SV,
I'm not just going to blindly disagree/agree for the sake of it and defend the company without any basis. At the same time these are my own thoughts, I'm not saying I'm always going to be right etc. I bring you my thoughts, my views of the science, finally it is up to you to decide if this is for you, if it makes sense to you and if your own research points to something that has a chance of winning.
Lets have a look at the points, thanks for posting them. (My thoughts in that slightly off red colour)
"............but the reason I have just sold my holding is not because I am worried about PPS efficacy or safety. I absolutely still believe it is a very safe and effective treatment for pain and inflammation, albeit much harder to prove disease modification. Unfortunately a good product does not guarantee commercial success. Here are my main reasons for selling:
Well this is a good start, least this person sees the merits of the product and concurs the efficacy is there. I agree, its only half the story, need the other half to work to get a successful commercialised product.
1. Management has missed promise after promise after promise after promise and delay after delay after delay.
I tend to disagree with this overall. Yes I admit that we have been disappointed in some of the timelines, things certainly have been pushed out, this isn't new to us. But mate, you gotta agree that a lot of that was beyond our control.
Examples please...RRV Peer review....this was supposed to come out ages ago...it took a lot longer, was this in our control - NO.
OA Phase 2 B...was supposed to come out ages ago, was it in our control, YES PARTLY - GOTTYA MOZZ.
Not quite...they realised it made more sense to combine this with other future data, it would get them to have a better publication, it makes sense to delay this. Does this hurt us? Maybe in the short term yes, did it cause us some worry, maybe in the short term, yes.
BUT the end result is that we will be in a better position. I know what your (or your friend's) point might be, it should be communicated better. Maybe I agree, but can they communicate everything on the fly, wouldn't that be impractical if not commercially sensitive? What if they think of an idea, communicate it and then have to reverse it for some reason or a better reason later. I understand there are obligations with some things, but this is just a point I'm making. Again, I'm not being overly defensive, if you disagree with me, you are entitled to.
2. Over the last 12-18 months, the company has burned more than $50 mil. with VERY LITTLE progress. There must be concern that the remaining $50 mil can be burned without achieving enough good news to support a cap raise or attract a partner
Look, I have no doubt in my mind your friend is smart....but at the end of the day I have to burn this argument to the ground with truth.
I've invested in a few companies over time, some are prudent, some not so. PAR is careful with their money. I completely disagree that they have wasted their money in the last two years.
They have achieved a lot. Again I know you want evidence...this is the stuff I can come up with in a few minutes, I can dedicate an entire post (prob a two parter), but I don't think I will dedicate my time to do this at the cost of some other research.
A) Expanded the Phase 3 and implemented the wishes of the FDA, r'qd patient numbers went up.
B) Catered for the revised protocols and design including the extra level of monitoring and implementation of dosing study
C) Extension and additional studies including, but not limited to the pivotal 008, 010 and durational studies.
This helps our label down the track, sure they could've saved some cash not doing this, but eventually they would have to and this, in my opinion it will add BILLIONS later down the track in potential additional revenue. Worth doing at this stage while building and laying the foundation.
D) Conducted SAS and EAP programs, it creates awareness, but gives PAR access to vital and valuable data to base the extensional studies and use as additional Real World Evidence. This will count immensely again later on.
E) Conducted a number (26 or so) of pre clinical studies in the main OA stream.
F) Have pursued joint pre clinical research programs in the area of ARDS, HEART FAILURE, CHIK-V, COVID. Why waste money on these? Pipeline. Need to broaden and show that we aren't a one trick wonder, these programs take a long time , need to start them early. They will all be accreditive in the future.
G) Peer reviews, RRV, CHIK-V, ARDS these all add legitimacy to what we have, it required effort and time to follow this and submit this, why bother? It adds to the cash burn to some degree, again, adds weight to what we have, specially from a future partner proposition one day. Saves time and effort to do it now while the data is hot.
In a way PAR cant win...if they don't spend time and money on broadening the pipeline they get condemned for relying too heavily on one indication, too risky. If they broaden then we say its a waste of money and dilutes our effort. I'm of the opinion that we do need to have at least some other possibilities and these other programs are at the very start of their ramp up, it has a long way to go and eventually once the main programs are self funding, we can come back and spend more time, effort and cash on these and build them up significantly. My views.
H) Valuation study, gives us a great idea of how much our drug is worth under what conditions. Takes time and effort to conduct such investigations.
I) Helllloooooo MPS Program
There are several sub parts here:
i - MPS 1 and 6 Programs, design, initiation. Employing some real experts in the field, look at the PI's involved. It takes effort and legitimacy to attract such talent.
ii - Numerous presentations but the bigger ones were the posters
iii - Liaising with the community and specialised docs as well as families of the patients.
This really is a stand out effort and worth the expense...it gets us on a map and on different radars altogether. Makes us more versatile and puts us in a niche spot for partnering and development. Orphan drugs have a separate and special place. They can be lucrative too.J) Staff build
An important part of a growing business, I don't think they have got the mix too wrong, they have to rely on consultants and that's the most efficient precise way to do it without employing too much full time staff and having them idle for lots of time at this early stage. As we grow our full time/permanent numbers will too.
K) Very little progress? What about the patents filed (ARDS as an example), what about the relationship strengthening with Bene? I also know there has bene some tinkering with the method of delivery in the background, we forget about all of these commercial aspects, they continue in the background. Just because the company is quiet for weeks on end doesn't mean they are wasting time and money. A lot of progress is still happening though we don't know about all aspects and don't hear about them.
L) Another example just came to mind...008 second site. Yes this is a major pain in the butt..
Do you really think I loved the announcement when they said that there will be a delay on 008 as they are adding 12 months observation to it. My first reaction was *groan, not again*. But when I read it the second time I then realised, DA, this is a GOOD thing...yes it adds a whole dollop of time, yes that's more waiting...yes that's more money...but WHY are they doing that, as it links into the very thing they are testing...
I don't want them to do a super quick rush cheap job on the MASSIVELY important synovial study that just lasts 12 weeks, submit it to FDA and the FDA fellows say..."Super job, you guys are good, but what happens to them biomarkers you've studied over 12 months. Does your drug LAST? Lets do another study and then we will see the next step".
Your mate thinks that NOTHING has happened in the last 12 to 18 months...THIS has happened, we have refined the greatest study of all time (well in PAR's history). This one little study will be the gateway from potentially going form $2500 to $6000 plus per patient....not for just 180 patients...not even for 18,000....THIS is the gateway for us potentially going from 2nd line to FIRST LINE. If I could have a medal for great work achieved, Id be giving it to PAR.
It is THIS 008 refinement and study that will get us firmly on the powerful AMA books, they will be the ones reading our data and suggesting to their members to try Zilosull. It is this study that will lead to greatness. Can this be fast tracked, can you do this cheaply and crapilly, was it good that they changed tact midstream and extended out the timeline? Was it good that they even came up with this study?
Yes.
PAR isn't thinking for tomorrow or next month...they want to be a GLOBAL TITAN....this takes time....you cannot do this in a short period of time.
3. The company is a headless chook until a new CEO is on board and the company must be struggling to find a good one. Skerrett is certainly not CEO material. Fixing problems will take the new CEO 6-12 months. In my view, he/she must abandon all of the peripheral stuff until the main OA P3 trial is fully funded and fully recruited. If it can't get that done, it is cactus.
No doubt we are requiring a CEO...someone to steer us in the right direction, someone with credentials and capacity..SOMEONE with some awesome experience of connecting companies with ace products to real distributional experts...experience....clout.....connections.
Give up on the rest of the peripheral stuff? Not going to happen, shouldn't happen...in fact we need to keep these going BUT do it cautiously and slowly in the background...as I have said, they are in the infancy and wont need to ramp up or suck out too many dollars for some time yet, we can effectively drag them out a bit without them being a worry. BUT you will see in any legit pharma company, they do not usually rely on just ONE product, larger partners WANT a multiple pronged pragmatic approach.
4. Nearly all of the company's functions are contracted to 3rd parties, so when issues arise, resolving them is very costly and time-consuming. Also, potential partners are very cautious about dealing with companies that are reliant on 3rd party contractors. The new CEO will have some huge challenges. Also, my guess is that any partner will require that bene Artsmittel be directly involved in the deal. That could be good for bene, but probably will substantially dilute PAR's $ and control of terms.
Kinda addressed this already, but yes, we are a bit reliant on contractors, but the beauty of this is that it is a very precise use of such a resource. It's necessary. One day this will phase out and wont be required as much as full timers and part timers fill these areas of need.
5. IMO the OA IP is weak and indefensible if challenged because there is just too much prior art. Also, the Arthropharm COVID patent is strong and has an earlier priority date so PAR has no hope of successful development of its SARS project unless it secures a license.
We have tackled patents in depth in the past. Agreed that just solely relying on patents isn't enough. Also having just reliance on one manufacturer is usually a risk. I think we are covered here by the complexity of the molecule, containing some 40 individual sub molecules that has to be aligned and synthesised precisely the same way, over and over, batch to batch. The proof is in the pudding. Off patent for years and no bio similar to date.
We have one of THE most complex commercial molecules. Do not think it is going to be easy for anyone to copy.
OA is broad, the way we have protected it is smart...presence of BMLS within OA.
6. Prof Felson seems to have lost enthusiasm (see his video) and has raised a couple of concerning issues; e.g. he notes experience with other OA trials where patients in the treated arm got pain relief and then increased their activity only to cause further joint damage whereas the placebo arm got no pain relief and remained more sedentary causing less OA disease progression. The placebo effect is also a very real issue that could significantly compromise the P3 trial results. I also wonder whether the FDA will be happy with the current dosage trial that has just started which is really not a dose escalation trial at all but just various administration protocols which in my view would not even satisfy a P2, but maybe they have somehow got FDA signoff. The OA P3 trial is definitely not a lay down misère, and even less likely to be the definitive pivotal Phase III required for FDA to give marketing approval without further trials.
Dr Felson cannot and will not put himself in a conflict of interest type situation. He wont chat about what he is contracted to do/investigate. We will only get his take at some much later point. Yes placebo effect is real specially in pain indications. Not sure about further trials being required, its a possibility but to date I have no intel on this possibility. I can however, see other studies having to be constructed later on for further broadening of the label. Don't forget faster pathways are also possible though I don't consider them in my analysis.
7. While there is still a chance that the P3 trial will be a technical success, we won't know until 2026 at the earliest and the odds of failure have certainly increased. The chance of partnering before 2026 seems remote; any earlier would at best just be an option with a small up front option fee with big bikkies not until perhaps 2028 if they get marketing approval.
Why does your pal think that the chances of failure have increased?? Show me the evidence on that one.
An OA deal certainly may take some time but I think a smaller MPS deal will certainly assist a larger OA deal, will give us funding and credence. Larger potential partners will certainly look at us more closely if there is a regional or MPS deal o the table.
8. An absolute minimum $50 mil. plus cap raise is essential well before the main OA trial can even begin in mid '23. Raising this $ will be very difficult unless the SP is below $1 and the disc. is the max. allowable for instos which is 25%. Many of the recent shareholders will, or probably already are cutting their losses prior to June 30, so this just adds to the downward SP momentum for the next year at least. Overall, I expect the capital markets will become increasingly risk avers for the next couple of years.
I don't disagree with you, we will need in that order of funding, prob more to sure us up for a decent amount of time. Volatile times, it won't always be like this of course.
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Again, don't get me wrong, I'm happy that you gave us the reasons, its interesting, we can learn from this. Don't feel I'm being overly defensive, I'm cognisant that just having a great drug isn't enough...I wonder what the percentage is? Maybe 55% good product and a full 45% how we manage it, sell it, what we do with it. Its vital.
I also understand the uncertainty in terms of funding hangs a bit like a dark cloud..., but at the same time despite the almost total collapse of our SP to un-imaginable levels, for the long term I don't feel too worried. I agree that this isn't a stock for all, you need TIME and you need FORTITUDE....I would also say don't shoot the messenger, the above are my thoughts, you still need to weigh this up for yourself.
I am not paid to say anything...I will profit or lose just like YOU if it goes up and if it goes down, I for one aren't crystallising when it goes DOWN....I need hard evidence as to a fundamental shift...a real devastating problem, for me to start winding back... I still am a firm believer that this is a compelling story and I'm happy with my exposure. I don't expect a miracle in the short term. I do have the experience of plenty of lesser stocks and very crappy management...jeepers, you think PAR aren't up to your std. you should hear about the Sirtex gang let alone the failure of their Primary Endpoint. And that still got me from $7 to $41.
DYOR as usual
- Mozz
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