Killik Broker note now out makes superb reading..................
MEDICAL MARKETING Cancer vaccines update
The long awaited announcement from Medical Marketing (MMI), the pharmaceutical development company, relating to its cancer vaccine program scored well with share holders yesterday. The share price, already up three times since the 14th January, rose further by the close and in morning trade has soared a further 15%. So why is there all of the excitement?
The trial, which has been underway since 2001, took 25 patients with follicular lymphoma and who had been treated with all known available treatments before being accepted. The average life expectancy of a sufferer is around seven years and of course many of these patients were late stage in the treatment. We understand that of the 25, a majority (thought to be 18) responded positively to the treatment by showing an immunological response to the vaccine.
The trial was funded by cancer charities and the full report will be published by Cancer Research UK and LRF.
The significance of this announcement is that this will be treated as a technological break through in making a vaccine work against cancer. Whilst the early trial looked at a particularly viral strand in lymphoma, other trials including myeloma (cancer of the bone marrow) are on going and early results appear to be going the same way. This is increasingly looking like a platform technology with much broader applications.
So how does this all translate for share holders? Medical Marketing, with a low cost operating model and working closely with the public sector and the universities, has a stated policy of licensing the technology to major pharmaceutical companies at the appropriate stage, normally towards the end of phase 2 when much of the value has been captured. We expect, on the back of this data, that a commercial deal will be in the offing in the near term. Licensing deals normally take the shape of an upfront payment followed by key milestone deals. David Best, as the founder of MMI, spent many years in larger pharmaceutical companies working on these types of transactions and therefore is well experienced in this type of deal.
Sitting behind this transaction is of course Oncosense which I believe could potentially be bigger than Genvax. Oncosense looks at the use of ruthenium as an alternative to platinum in cancer drugs and we believe three of the favored compounds will be going to clinical trials in the near term. Trial length will be short so indeed we could have results by the end of 2005. Earlier in January, the company, whilst believing the potency was considerable compared to platinum, was delighted with the safety performance being comparable to the safest drugs on the cancer market.
By the end of 2005, it is thought that the group could have eight or nine phase two clinical trials running in major disease areas like cancers and HIV. With market deals in this space for licensing running from 100 million (for pre-clinical) to 2 billion for phase three, the potential upside for a small 100 million player like MMI is huge. Despite the rise seen so far this year, the shares, which I own, remain with significant potential for the coming months.
cheers GF.