cbio - a recap for new investors/traders

CBZ Cbio Limited - A Recap
Cbio is biopharmaceutical company based in Brisbane, Australia. It is focussed on commercialising its proprietary drug, Xtoll, for autoimmune and inflammatory diseases. This drug is the result of 30 years of research and is currently in a trading halt until monday where the phase IIa trial results will be out, if they are good this will be big. We are looking at possibly one of the best Arthritis drugs and safest in a massive market, annually around 16 billion per annum.

Market Cap Fully Diluted @ 68c - $134 million (175,242,256 shares, 21,797,355 options)
WiseOwl have a $1.47 target based on potential milestones and future royalties.
Old Broker Presentation: http://asx.com.au/asxpdf/20110208/pdf/41wnfswhj03m1s.pdf


THE COMPANY

• CBio is currently developing a first-in-class drug called XToll. XToll is an endogenous regulator of the innate immune system, which means it works with the body's own processes, and is therefore likely to work better and more safely than other available drugs currently on the market.


• Listed at $1 on the 15th February 2010, drifted on low volume for a while, has been in a strong uptrend recently.


• CBio has granted an option to Novo Nordisk (a global top 20 pharmacompany with over 29,000 employees). This Option allows Novo to have the first right to negotiate a licensing agreement on or before the completion of the current clinical trial. If CBio is unhappy with the terms CBio can transact with another pharma company at that time. The Company is currently in dialogue with two other global pharmaceutical companies.


• The company has a high calibre Board and Management team with an excellent mix of skills, and general and specific expertise. Importantly, they have already demonstrated an ability to do deals which is essential for success in the rheumatoid arthritis space.


• One director on the board who is vice chairman of Novo Nordisk A/S, as well as another director who is the retiring senior vice president of the Biopharmaceuticals Research Unit at Novo Nordisk, plus another who was a senior Vice president of Pfizer.


• There are 3 main companies at roughly the same stage as CBZ ie pre phase 2 results, market caps range from 200 mill to 400 mill, CBZ market cap is less than 100 mill.

THE DRUG

• XToll is a unique therapy for the treatment of human autoimmune disease, including Rheumatoid Arthritis (RA). XToll will initially be developed as an RA therapy but has the potential to be used as a therapy for a number of diseases including psoriasis, MS, and Lupus.


• Existing RA drugs generate significant income for global pharmaceutical companies -the top 3 drugs generated a combined income of approximately US$19 billion in 2009. These drugs however only work for 60% to 70% of patients and they also have significant safety issues. Safety issues exist, and patent expiries present commercial concern for future income streams for big pharmaceuticals.


• The manufacturing cost of goods for XToll is very low compared with the current registered RA drugs.


• XToll will, once remaining patents are granted, have patent protection to at least 2023 with a potential extension to 2028 in most jurisdictions.


• CBZ's previous trials have shown less side effects than any other major drug on the market(considering that the side effects of these other players are illnesses such as cancers) and that patients who recorded a 20% or more improvement was greater for CBZ than any other drug on the market.


• Drugs for rheumatoid arthritis often prove useful for treating other diseases and Xtoll should be no different, with data already in hand for psoriasis. Further potential applications also exist and, given the wealth of opportunities, carefully chosen and timed follow-on indications could see Xtoll become a significant treatment for many diseases.

THE TRIAL - RESULTS TO BE RELEASED MONDAY

• The phase IIa trial that Xtoll is being studied in is likely to be of sufficient size, duration and overall design to provide solid evidence of the drug's ability to safely treat rheumatoid arthritis. The data produced should also be sufficient to attract a commercial partner, pending final results, with deals in the rheumatoid arthritis space often occurring just after phase IIa trials. The last three significant deals in the space having featured upfront payments between US$80 and US$100 million, with milestones between US$650m and US$1.1 billion.


• Results from a small previous phase IIa study in rheumatoid arthritis auger well for the soon to be released results from the current study. These results are likely to prove a catalyst for a substantial re-rating of the company.