Header updated on 24th April 2008

Market has been looking for an announcement re a licensing deal for Cetilistat, the obesity drug; instead it has been hit with the withdrawal of Renzapride, colonitis drug, following an unauspicious performance at Phase III. Folloiwng has been edited to reflect the situation

Alizyme is a speciality biopharmaceutical company that has been developing product categories for inflammatory gastrointestinal disorders, obesity and supportive cancer care . It is currently trading at a five year low of around 27p with a market cap. of around 60m. Prudential owned a near 20% stake (reduced in sale today?) There was good institutional taku-up of a placing in March rasing 10m at 50p; no wonder there has been "angry" selling. The directors hold 3.34million shares or about 1.7% of the equity (of which Tim McCarthy, CEO has 1.1million); thus, after some 10 years of development effort, they must be comletely focused on the success of the company and multiplying the value of their holdings (but with real doubts about their marketing competence). Alizyme had previously raised capital sums in the past three years at around 70p and 100p so it was somewhat surprising to see the share fall through its 70p support level. Clearly one reason is the current disaffection with the biopharm. market. Another has to be disappointment for the failure of the CEO, Tim McCarthy, to deliver on his expectation that 2007 would be a transformative year. The key question is whether 2008 will be that year and when is it likely to happen? The following points are relevant:

1. Alizyme did sign one deal in late-2007: with Prometheus Labs (U.S.) for the Colal-Pred, at a potential market of $250m, the smallest potential of their four products. Prometheus pay $2.5m up-front with a total of $15m payable upon future development milestones. They are responsible for all US development costs and will pay Alizyme undisclosed royalty rates which will increase with net sales. The deal was followed by a Japanese licensing agreement (which also gave Alizymen access to additional potential drug candidates).

2. This perhaps sets a precedent for subsequent deals for their other products. Cetistat (obesity) has an estimated potential of $1 billion p.a. sales and ATL-104 (mucositis) has a potential of $500m sales. The U.S. FDA has encouraged AZM to also launch a Phase III exercise for Cetistat for all diabetes sufferer because of positive II results for diabetes sufferers who also suffer from obesity.

3. Whilst the development programmes for the other drugs are on-going and appear to be satisfactorily funded from present resources, this is not the case for Cetilistat. The "Product and Company Update statement" (7th Jan 2008) says that 'the Phase III development programme is now ready to commence following the conclusion of a commercial deal'. So, perhaps for the first time, the development programme would be delayed if there was not a funding deal in either the U.S. or Europe. The reason for the sp shooting to nearly 200p in 2004 was the signing of a deal with Takada of Japan for some $50M development funding.

In response to a question at the Conference to report the Renzapride fiasco, McCarthy seemed pleased that there were six potential bidders for Cetilistat; however, that implies any announcement is some time away. When it comes, however, taking a line from the Takada and Prometheus deals it would seem likely that there would be of the order of $100m funding to support development. Of course, the major cash flow will be from licensing of actual sales. The analysts do their own discounted cash flow exercises; those seen tend to dwarf current valuations of the company.

There is not a strong argument for jumping in unless and until the sp establishes a baseline. Given the peaks in the sp, the time will probably come when there will be a very significant jump. An alternative scenario, is that management continue to rpove their level of incompetence and a buy-our results. Clearly the strength of the company is in their biochemists.

Eric

The threshold REACHED (gone foward?) or CROSSED (gone backward) has reached BETWEEN 3% - 4% (maybe). I just cant see why it doesn't say BOUGHT or SOLD and stop all this mucking around!!!!!!!!!! I thought the RNS was supposed to bring all things out into the open CLEARLY.

Neil, I dont think it clearly says one way or the other (i think it is buy though,,,i hope)

Bluelady, i cant help thinking I know you, lol!!

Kivver, looking at the two RNSs relating to Legal & General Group Plc (Group)

RNS 21st May 2007.

http://moneyam.uk-wire.com/cgi-bin/articles/200705211115379373W.html

If you look at 7. it says Threshold(s) that is/are crossed or reached:

From 4% - 3% (L&G)

If you look at 8.B it says total number of voting rights..... 7,823,400

% voting rights............. 3.90%


RNS 7th November 2007

/http://moneyam.uk-wire.com/cgi-bin/articles/200711071338222090H.html

If you look at 7. Threshold(s) that is/are crossed or reached:

From 3% - 4% (L&G)

If you look at 8.B it says total number of voting rights.........8,227,102

% voting rights....... 4.1%

You will be able to see that under 8.A the phrase 'situation previous to the triggering transaction' where there were 7,823,400 shares (the same number for the 21st May RNS) . There are now 8,227,102 shares after the 7th Nov RNS. In May L & G had 3.9%, now they have 4.1%.

This clearly says that the RNS for 7th November is a buy, so stop all this hoping and thinking, lol.

Or to keep it really simple when the RNS says the threshold crossed/reached is 3% - 4%, it means there are more shares ;0).

BROKERWATCH Alizyme upgraded to 'Buy' at Investec over partnering deal promise
AFXU


LONDON (Thomson Financial) - Alizyme has been upgraded to 'Buy' from 'Hold' by Investec because of the stock's recent historic lows and the management's commitment to achieving a deal since a reshuffle this time last year.

The company's shares have been consistently below its 10 pct target price, while the management has a 'live or die' attitude to securing a partnering deal, Investec said.

Investec expects a short-term spike in the value of the shares on a deal announcement, but a long-term increase in share value will depend on the terms of any deal. The company needs a cash injection to take its Cetilistat obesity product into Phase III trials, Investec said.

At 11.30am, Alizyme shares were 80.5 pence, up 1.5 pence.

julian.hofmann@thomson.com

jh1/rw

An interesting read.

Studies warn on rimonabant and depression, value of anti-obesity drugs
AFX


PARIS (Thomson Financial) - Findings from two medical studies published in the UK have raised concerns about the higher risk of depression among patients taking Sanofi-Aventis' rimonabant drug, and pointed to limited long-term weight loss from rimonabant and two other anti-obesity drugs currently on the market.

A paper to be published in Saturday's issue of The Lancet presents results from a study of rimonabant -- which is marketed as Acomplia -- by a research team headed by Arne Astrup, a professor at the Faculty of Life Sciences at the University of Copenhagen.

The team analysed four trials in which 4,105 patents were either given a 20mg daily dose of rimonabant or a placebo.

Over one year, patients on rimonabant realised weight loss 4.7 kilos (10.3 pounds) higher than counterparts in the placebo group. But they were also 40 pct likelier to experience 'adverse' or 'serious adverse' events, according to Astrup's study.

Specifically, patients on rimonabant were two-and-a-half times likelier to stop taking the drug because of depression than those on placebo, and three times likelier to discontinue the treatment because of anxiety.

The findings are significant because individuals with a history of depression -- a phenomenon common among the severely obese -- were excluded from the trial, the authors said.

'We recommend increased alertness by physicians to these potentially severe psychiatric reactions,' the paper argues.

Earlier this year, Sanofi-Aventis withdrew its new drug application for rimonabant in the US after being rejected by a US Food and Drug Administration (FDA) panel in view of evidence of patients suffering from depression. The company said it expects a four-year delay before gaining US approval for the drug.

It is also facing a lawsuit from an institutional investor claiming the pharmaceutical group made concealed data concerning the drug's propensity to cause depression.

In Europe, rimonabant been approved by the EU with an indication for treating obesity, and is now on sale under the Acomplia brand in a number of countries.

However, Sanofi-Aventi has updated its labelling of the drug in Europe with a contraindication for patients suffering from depression or taking anti-depressants.

Sanofi-Aventis announced this week that European Commission has endorsed a positive opinion from the European Medicines Evaluation Agency (EMEA) for Acomplia to carry type 2 diabetes trial results on its European label instructions.

The news followed Sanofi's announcement in September that it aims to submit Acomplia for worldwide approval in 2009 as a treatment for type 2 diabetes.

In a separate paper published online Friday by the British Medical Journal (BMJ), Canadian researchers said rimonabant and two other anti-obesity drugs, orlistat -- made by Roche Holdings AG's and marketed in most countries by GlaxoSmithKline (GSK) -- and Abbott Laboratories' sibutramine, were of only limited effect in terms of weight loss over the long term.

The researchers reviewed data from 30 trials in which obese volunteers -- average weight 100 kilos (220 pounds) -- took either anti-obesity drugs or a placebo for a year or more.

The three drugs reduced weight by less than 5 kilos (11 pounds), equivalent to a loss of less than 5 pct of total body weight. At the same time, the researchers found that patients taking the weight-loss pills were significantly more likely to achieve 5-10 pct weight loss, compared to those who took the placebo.

The three drugs had various beneficial side effects but all had adverse effects, including, in rimonabant's case, an increase in depression and anxiety, they said. The authors also noted that no trials examined rates of death and disease as a result of taking anti-obesity pills and called for trials to looking into this aspect.

In an accompanying editorial in the BMJ, Professor Gareth Williams argued against anti-obesity drugs being licensed for sale without prescription.

Non-prescription sales of anti-obesity drugs already exists in the US and as GSK has applied to sell orlistat over the counter throughout Europe, he said.

Global sales of anti-obesity drugs reached 1.2 bln usd in 2005, the BMJ said.

tfn.paris@thomson.com

gt/jlc

RNS today re deal with Prometheus in US:

Link to Alizyme RNS

If above doesn't work, then copy and paste this:
http://moneyam.uk-wire.com/cgi-bin/articles/200711290701577410I.html

Webcast at 10:00 this morning.

Hopefully a taste of things to come!

Hi Neil: yes, I guess at last they are proving that they can do deals!

Its a good start to the best case scenario, small deals to prime the SP, followed by the big deals......i'm getting carried away again.
Fingers crossed.

sp not exactly running away with joy this morning though. It'll be interesting to listen to the webcast later.

SP now flat! ?????????????????

Hmmm - heading back to - well, could be back to 72p I guess. Blast! Need to find a rocket to blast under them I reckon. Still, now that they've done the deal announced today, and from listening to the Q&A on the webcast, there will be plenty more to come.

Time... Patience...

May need to shift funds elsewhere in the meantime. I just so hate sps that have a habit of sliding in the wrong direction.

I'm going back in to cryofreeze! wake me up when logic returns. :0)

How was it higher in 2004 than it is now??????? patience eh!! This was going to be THE year, still might be but time is running out.

Just a small snippet from the FT.

Alizyme lost 3.5 per cent to 75p in spite of a licensing deal with Prometheus Laboratories of the US for the biopharmaceutical groups treatment for gastrointestinal diseases. Dealers said a deal covering Japan could follow next week.

Thanks Neil. I hung on to a small number of AZM but have down-sized somewhat. The sp just seems rather reluctant to acknowledge any deals, doesn't it?

It does seem that way Toya, but i just think that at some stage the penny will drop if and when more deals are done.

It will, eventually - and I'll top up again when it starts to move in the right direction.

RNS today: follow-on deal from last week's announcement, this time in Japan:
Alizyme PLC

ALIZYME ENTERS STRATEGIC PARTNERSHIP WITH TSD JAPAN INCLUDING A CO-DEVELOPMENTAGREEMENT FOR COLAL-PRED(R) IN JAPAN

Cambridge UK, 03 December 2007: Alizyme plc (LSE: AZM) ('Alizyme') announces
that its wholly owned subsidiary, Alizyme Therapeutics Limited, has entered into
a strategic partnership and co-development agreement with TSD Japan Inc.
('TSD'), a bio-venture company, including the exclusive rights to co-develop
COLAL-PRED(R) for ulcerative colitis in Japan.

TSD is a business focused on strategic partnering activities that
involve in-licensing pharmaceutical drug candidates for development and
commercialisation in Japan
TSD to identify new drug candidates in Japan for in-licensing/
acquisition by Alizyme for development ex-Japan
Exclusive licence agreement with TSD for co-development of COLAL-PRED(R)
in Japan
TSD will be predominantly responsible for Phase I and Phase II clinical
development costs
All future milestones and royalties in Japan shared equally
TSD to actively seek partner for late stage development and
commercialisation of COLAL-PRED(R) in Japan

Alizyme has formed a strategic partnership with TSD that offers the opportunity
to access one of the world's major pharmaceuticals markets via a Japan based
organisation. The corporate strategy to develop and commercialize Alizyme's
products in this important major territory is exemplified by this agreement for
COLAL-PRED(R). In addition, the relationship with TSD provides opportunity to
introduce further products from our portfolio into the Japanese market, and
provides the opportunity to access additional products via TSD for development
by Alizyme in the West.

Commenting on today's announcement, Tim McCarthy, Alizyme's Chief Executive
Officer said:
'We are delighted to enter into this strategic partnership with TSD in Japan,
which is exemplified by our co-development agreement for COLAL-PRED(R) as the
first step in our partnership. We have maintained a strong relationship with Dr
Shiho, the CEO and founder of TSD, following his time with Takeda Pharmaceutical
Company Limited and are excited by the many new opportunities that this
partnership will offer in the overall corporate development of Alizyme. We
believe Dr Shiho and his experienced team at TSD are uniquely positioned to
optimise the development and commercialisation of COLAL-PRED(R) for Japan, and
offer Alizyme further access to the Japanese market.'

Today's announcement follows last week's announced partnership with Prometheus
for North American rights for COLAL-PRED(R) and marks another important step in
our commercialisation activities.'

Commenting on today's announcement, Dr. Osamu Shiho, Chief Executive Officer TSD Japan commented:
'COLAL-PRED(R), developed by Alizyme, is a unique compound to be co-developed by
TSD Japan's pharmaceutical partnering business and I believe that its
significant potential as a pharmaceutical agent will greatly assist us in
realising our corporate objective of developing and commercializing innovative
products for the Japanese market. I would like to see our collaborative
relationship broaden in the future, both in providing Alizyme access to new
products for their portfolio and providing TSD access to other promising
compounds from the Alizyme portfolio.'

As usual though - no effect on the sp other than negative!

Hi folk

Sorry to have been AWOL. Been somewhat passive with spare cash largely soaked up with cost of living. So selling up and moving to a lovely cottage down in Dorset: get back into investment mode. Still have a few AZM. Not surprised that the market is a bit disappointed with the COLAL-PRED announcement: not that its not OK in itself but because its not very big. The potentially big boys are Renzapride and Cetilistat. My take is that these are bigger deals and therefore taking longer, probably because they have broader interest. They will be able to say that they have done one deal in 2007 which is a bit of a face saver. I don't think they have lost credibility with their major institutional supporters, otherwise they would have dropped below the 70p support price. One of these days, the big news will come through and its best to be on board.

Eric