Krensavage a little late on reporting its buy..
That's another specialist bio fund, and one that likes to buy companies rather than drug prospects.
Wednesday, 18 February 2015
Read all about it
The new positions in Biota were published today (for transactions in the quarter ending 31 December).
Many funds had either significantly sold down or completely sold out of Biota in that quarter, explaining the large chunky sales.
BlackRock and JP Morgan were the heaviest sellers.
In their place 2 or 3 specialist biotech funds have emerged as holders: RA Capital, Senzar Asset Management and to a smaller extent a new fund Venbio.
Further, East Hill emerged from its hibernation and bought another 400,000 taking it to just under 10% of the company.
Baker Bros and a couple of others held their nerve. Broadfin is still there, but didn't buy more.
And why not I guess: the stock is at cash backing, so hopefully it has hit the bottom. Unlike some biotechs with no cash, where the bottom can be very deep and distant.
One small thing that emerges are the number of links to Vertex: Landon Clay, RA Capital, and a couple of other smaller links.
The BIO CEO presentation was interesting. Not so much for the presentation, but for the questions. Biota management get to field very few questions publicly. Joe Patti was forced to acknowledge a key issue in the company's strategy for vapendavir. If they keep ignoring it, it won't go away.
Vap might prove to be effective, in asthmatics with proven HRV infection. Let's say it is, for the sake of argument.
The subset of proven HRV to clinically enrolled HRV might be as low as 40%. OK. When the drug goes to the FDA itself and its subcommittees, it's plausible, maybe even likely, that the FDA might say two things:
1. That any level of adverse effect is unacceptable (see plecoranil) given many people without HRV might take it and/or
2. That it's not reasonable to treat the 60% of people with clinical common cold symptoms who don't have HRV to get a response in the 40% who do. This is because HRV is self-limiting. SO, they might approve the drug in proven HRV exacerbations. Which would be fine, if there was a rapid HRV test. Which there isn't yet.
The BARDA contract is nearly disentangled. That became more of an issue than analysing or explaining why they stopped the trial. We have very little information on that.
Relenza and LANI will earn a little more than expected this FY which is great news because the only thing supporting the sp is cash, and the more BOTA burns cash the more the sp will drop.
Finally, no news on LANI. A 10-20 million dollar upfront and a few % royalty is probably all that can be hoped for, but there will be some element of credibility in inking a deal, and the cash will be useful as an addition to a takeover... sometime next year.
I don't know what East Hill and Broadfin are asking management and the board to do. But settling BARDA, settling LANI, and packaging the cash and royalty streams with vapendavir and RSV might be somebody's idea of a reasonable purchase.
Many funds had either significantly sold down or completely sold out of Biota in that quarter, explaining the large chunky sales.
BlackRock and JP Morgan were the heaviest sellers.
In their place 2 or 3 specialist biotech funds have emerged as holders: RA Capital, Senzar Asset Management and to a smaller extent a new fund Venbio.
Further, East Hill emerged from its hibernation and bought another 400,000 taking it to just under 10% of the company.
Baker Bros and a couple of others held their nerve. Broadfin is still there, but didn't buy more.
And why not I guess: the stock is at cash backing, so hopefully it has hit the bottom. Unlike some biotechs with no cash, where the bottom can be very deep and distant.
One small thing that emerges are the number of links to Vertex: Landon Clay, RA Capital, and a couple of other smaller links.
The BIO CEO presentation was interesting. Not so much for the presentation, but for the questions. Biota management get to field very few questions publicly. Joe Patti was forced to acknowledge a key issue in the company's strategy for vapendavir. If they keep ignoring it, it won't go away.
Vap might prove to be effective, in asthmatics with proven HRV infection. Let's say it is, for the sake of argument.
The subset of proven HRV to clinically enrolled HRV might be as low as 40%. OK. When the drug goes to the FDA itself and its subcommittees, it's plausible, maybe even likely, that the FDA might say two things:
1. That any level of adverse effect is unacceptable (see plecoranil) given many people without HRV might take it and/or
2. That it's not reasonable to treat the 60% of people with clinical common cold symptoms who don't have HRV to get a response in the 40% who do. This is because HRV is self-limiting. SO, they might approve the drug in proven HRV exacerbations. Which would be fine, if there was a rapid HRV test. Which there isn't yet.
The BARDA contract is nearly disentangled. That became more of an issue than analysing or explaining why they stopped the trial. We have very little information on that.
Relenza and LANI will earn a little more than expected this FY which is great news because the only thing supporting the sp is cash, and the more BOTA burns cash the more the sp will drop.
Finally, no news on LANI. A 10-20 million dollar upfront and a few % royalty is probably all that can be hoped for, but there will be some element of credibility in inking a deal, and the cash will be useful as an addition to a takeover... sometime next year.
I don't know what East Hill and Broadfin are asking management and the board to do. But settling BARDA, settling LANI, and packaging the cash and royalty streams with vapendavir and RSV might be somebody's idea of a reasonable purchase.
Friday, 16 January 2015
JP Morgan Conference Presentation
is posted on the BOTA website.
They seem to have streamlined their strategy and it's presentation. There is no further mention of BARDA and efforts to reclaim $. The (re) analysis of LANI outcomes is encouraging.
It's organised and plausible. They have a package with near term plans for RSV at Phase 1, vapendavir at Phase 2 and LANI still sitting at Phase 3.
However, they are giving themselves all of 2015 to partner ROW LANI.
Vapendavir Phase 2b and RSV Phase 1 won't have results till mid 2016, by which time their cash position will be a lot less than now. I really wish they would look at a rapid test for rhinovirus.
The only value adding step in the near term is partnering LANI. But a year is a long time and the share price doesn't have that luxury.
They seem to have streamlined their strategy and it's presentation. There is no further mention of BARDA and efforts to reclaim $. The (re) analysis of LANI outcomes is encouraging.
It's organised and plausible. They have a package with near term plans for RSV at Phase 1, vapendavir at Phase 2 and LANI still sitting at Phase 3.
However, they are giving themselves all of 2015 to partner ROW LANI.
Vapendavir Phase 2b and RSV Phase 1 won't have results till mid 2016, by which time their cash position will be a lot less than now. I really wish they would look at a rapid test for rhinovirus.
The only value adding step in the near term is partnering LANI. But a year is a long time and the share price doesn't have that luxury.
Saturday, 10 January 2015
Volume: like smoke, there's gotta be fire
The volume of shares recently traded in Biota is unusually high. Also, the trading is lumpy. The share price has increased, at times hitting 2.80 before settling back again.
US trading is notoriously opaque, so the market is none the wiser. Whether its new entrants, or holders adding or selling we really don't know until the end of quarter reporting and that's 6 weeks delayed. Apparently the high frequency trading skills don't extend to high frequency reporting.
It looks to be a nasty northern hemisphere influenza season. And the CDC is (rightly in my view) recommending early antiviral treatment.
But seasonal sales of relenza always disappoint. There is no marketing, poor stocking, and so sales are minimal. Other than a surprise Japanese stockpiling order early in the year, I don't expect much from relenza sales the rest of the FY. So, that can't explain it.
Inavir sales for this winter won't be reported until full years results in May.
And we know the R&D calendar is set way back.
Any end of FY rebalancing shouldn't have continued into the first week of the new year, and it has.
And, a BARDA settlement would be just cash, which is great, but a one-off.
So, I can only speculate this level of activity is a balance between large holders wanting out, and someone else confident of, or planning, corporate activity. It's a level of turnover that's just too high to be normal. And, I'm a firm believer that unexplained share movements always have an (eventual) explanation.
US trading is notoriously opaque, so the market is none the wiser. Whether its new entrants, or holders adding or selling we really don't know until the end of quarter reporting and that's 6 weeks delayed. Apparently the high frequency trading skills don't extend to high frequency reporting.
It looks to be a nasty northern hemisphere influenza season. And the CDC is (rightly in my view) recommending early antiviral treatment.
But seasonal sales of relenza always disappoint. There is no marketing, poor stocking, and so sales are minimal. Other than a surprise Japanese stockpiling order early in the year, I don't expect much from relenza sales the rest of the FY. So, that can't explain it.
Inavir sales for this winter won't be reported until full years results in May.
And we know the R&D calendar is set way back.
Any end of FY rebalancing shouldn't have continued into the first week of the new year, and it has.
And, a BARDA settlement would be just cash, which is great, but a one-off.
So, I can only speculate this level of activity is a balance between large holders wanting out, and someone else confident of, or planning, corporate activity. It's a level of turnover that's just too high to be normal. And, I'm a firm believer that unexplained share movements always have an (eventual) explanation.
Monday, 29 December 2014
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.
Wednesday, 1 October 2014
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.
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.
Thursday, 18 September 2014
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'.
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'.
Subscribe to:
Posts (Atom)