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

'There's a bid rumour at 20p, but I think that theoretical fair value is 41p as in the value of the assets that Alizyme holds which are clinical development,' said analyst Ibraheem Mahmood at Investec.

'Having said that I think this is just a rumour and I think it'll go away,' he said.


Over 8m traded now - looks like more than just a rumour! I did happen to notice this earlier today so am 'in'

at what price,if u dont mind,if there was not any evidence of this hike in the price i think company would have mentioned this by now,so the volume is strong,and we might get some thing tomorrow or this afternoon,but over all good for those who bought under 10p this morning.

The people that have started this rumour have made a few 000 and are out now ! watch the sp go south .

Quite agree but the volume seems to show other wise,i think there has been big purchases at 14p mark so i personally think once the profit takers are out of the way we might get the next surge north if the rumour becomes reality.

AZM is chaotic today .... shortly after opening you could have bought at 11.25 and a little later, very easily at 12 .... it is now up to 13.5 mid again, which is close to yesterday's high

volume huge already at 2x daily norm

Volume not so huge today but the sp has climbed up steeply this morning and back at Tuesday's high

yet again, volume is 2x daily norm

if there really is nothing at all going on here, then why the large/huge volumes pretty much every day for the last 2 weeks, and the steady rise of sp from 7p as at 1st september?

dont be concerned cynic.
just my opinion.
lows usually take time to form.
naturally there are exceptions, but usually not.
so why get involved?
antway, the trend is down.
regards
jkd

are you totally bonkers or have you posted on the wrong thread?

Hi
Did I see a piece on AZM about a rumour of a takeover at 20p?

the end? certainly not 20p

The chart is a disaster sell to 1p.

Hard to believe a few years ago AZM were at 260p ish !!

not much point selling for any poor shareholders in this now!

most shares been rashed but not as bad as this

cynic and all others on this thread, re your post 707,
i am sorry if you misread my post 706 and for not responding.it slipped under my radar.
my intention was to suggest my opinion was that price had not at that time made a long term low formation and was still in a downtrend thus it would likely fall further.
sorry if i didnt make it clear. i certainly wasnt suggesting buying either.
must be more careful.just goes to prove once again how important it is to do our own research and not listen to others. which you clearly do. your own research that is
regards
jkd
edit/ps and the other of course. lol

haven't held these for many months, but (imo) sp's present parlous state supports my view that minnows are seriously dangerous if you are not an active trader

The management have seriously missled the shareholders.

surely they would never do that!

Alizyme suspended - to be placed into Administration