target .27, page-20

Thanks for the response, Southoz. Always value your insight and opinions.

We appear to be in agreement on two things. The first is that Roberts’ report is “puzzling”. The second is that Roberts is no idiot. Personally, I’m not aware of an Australian analyst with more commitment to and knowledge of biotechs. For this reason I don’t dismiss what he says in the same way I don’t dismiss what you say. Your knowledge of the clinical trial process certainly far outweighs mine.

What you have said raises a few more questions for me which I hope you have the time to answer.

• Do you know if POH has paid Baillieu for this report?

• Are you confident Roberts has had adequate discussion with POH management prior to writing this report?

• Why hasn’t Roberts provided any explanation of the important differences between the transdermal and topical applications?

• You suggest that POH will go it alone to approval on topical oxycodone on the back of two Phase 2 trials with a small vehicle arm added to one of these. You suggest that POH will use this strategy because it’s relatively straightforward, because it’s financially feasible and because no big pharma is really interested in topical opioids. I note that POH doesn’t anticipate its second P2 oxycodone study will have commenced prior to H2 2014. Yet Roberts estimates topical oxycodone will have been licensed as early as 2014-2015. Are you suggesting that Roberts is assuming that POH could have completed all studies, filed, gained FDA approval and successfully licensed to a non-interested pharma within that time frame?

• As well as your statement that big pharma is not interested in topical opioids, you suggest that there has been and will be little interest in POH’s transdermal oxymorphone patch
It hardly sells itself is what Roberts is telling you - not now with P1 and will probably struggle even after the P2 results.

On what basis do you make that call?

• POH says it will commence Phase 2 transdermal oxymorphone before H2 next year and that it intends to license on successful completion of Phase 2. You appear to believe that there will be lack of interest from pharma and this could be one of the reasons for Roberts’ estimate of an oxymorphone launch as late as 2020. You also note the lack of finances to take on a Phase 3. Are you therefore assuming that oxymorphone development will sit in limbo for a couple of years after Phase 2?

• With respect to Roberts’ nil valuation for animal health, OTC topical, and cosmeceuticals, you say that without pharmaceutical applications a transdermal company will go broke. That’s likely correct. Yet Roberts’ valuation is based on the assumption that POH’s pharmaceutical products will be successfully licensed and developed. If he has assumed that, then he is not contemplating a scenario whereby these divisions are trying to operate in the absence of pharmaceutical success. Therefore, why would he place no value on these divisions?


I’ll give it all a bit more thought based on your answers!