its nearly 3 months since BARDA withdrew their grant from Biota.

We can presume that rather than executives or board members owning up to failures in losing BARDA, it's only the scientists in Melbourne who will bear the loss. We are supposed to believe that the loss of the BARDA grant, which will cost 150 million in cash and about the same in market cap, is in no way related to anything the board or the executives did, or omitted to do. Maybe so, but it needs to be demonstrated. A fuller explanation from BARDA would be helpful in that regard.

The decision to basically completely abandon research hasn't helped. Removing 10 million from a 12 million annual research program leaves someone to photocopy and go to a couple of conferences. Every researcher who stays will be looking for another job - you would be a fool to trust the company with your skills. The general and administration budget, on the other hand, sits at around 10 million pa.

In the last 3 months, the only thing we can say is that there was an avalanche of selling by institutions, and some insider buying.  Which is more important?

It might suggest that the company is no longer deemed an underpriced long term serious prospect for a significant company that will be rerated with growth. But more likely a short term kicker on a turnaround from an impossibly low base - a bottom that only the executives and some long term investors like us understand how ridiculously deep it was, even if it was a cashbox. Even it was... a NABI !  Maybe someone will attempt a reverse takeover of BOTA for a NASDAQ listing and the cash!

Any future share price lift from here if it comes will come from retail buyers and not the likes of Morgan Stanley. Further, there can't have been deals in negotiation, otherwise the buying wouldn't be allowed. So no pending deals either.

There's no doubt they are waiting on some clinical trial news and some BARDA negotiation outcomes to mix into the news flow. But the best they will get is some positive LANI trial results, and some extra cash from BARDA. Still way less prospects than they had 6 months ago. Maybe a partnering deal will follow. But partnering a one drug company with no researchers? There is no alternative vision offered to shareholders at present. The irony is that biotech is still enjoying a boom, so other people's assets are expensive.

Melbourne closes

Biota will close it's Melbourne research and administrative base.

There's a couple of issues.

1. I wrote this in a distant entry on this site:

"There are 44 million dollars in tax credits in Australia and 23 million in UK. I am not an accountant, but that's 67 million in value gifted by Australian shareholders into the merger. It's not clear how that can be monetised. Biota should have found a way to pass that benefit to Australian shareholders before the merger. If those credits are lost, it represents further incompetence around the merger."

I wonder what happens to those tax credits.


2. The previous Board and executive officers played Pied Piper to this outcome. I feel very, very sad for Biota employees, both the current and the potential future employees.

Inavir 4th quarter sales

11.4 billion yen.

13.4 for the year.

Very good result.

Not So Fantastic, Mr Fox

3 years ago BOTA could have negotiated a ROW deal, or an outright sale of the company, with big pharma from a position of strength i.e the LANI compound and 230 million to throw into the bargain. That partnership would be much further along because a large organisation could move more rapidly with trials and it wouldn't have wasted a year moving stock exchanges. If BARDA had pulled funding from Daiicihi Sankyo, what impact would that have had on BOTA? Zip. The Board thought that 80% of the return for 100% of the risk seemed a good deal with the BARDA grant. But the risk calculation was wrong. BOTA's a Cessna not a Jumbo. Losing an engine, no matter how improbable, has different effects.
 
BOTA will now be negotiating with medium pharma from a position of weakness: no ability to fund and a ticking patent clock. Cap in hand. LANI must go to Phase 3 by Southern Hemisphere 2015 as planned. I know it, and any potential partner knows it. 80 million in the bank doesn't help in that context.

Phase 2 should be positive, but the results are 2 months away. Selling with Phase 2 is (a bit) better than nothing.

But if the BARDA termination has to do with a negative attitude toward NIs from FDA it's bad news from a partnering point of view. The 'best' we can hope for is that they thought the company was mishandling the grant.

BOTAs recent capital raising introduced fund managers that, after the reasons for termination are released, aren't likely to back BOTA now for full funding of Phase 3. Trying would be nuts.

The Board is meant to assist the company as well connected experts. None had any inkling of a change of heart at BARDA. And none could do anything about it. They need to do some work now.
Disparate and small Australian shareholders are easy to push around. Burning US hedge funds' cash is a little harder to hide. The Board needs to express something other than surprise.

Sadly, the only option appears to be to sell or merge the company's assets, even though those enterprise assets are currently valued at almost nothing. Only hubris can get in the way.

This is a failure to commercialise an excellent drug. It's a painful irony in the face of so many examples of successful commercialisation of worthless or dangerous drugs.

Barda was the only upside surprise this company ever delivered. It now joins the rest of the wrecks on the downside surprises.


Other notes

Barda were the ones who sought testing for an 80mg dosage - there was no need to introduce that into the clinical trial mix. Testing only 40mg would have meant an adequate number in the current Phase 2 trial.

Barda's explanation for the termination will make compelling reading.

It's deja vu all over again

Well we've been here before so many times that it seems weirdly familiar.

BOTA back to (basically a little above) cash backing. Back to immediately pre-Nasdaq ASX dumping and shorting lows.

There might even be a few of you out there who experienced the FDA antiviral subcommittee's rejection of Relenza last century. Now that was also unexpected and the market reaction was...like re-entry into the atmosphere without the little parachute at the end. Or the water.

 Maybe this time through no fault of it's own.

Today's quarterly results and conference call were useful. Clear statements that BARDA had been kept abreast of all developments with the LANI contract as they arose, from the beginning. Amazing to learn that the scheduled management input into the IPR involved a single 45 minute presentation. A. Single. 45 minute. Talk.
This should remind you all that powerpoint can kill.

Didn't tell us if the project actually was overbudget. I doubt it. I wondered if the extension of Phase 2 required extra money.

Everything other than BARDA stopping the contract was just dandy. Cash in the bank, courtesy of less spending and more royalties. Other programs chugging along.

Phase 2 results expected out in the next quarter. If they show what's expected, we could have expected a significant SP rise.

My guess is that DS sales of Inavir in March quarter to be released on 15th May will be really good.

That would also have pushed us along.

So would the release of the new shareholders who came on board during the capital raising in January - that's due out next week.

One concern even if BARDA continue their support is that it's not clear whether any trials can get underway this Northern winter.

No word on the DS ROW negotiations.

But on that, I scratch my head. Why would DS not ignore any deal, throw in an unsolicited offer for the company and replicate its Japan earnings in the US? BOTA's valuation is just criminally low right now. Considering how DS were monumentally #%&@ed by Ranbaxy, this would be both chickenfeed and a great value adding buy.

So, we wait for others to decide our fate. That's always the case with biotech to some extent, but this is extreme.

As you all know, I would have sold the ROW rights with the BARDA cash 3 years ago. Too late for that. Let's see what BARDA/FDA dream up. Might be this week, might not be.

I hope this the price that one day the press will write about: that the stock was $3 in 2014 after the BARDA stop order, before the company was sold for ??? at that magical time in the future.

Plausible theories

The discussion rooms have pointed toward recent developments at BARDA outlined in the following two releases:


http://www.hhs.gov/news/press/2014pres/04/20140416a.html

http://www.hhs.gov/news/press/2014pres/03/20140311b.html


I have also raised the recent controversy around Tamiflu and the call by British researchers for independent clinical trials of NIs.

I agree that it's plausible that BARDA will take over the conduct of the rest of the clinical trial program for LANI. It will simply use the committed funds for the rest of the program and shift those to conduct the studies themselves.

They will have nationalised clinical research! In the USA!

Advantages

BARDAs clinical research network might be of higher quality and therefore able to deliver better than BOTAs selected groups. It likely that BARDAs selected contractors are not the lowest bidders when these projects are tendered.

That the take over of conduct of the trials should mean that if the drug shows effectiveness and safety, it is automatically granted FDA approval (since they in essence designed and conducted the trial)

The SP will increase 50% in the short term on that sort of announcement

Disadvantages

They have not done this before, so processes will be slow and...

Bureaucratic: I imagine the trials will take longer to complete - will they guarantee patent extensions?

Will BOTA still get it's 7% management fee?

BARDA/FDA/CDC will interpret the results; however they would do that post-hoc anyway at registration

Undoing manufacturing and other contracts - BARDAs problem I guess.

No understanding of shareholders - witness issuing a stop work order before an explanation of the reasons, decimating shareholder value. Hamfisted and stupid.

The clinical trials would need to cover seasonal influenza use not just pandemic. There are some potential differences in clinical outcomes. But the trials for registration would need to be the same and delays in trials mean delay in deals and marketing of LANI as a seasonal drug.

Unless the company has to do other trials for seasonal use/registration. That would be unacceptable.



In essence, if BARDA are taking compounds and paying for the clinical research and manufacturing for pandemic products, and then purchasing them, they are effectively acting as big pharma and consumer. They could go ahead and sign a contract direct with BOTA for rights to the compound in stockpile use. There would be no middlemen.

Problem is, they haven't made a commitment to the compound's creators/IP. And they aren't actually committing to a stockpile order.

An interesting new world for similar product development. Question is: is BOTA the golden child or the guinea pig?

Gulp hard: stop order just released

Stop-Work Order Received Pending In Process Review Decision From BARDA -
- Phase 2 IGLOO Top-Line Data Anticipated in Q3 2014 -
ATLANTA, April 29, 2014 (GLOBE NEWSWIRE) -- Biota Pharmaceuticals, Inc. (Nasdaq:BOTA) ( the "Company") today announced that it has been notified by the U.S. Department of Health and Human Services (HHS) office of the Assistant Secretary for Preparedness and Response (ASPR) and Biomedical Advanced Research and Development Authority (BARDA) that pending a decision regarding the outcome of a recently completed In Process Review (IPR) of the Company's contract for the development of laninamivir octanoate, ASPR/BARDA has issued a Stop-Work Order notifying the Company to discontinue work on a number of activities under its contract.
The Company's contract provides that ASPR/BARDA will conduct IPRs in its discretion during the performance period to discuss the progression of milestones and deliverables under the contract. The IPR, which was the first such review of the Company's progress since the inception of its contract in March 2011, was conducted by a team of representatives from the Public Health Emergency Medical Countermeasures Enterprise (PHEMCE), which is led by ASPR, and in addition to BARDA, includes three primary HHS internal agency partners; the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA) and the National Institutes of Health (NIH).
As a result of the receipt of the Stop-Work Order and exceeding the original recruitment target of 636 patients in its Phase 2 IGLOO trial, the Company has concluded enrollment in the Northern Hemisphere and will not enroll patients in this trial during the upcoming Southern Hemisphere influenza season. As previously disclosed by the Company, virology data available to-date indicate approximately 40% of the patients enrolled in the trial had laboratory confirmed influenza A or B. The Company anticipates that top-line results from this trial will be available in the third quarter of 2014.
"We are surprised by this Stop-Work Order and unfortunately, do not have any additional visibility or understanding at this time as to the nature of ASPR/BARDA's pending decision related to the IPR," stated Russell H. Plumb, President and CEO of Biota Pharmaceuticals, Inc. "We anticipate that this decision will be forthcoming shortly, and we will provide a further update at that time. In the interim, we are complying with the order and focusing our efforts on critical path activities for the program not covered by the order, namely completing the conduct of and finalizing the data from our Phase 2 IGLOO trial."

Read more: http://www.nasdaq.com/press-release/biota-provides-an-update-on-the-development-of-laninamivir-octanoate-20140429-00354#ixzz30HCoa940

The hard part of this is not knowing whether that review had access to current top line data analysis or not.

The only hope is that they will tell the company to proceed with Phase 3.

If it's a process problem, it needs to be explained.

In the meantime, prepare for a whack to the SP.

Dog days

Biota's share price continues to fall, surpassing the recent drops in Nasdaq overall Biotech Index. Certainly overnight the Index recoverd, while BOTA continued to slip.

There has been no information released since the ROTH conference a month ago.

I guess there are concerns or expectations (or maybe knowledge) that the LANI Phase 2 trial will need to be extended. That would be a bad outcome and that would be reflected in some further  shareprice pressure, and more importantly no real momentum for some time.

At this point though, a positive outcome (acceptance of current Phase 2 results and moving to Phase 3 this year) would certainly improve prospects.

Also, as I've mentioned, no news of a deal with Daiichi Sankyo will also suppress the share price. This outcome isn't reliant on the weather or the science, just the management. It needs to be done to give the market clarity and confidence.

DS should be in a better mood since they have partly cut themselves loose from the millstone that was Ranbaxy.

The BMJ and Cochrane continue their ongoing ideological battle with Roche over Tamiflu. It's relevant in that it drags Relenza and other NIs into the crossfire. As best I can determine, the release of all of Roche's clinical trial data didn't actually change very much about the conclusions reached in the published data.

The problem is that the trials were not powered to demonstrate anything other than effectiveness in reducing the severity and duration of seasonal influenza. That was the target market at the time. To conduct a trial to examine mortality or influenza complications like pneumonia is a very different beast. A much bigger beast.

For the BMJ and the reviewers to argue that the trials should have been conducted independently (i.e by them?) is to make a statement about all drug trials. They do concede they are making statements about the whole system of trials and registration, but they really hate Roche. To criticise the trials as placebo trials is really getting a bit petty. There is no real alternative treatment for influenza.

Whatever they might think of the treatment effect of NIs in regular use, the Cochrane investigators are wrong to extrapolate that NIs are therefore of no value in an epidemic or pandemic. The CDC, WHO and I, think that they are. Other studies, the basic science behind NIs and post-surveillance clinical evidence supports "our" (you know me and my buddies at WHO and CDC) view. In Australia, I recall an interesting statistic during the last H1N1 outbreak: none of the people admitted to ICUs (including those who subsequently died) with influenza had received prophylactic or treatment NI prior to admission. The effectiveness of intravenous NI was established anecdotally during that outbreak, but more formal evidence of the impact of the IV form could assist in assessing the impact of NI in desperate situations more quickly than population studies. NIs will save many lives in the event of a pandemic; the notion that a vaccine will be developed in a few short months presumes that everything functions pretty much as normal for those months in a real pandemic. My guess is that it won't, and the stockpiled NIs will be the first and second line of defence.

There is a strong British anti-pharma anti-corporate bias in all this work. Indeed there is a strong British anti-treatment bias that pervades a lot of Cochrane. But they really hate Roche, and are convinced they deceived the MOH and the people. The fact that the Cochrane Tamiflu reviewers could not be ever seen to be independent themselves is a flaw in the process. They are activists, which I support and applaud, but maybe someone else should do the work.The meta-analysis process is not above interpretation or bias. Activism for evidence is wonderful as long as the community doesn't actually suffer from a lack of common sense in the absence of exhaustive evidence.

The touchy subject of the effectiveness and efficiency of influenza vaccination has always been left undiscussed. Influenza vaccine is gathered along under the voluminous skirt of vaccination support. But is it reasonable that a vaccine that changes every year and needs to be administered to the whole population every year with no guarantee about the targets and no trialling for each new formulation could be at least pondered without being seen to be anti-vaccination? I don't know why GSK escapes the ire of the anti-corporates just because it makes influenza vaccine. That's why I always thought a universal treatment for influenza was a great step forward. It's ironic that a universal vaccine would be hailed, whereas a universal treatment/cure is heavily criticised.

Of interest, many of the Relenza trials at least here in Australia were conducted by Prof Chris Silagy, one of the earliest and strongest advocates for Cochrane and evidence based medicine.

Roth Conference presentation

I took away a couple of important points:

Igloo is 90% recruited on its original topline estimates, but won't have enough PCR positive patients based on their estimates of differences predicted.

Related to that, the company seems to be estimating another season to recruit in Phase 2 then a year for Phase 3, so IND not until second half 2017.

That's a poor outcome in a strong influenza season.

Another year's delay to recruit about 100 PCR + patients is pretty poor. Not only in patent terms - a year's delay costs tens (?hundreds) of millions in sales/royalties. I don't have access to the statistical assumptions, so can't tell if a strongly positive clinical outcome could influence this decision. But I hope it does.

BARDA should only care enough to get an IND to FDA. I'm not sure how BARDA can assess what the FDA will think about the power in this Phase 2 based on recruited numbers and outcomes. I'm not even sure why 80mg was ever considered worth chasing, when 40mg is doing fine in Japanese registration trials and in post-marketing.

Looks like buying in assets is expensive at present, so no cheap deals on offer.

We need a deal here. Same as it ever was. Either LANI or Vapendavir or RSV - we need to strike some partnership deals so the market can start attributing some valuations, even if the timing might be uncertain.

Alas poor Relenza, I knew it well

Biota earned 4 million dollars from GSK last quarter on Relenza royalties.

Relenza Royalties: a pleasant alliteration, isn't it?

Alas, that looks to be about the last time that phrase will be uttered on a financial record or anywhere else.

If there was a television program that was the biopharmaceutical business equivalent of Air Crash Investigation, Relenza would be in it.

Critical issues missed at planning, inexperienced pilots, greedy airline, happy passengers (shareholders) in the back, optimistic takeoff, quick heights, unexplained turbulence, plane falling, futile struggles, and finally crashing. Should have killed off the company but somehow the same guys were allowed to fly again.

My rough estimate is that Relenza sold under a billion dollars all together (ever), and Biota made maybe 70 million in royalties and milestones. That's mostly from two stockpile seasons. It never penetrated the seasonal market.

Tamiflu did better (lol).

Why? Well the legal case outlined it all.

1. The diskhaler was an outdated, cumbersome piece of equipment that should never have been used. GSK are world leaders in inhalers and they kept the diskhaler in use for relenza when they had ditched it for every other drug they made.

2. They (GSK) decided that vaccines to treat the whole population every year were better profit drivers than an effective treatment for a smaller group of infected people. I'm as pro-immunisation as the next guy, except for influenza. Only the drug companies could mount an argument for funding a vaccine that changes every year, is based on best guess components, isn't tested in its new formulations, and needs to cover the entire population annually to achieve herd immunity - for a year.

3. They didn't come up with a quick, easy POC flu diagnostic to support the drug. Actually Biota did, and sold it to Thermo who ran with it for a few years then ditched it.

So unenthusiastic were GSK about influenza treatments that they also passed on Flunet, which is essentially Biota's backup LANI. Handed the option back.

Interesting that GSK didn't give Relenza back to Biota in the negotiations around the law suit. They didn't just want to shelve it, they wanted it dead.

What a sad and sorry debacle.

Biota's share price has improved over the last month. It's not clear why other than increased exposure with the Baker Bros purchase.

However, as I have stated before, at any price up to $10, I don't understand why Daiichi Sankyo wouldn't purchase the company rather than do a deal on ROW Inavir. We await some guidance on the ROW deal.

Let's hope the contract trial centres have lifted their game with the Phase 2 LANI trial. Not only is it important for this year, but the same centres will probably be used for Phase 3 and if it's a quieter flu season next year it will be a serious problem.

Baker Brothers

Baker Bros. Advisors is a specialist, and successful, healthcare fund manager.

It reported picking up just over a million shares in Biota during the December quarter. This was probably the shares offloaded by Hunter Hall.

Be interesting to see how many more they picked up in the capital raising. Won't find that out for a while though: 45 days from March 31!

Good validation, from a fund with significant credibility.

Any questions? Anyone? Anyone?

Oh yes, thanks, hi, I wanted to ask a couple of questions regarding today's second quarter results and update.

1. It's disappointing to hear that Igloo might not fully recruit this Northern Winter. Actually I think a PCR positive rate of 50% is pretty good if the study is recruiting from family practices, rather than ERs. Also, you said that it takes 2 weeks for a PCR result? We'd expect a PCR result in a day or two down under.

Also highlights one of the problems in flu treatments in primary care without rapid flu diagnostics. Can we get into the rapid flu diagnostic market again?

Is the use of 2 different dosages of LANI part of the problem regarding sample size?

Also you mentioned going back to Barda? You mean for more than 250 million? 

In any event, isn't it the FDA you need to speak to regarding the recruitment?  Is there a mechanism to discuss Igloo with FDA before deciding to extend it, other than submitting an NDA?

Also, doesn't the sample size depend a bit on results? If the benefit of LANI is better than expected, might that mean no extension is required? Can you analyse interim results to determine this?

Also, putting the study back another year reduces the patent life of the compound doesn't it? Or are there extensions possible?

2. Why does the company need to do another Phase 1 and 2b study for vapendavir? It has already spent over 10 million on a Phase 2b for vapendavir in asthma. Why do you need a "new" tablet formulation? Is the new tablet form worth starting from scratch? How much do you expect to spend?

Isn't there a similar problem regarding rapid rhinovirus diagnosis? Can you develop such a test if you want funders to eventually reimburse this compound?

3. Is the restructuring complete?

4. Have you had any face to face meetings with Daiichi Sankyo regarding the ROW arrangement regarding LANI? When do you expect to be able to announce an update on this issue?

5. How many analysts are now covering Biota?

Thanks

Post Capital Raising 1

East Hill have reduced their holdings by 100,000 or so shares.

However, the latest SEC filing reports their pre-dilution holding: post dilution my estimate is that they hold about 13 % of the company. That is, unless they picked up some more in the recent secondary offer, but I doubt it.

With the exit of Hunter Hall, East Hill was the biggest shareholder by far, and at current prices is still deep underwater. I suspect they remain the biggest single holder post-offer, but we'll see with further reports.

In that regard, NASDAQ is way behind the ASX: changes in significant holdings are reported almost immediately (7 days I think) on ASX. Nasdaq allows 30 days from the end of the quarter the change occurred!

The current influenza season is a little more lethal than usual, but otherwise standard. It does highlight to analysts and new investors that, although seasonal, each year holds a sales stream. Unfortunately we always have to wait until April/May for what are essentially annual Tamiflu and Inavir sales figures.

The share price has had some dramatic fluctuations this week, springing back to $5 at its end. Whether we are seeing the last efforts of post- offer price support, or the real market in effect, I can't tell.

Capital raising Part 2

This secondary offer got away without a glitch.

No, I didn't get an allocation. Just a brief email telling me all the shares had been allocated the previous week. But my guess is that even Jamie Packer couldn't have got shares if his enquiry had come from an Australian server.

The share price rose Friday, probably on the back of a small avian influenza story coming out of Asia. There is still a fantasy among some that the FDA will grant emergency approval to inavir. It's like UFO sightings - some people just keep believing. Still, over 5 is a welcome sight. Especially given that some of those who were allocated shares at 4.30 would be very glad to give them up for a quick 20%.

Influenza in US is very widespread, so I think the study will recruit fully and hopefully early. If I was a fantasist, it would be that FDA would listen to a story that the current Phase 2/3 is adequate for approval without formal Phase 3 next year.

Instead, we wait now for evidence that Daiichi will do a deal. There is no other news of any interest in this stock other than that.

Raising Capital Part 1

Biota's recently announced capital raising/new share issue has been anticipated for some time. Management's entire rationale for this issue has been made clear -  is about increasing stock liquidity; it concedes it doesn't need the money. Indeed, the first observation about the amount raised is that it still won't buy all that much. Hunter Hall's sell down has done something for liquidity. But there are a lot of Australian holders, me included, who stubbornly hang on and don't buy, sell or otherwise trade. Australian holders... and East Hill.

Here are some thoughts:

1. This share issue just about completes the set of completely ridiculous (disclosed) actions made by the company as part of its Australian departure. Their effort was just amateurish. Worse could be said, but I am being polite. The definitive statements made in public about not needing to raise capital are ringing in my ears.

The use of NABI as a listing vehicle was a mistake. Even if NABI shareholders didn't fight the deal, all BOTA would have had is extra cash but not the extra shareholders, and by the logic of this issue, no more liquidity than it has now.

An IPO would have been the best way to enter NASDAQ.

2. The timing and price of the issue is doing Wall Street a favour. The price is at its near lows, and no significant corporate or research action has yet occurred. So, they have gone to the Street with a powerful value proposition at the expense of the rest of us. I guess the argument is that the favour will be returned.

3. The dilution, in terms of shares issued, could have been worse, so I'm thankful for that.

4. The issue closes in about a week which hopefully means they have their buyers lined up.

5. They have done a vastly better job at supporting the company in the market and protecting it from a shorting attack than the previous Board on its announcement of the original deal on the ASX. Some pumping in the last week, and some significant support through the day of the announcement.

6. I emailed Guggenheim and have asked for an allocation - let's see what they tell me!

Other interesting issues from the associated presentation (SEC filing dates 9 Jan), which is a good update, include

1. IGLOO is already 30% recruited: that augers well. The first few patients at each centre are the hardest to get - the rest then tend to follow more smoothly. Also, centres can be shut down over Christmas. I expect they will complete recruitment as planned. The current influenza season is severe enough. In some odd way, a polar vortex is unhelpful - people might get the flu but they need to go to their doctor/medical centre and enrol in a trial which you might not be bothered to do if you're freezing cold, even if you have a 50% chance of getting free Inavir.

2. Vapendavir seems to have been resurrected as a respiratory drug! I only hope someone is interested in making a deal. I hope BOTA don't plan on pursuing it alone. Really, don't.

3. RSV is powering along with 2 new candidates and some good preclinical data.

What don't we, or the market, have?

An update on the ROW agreement with Daiichi Sankyo.

A very Happy New Year

for the BOTA shareprice!

Went off like a party popper since the Nasdaq struck 2014.

Looks a little more solid than previous efforts, so lets see what the rest of the year brings. Flu activity, especially H1N1, is early and reasonably active. Hopefully, this translates to a high chance of trial completion on schedule.