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

Looks set to fall further today. I wouldn't get back in until there's some strong upward momentum - even if that does mean missing the rock-bottom sp.

Lets wait and see

Its simple to me, we need some positive, factual news. If, buts and maybe's are no good anymore.

flat today was up 0.75 could this be the bottom ?

It may well be but I'm still steering clear until I see some real impetus - there's so much happening elsewhere that I'm happy to hang back for now.

Suggested 15p as a buy. But still can't find a CFD provider for them!

Fred: go to IGmarkets.com

Or Etrade.

I think this will be the bottom ladies and gentlemen does anyone concur from looking at the 10 yr chart this is the lowest azm has gone

Toya & Neil, Thank you! Will consider it.

Silence on this thread on the PhIII failure to meet end-points.

And Colal-Pred looks like a good idea - has anyone worked-out what was wrong with the end-points?
Some bounce today, but the Questions remain...what's the Cash position, this level of sp doesn't look good....oh dear.

Cash.
5.8m cash at 31st December 2007, and raised a further 10m via a Placing in March



Shocking really, the way this share has just disintergrated, Colal Pred, In many P,Is view was a given, now , if it isnt dropped like a stone, then maintenance of remission at best. Cetilistat needs to be a decent deal, all eyes on Takeda, It really is all or nothing.
Personally, im annoyed with myself, I broke my own trading rules and have paid for it.
Never fall in love with a company and set your stops and stick to them, had I done this I would have stopped out with a trailing stop at a small profit. What a dummy! still you cant win them all. I have done very well with the likes of PHC, BGC, and AFR. So it was about time I had a reality check. We live and we learn.
Neil

Luckily I was out of this but if Cetilistat does succeed then this will pick up again - could be a while though. However, couldn't resist a small punt at this level!

These pharma-minnows have a habit of getting hammered - like OXB.

SLN, meanwhile, is picking up nicely on renewed rumours of possible takeover by AZN.

PURI is picking up also - good solid results there, of actual sales of an actual product!

Still low, AZM is showing that when out-of-favour almost nothing will remove the stigma. It takes the Market a while to forgive...and the current MArket has some interesting opporunities...although I forget which.
I'm happy with BTG and have high hopes now the Market has cottoned-on. This should continue to rise, although tempting to take a profit, just in case!
Not held AZM, but this is getting cheap enough.
OXB is a massive disapointment, lost a good deal on that - but the Trial continues - it is the "odd way" the companiy has to define "end-points" which is casuing the problem. You wouldn't ask athletes to define their end-point and then let them race at different tracks....yet this appears to be the situation. Sure it's difficult to do anything else, but it does mean thr co will try to define a "really good" definition, rather than one that's "safe" for investors.

LT holders of AZM - what's yr take of the co. at AGM's for example?

EDIT 29Aug08-down 10% as FD exits - now abt 6p not a lot of interest in the last 2-months (here), does this signal (sp), worse to come? Latest RNS points to continuing cash loss - so maybe more Placings - ( but these have been from 1 not that long ago)- with current Interest/Credit woes will this be possible and at what price? Cn't see a big investor getting excited at anything near today's 6p.
I'm still Out, but hoping there could be Value . . . . anyone?

20 % up today is there some big news coming out ??? Time to buy ??

now 42% up,and on the other boards people are predicting a bid around the 20p mark.

bid from whom? ..... on what substance? ..... perhaps some narcotic!

NEWS AT 14.04PM REGARDING RUMOUR OF A BID,BUT YET TO BE CONFIRMED,STILL A NICE RISE TODAY,AND OVER 5M BEING TRADED SO FAR.

that is indeed a lot as norm is a bit under 1m.

IG close to their company limit and there is at least a name to the alleged bidder, though as it is Japanese, i cannot remember what it is

One wonders if the announcement comes from the company about any bid offers,as the the total volume is over 6m and still buys are coming through,some thing could be coming at even a higher bid.