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

Agree, Gus. My point was essentially that: the prelim figures are pretty well known; it is what is said about progress towards a deal and confidence in Phase III of Cetistat starting on time that could (should?) take the sp forward. The sp has been trading sideways for about 3 weeks with something of a cone. So break-out is likely, probably in next week. It could be down if there is nothing positive in Prelims. I have staked my position on the break-out being upwards - the development programme has been progressing steadily ever since I have followed the share (over 5 years) so I feel it is unlikely that they would allow it to stall now. More important to have a reasonable deal rather than waiting overlong for the optimum deal.

Eric

Testing the support level again. I am hoping that it is a double bottom forming and that will turn sentiment around. There is little doubt in my mind that the share is being professionally traded down. Perhaps surprising that it hasn't triggered more investment support. I also believe that the Prelims are the key event (last year on 16th Feb. - no indication on website of date this year). If there is positive news then the share should pull away rapidly. Even if it is still a 'wait for it', then the prelims out of the way will mean that the company is out of the closed period (I assume) and the directors can poile in to increase their stake. Lets face it they have sold institutional investors on buying at 70p and 100p so they can double or treble their stakes in next to no time.

My comment about a support level is based on the sideways trading of the last 3 weeks or so. You need to go back to the Iraq crisis in 2002/3 to go further down to around 30p to get a historical support level. Seems nonsense really. But the investor is basically in the hands of traders who know how to make money by playing the system. The only real answer is hard news - please!!!!! I'll be interested to se if there is comment in Shares or Investors Chronicle.

Eric

Well lets hope that we can stay at the 40 p level!!

(pressed wrong key!)

Good article in Shares entitled Biotech Blockbusters. It takes you throught the development life-cycle and a good introduction for anyone not familiar with the sector.

They highlight three companies and it is worth comparing with Alizyme. The companies are:

Antisoma Cap. 103.8m cash 61.4m
Novartis deal for cancer drug worth up to $890m. Entering Phase III this year: take 18 mths then follow up trials 2 and a half years. Handling three other drugs themselves, with first reporting Phase II this year.

Protherics Cap. 171.6m cash 46.9m
Revenues from existing drugs of 14.8m. AstraZeneca deal roth up to 195m plus royalties. Expanded Phase II trial starting this year. With Phase II report on another drug due this year.

Oxford Biomedica Cap. 99.4m cash 42.5m
Sanofi-Aventis deal could be worth E518m. Due to report Phase III trials in 2009. Other early Phase drugs.

They stress the essentials as being: (a) More than one promising drug; (b) Strong management team with deal making potential; (c) Solid cash balance - visibility of funding for next 12-18 months at least.

Each of these companies has landed deals at earlier stages than Alizyme, drawing attention to question-marks under (b). Stronger in cash than Alizyme but not really a problem. Alizyme score as being two or three years ahead with two drugs reporting Phase III this year, including a potential blockbuster in Renzapride, and Cetilistat, another blockbuster, entering Phase III when a deal has been completed.

Its striking how much all of these companies has come back in the market. AZM's 80m cap. doesn't look out of line. The key, of course, is a deal. A deal along the lines negotiated by the above would put AZM well ahead because of the nearness to marketing and licensing fees and thus lower risk of failure.

Eric

This thread is reading like an old SEO thread. Same pattern same ?

Not interested in SEO. Might as well say that Red and Green are both colours.

Well, this is the corresponding day to the Prelims day last year. Hopefully, the reason is that they are delayed because of imminent announcement of a licensing deal for Cetilstat. Or perhaps I am in cloud cuckoo land. Either that or I will be on cloud nine!

Eric

Let's hope the latter, Eric

Compare it to Barclays who report tomorrow!!!!!!! I think somebody knows something??

Kivver, I think the Barclays uplift was due to the bullish article in the Times re prospect of increase in dividend. With AZM there is just silence, including the papers.

All quiet, apart from this.


Alizyme PLC
18 February 2008


For Immediate Release 18 February 2008

ALIZYME PLC


TR - 1: NOTIFICATION OF MAJOR INTERESTS IN SHARES


1. Identity of the issuer or the underlying issuer of existing shares to which
voting rights are attached:
Alizyme plc

2. Reason for the notification (please tick the appropriate box or boxes):
An acquisition or disposal of voting rights

3. Full name of person(s) subject to the notification obligation:
Morgan Stanley (Institutional Securities Group and Global Wealth Management)

4. Full name of shareholder(s) (if different from 3.)

5. Date of the transaction and date on which the threshold is crossed or reached:
13 February 2008

6. Date on which issuer notified:
15 February 2008

7. Threshold(s) that is/are crossed or reached:
3%

8. Notified details:
A: Voting rights attached to shares


Class/type Situation previous Resulting situation after the triggering
of shares to the Triggering transaction
transaction
if possible
using the Number of Number of Number Number of voting % of voting rights
ISIN CODE Shares Voting of rights
Rights shares

Direct Direct Indirect Direct Indirect

Ordinary 6,106,444 6,106,444 Below 3% Below 3% Below 3%
Shares

GB 2p

GB0000374289


B: Financial Instruments

Resulting situation after the triggering transaction
Type of Expiration Exercise/ Number of voting % of voting
financial date Conversion rights that may be rights
instrument acquired if the
Period/Date instrument is
exercised/
converted.

n/a n/a n/a n/a n/a

Total (A+B)

Number of voting rights % of voting rights
Below 3% Below 3%


9. Chain of controlled undertakings through which the voting rights and/or the
financial instruments are effectively held, if applicable
n/a

Proxy Voting:

10. Name of the proxy holder:
n/a

11. Number of voting rights proxy holder will cease to hold:
n/a

12. Date on which proxy holder will cease to hold voting rights:
n/a

13. Additional information
n/a

14. Contact name:
David Campbell, Finance Director

15. Contact telephone number:
+ 44 (0) 1223 896000

For further information, please contact:

David Campbell, Finance Director
ALIZYME plc Tel No: + 44 (0) 1223 896000


Further information on Alizyme can be found on the Company's website:


www.alizyme.com

It looks like renza results will be on time, if not slightly early, check out www.clinicaltrial.gov

Mon, 25 Feb, 13:02 GMT

FOCUS Prognosis poor for cash-strapped biotech cos if market problems persist
LONDON (Thomson IM) - Troubled biotech companies Ardana and Vernalis are early casualties of a funding crisis that could leave peers such as Allergy Therapeutics, SkyePharma, Amarin, Medical Marketing International and Proteome needing to make major cuts to survive, according to analysts.

'It's become very apparent that the next six months are going to be very hard for companies that need to raise money,' said Robin Davison, a senior analyst at Edison Investment Research.

He said that any company that is at risk of coming to the market is getting its shares depressed because investors don't want to have to stump up more money.

Ardana announced last week that it was putting itself up for sale, and the following day Vernalis cut its workforce by almost 60 pct and sold most of its profit-making operations in a bid to pay off debt.

Davison said the few companies that aren't in this danger area include Antisoma, BTG, Renovo, Oxford Biomedica, GW Pharmaceuticals and Protherics.

For most other companies in the secto, the funding situation is either quite bad or acute, he said, adding that the only way they can solve their problems is by licensing a product.

'You've got like 20 or 30 companies that are desperate to license,' he said.

He mentioned Allergy Therapeutics as being in a difficult situation, explaining that it has got a borrowing facility but is unlikely to want to use it because 'that just gears up disaster'.

He added that Alizyme also is in a difficult situation unless it can do a licensing deal because it doesn't have a lot of money to fund ongoing development.

Meanwhile SkyePharma has a put option for 69 mln stg convertible bonds due at the earliest in May 2009, and another put option for 20 mln stg due in June 2010 at the earliest, and Davison said that in the current climate refinancing the debt would be very difficult.

He said that in a lot of cases the problem faced by companies is that their overheads limit what they can spend on R&D

'Maybe if you can rationalise that -- you have fewer CEOs paying themselves a lot of money, all the other costs and hangers on, PR advisors and that sort of thing -- it will thin the whole thing out,' he said.

Paul Cuddon at KBC Peel Hunt agreed, adding: 'It all depends on whether people can make some money with what they've got at the moment. I mean that's the key. If they've got some IP (intellectual property) that's worth something then they should be OK; if not then they shouldn't really have the IP in the first place.'

Cuddon identified Proteome, Allergy Therapeutics, Amarin, Alizyme and Acambis as being companies that don't have a lot of cash, but said that in the case of Alizyme and Acambis they have good products to license.

Cuddon agreed with Davison that a key factor that could determine the survival of biotech companies is the extent of their overheads.

'Phytopharm don't spend very much money on R&D at all because they in-source all their compounds from universities, from people who have spent a lot of money already developing them. So it's the companies that have got a huge number of employees and are spending a lot of money on R&D that are most at risk, certainly Alizyme, Amarin, Allergy Therapeutics,' he said.

ben.deighton@thomson.com


Number of employees 19, not exactly a legion.
Large buy @1651 39.01p V 248,503 O, trade

Here we go again!

Wait for it!

There we go!

IS IT TIME TO BUY.

Down again against the market. What is it that the market knows?

PTI, BGC, and OXB, also fell, to name but a few, but you never know Fred

AZM sp 42.5p up 6.25p on volume over 7,250,000 shares. Perhaps we have an announcement coming next week. If not, then who is doing the buying?