target .27, page-19

Nice analysis of the analysis Hottod.

Usually paid coverage provides excellent background information about companies because of the special access analysts they get.

In contrast to investors who get mainly PR.

But sadly 9 times out of 10 analysts sp targets miss to the downside. Very rarely to the upside.

And although analysts make silly sp targets they are generally not silly individuals. And there are reasons behind what they say.

Which makes it all the more perplexing when they make a meal out of something. As you claim.

You say oxycodone will be harder to get to market than oxymorphone. And that oxycodone has the potential to earn more than oxymorphone.

I don’t think so – on both counts.

I think POH are taking a bet here that topical oxycodone can get approval on the back of two simple P2 studies with a tacked on small enhanced enrolment type of study to support a fairly modest efficacy claim.

Essentially by following the guidance for topical lidocaine which requires two simple studies showing drug plasma levels and skin irritation. Under the general framework that although there is some efficacy this is not hugely important given its good safety.

And so after the two P2 studies add a small vehicle arm to one of them and you will at least get approval for at least one indication. Although this sounds like much work the key advantage is the low cost – because of the small Ns and easy measurement.

And importantly this all achievable by POH on its own and it is relatively low risk. No big pharma is required which is just as well because they haven’t shown much interest in topical opiods.

Which unfortunately is just the spot Roberts has to make his heroic assumption so that the sp target looks attractive. He has to assume a partnering deal for oxycodone of 40-70m upfront.

Which is where the wheels fall off the analysis and nothing makes sense anymore – as you have picked up on.

But the point is that oxycodone is far more straightforward than oxymophone that will require more difficult studies probably having to demonstrate both efficacy and tamper resistance in a large N. And studies are well beyond POH capital reserves – but which they are more likely perhaps to attract support.

This is what I assumed Roberts was getting at when mentioned raising the profile for oxymorphone through success with oxycodone. It hardly sells itself is what Roberts is telling you - not now with P1 and will probably struggle even after the P2 results. Hence the very long timelines.

In terms of discounting fat cosmetics, horse feed, acne cream etc to zip – this is just consistent with the view that it is drugs that make transdermal companies. Transdermal companies without the “drug dream” just go broke.

I suppose it comes down to thinking about what it means when analysts get jumbled up. As we both think Roberts has. You assume a more positive story is available if only he did better research or talked to the company more. I assume that if a clever guy like Roberts can’t put together cogent story theres a few problems.

Regards Southoz