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Patrys (PAB) is a Melbourne-based developer of natural human antibodies for the treatment of cancer. The company has been built on technology to identify novel cancer targets, as well as produce monoclonal antibodies of the IgM class rather than the conventional IgG class to which all the current approved antibody drugs belong. Patrys is currently in Phase I/IIa trials with PAT-SM6 in Multiple Myeloma. PAT-LM1, for various solid tumours, is pre-clinical.
Antibodies are growing in commercial and clinical importance in cancer therapy
Over the last decade a number of monoclonal antibody therapies for cancer have become blockbusters due to the clinical efficacy and safety profile of these drugs compared to conventional chemotherapy. As a consequence cancer antibodies are increasingly appearing in the pipelines of major pharma companies looking for the next Avastin (US$6bn in global sales in 2011), Rituxan (US$6.8bn) or Herceptin (US$5.9bn). We see Patrys as benefiting from continued clinical and commercial interest in cancer antibodies, especially given the enabling technologies which the company has brought together which sidestep other discovery platforms.
Patrys has overcome its issues
Patrys has underperformed the market since its 2007 IPO largely because it was unable to produce antibodies at scale and therefore missed expected development timelines. The scale-up issue has now been overcome and we believe Patrys can now be re-rated on the strength of data from its Phase I/II clinical trial in Multiple Myeloma which is now underway.
Patrys has good leadership
We have a favourable opinion of Patrys’ management. Dr Marie Roskrow, who became CEO in mid- 2011, comes to the company with considerable experience as a clinician and as a participant on the financial side of the pharma and biotech industry. Backing Marie is a quality board chaired by the Sydney venture capitalist John Read which includes Dr Alan Robertson, CEO of the successful Australian drug developer Pharmaxis and Suzy Jones, former head of Business Development at Genentech.
PAT-SM6 can help re-rate the stock
Earlier this month Patrys took its PAT-SM6 antibody into a Phase I/II clinical trial in Multiple Myeloma. We see data from that trial, as it releases from early 2013, as helping to re-rate Patrys stock by drawing attention to the strengths of the company in terms of target selection and antibody engineering.
A very inexpensive antibody play
We value Patrys using a probability-weighted DCF valuation at $0.12 base case and $0.21 optimistic case. Our target price of $0.12 sits at the low point of our valuation range. We see data from the current Phase I/IIa trial with PAT-SM6 as helping to re- rate Patrys to our target price.

http://www.patrys.com/images/stories/Investor_Analyst/Patrys_2012_11_20.pdf