drug pi-88, melanoma; how good is it?

This drug is a powerful one: 40 % stabilisation rate in Phase I, Melanoma, a notorious killer. Very difficult to cure but PI-88 has done a very good job in Phase I; not a phase where one is looking for good results.

So, how good will Phase II be?
I believe it can only get better with the addition of Chemo.

The drug already has 3 inhibitors, so in effect this is a fourth one and the combined effect could be very positive.

If so, then it would make PI-88 the foremost drug in the world against Melanoma, for starters, IMHO.

It is quite possible that this drug may get a preferential treatment by the FDA after conclusion of Phase II.

Presumably, they will be looking for a Partner who will take over from there.

And how big can the market be?
This is a major market and I wouldn't be surprised that once the marketing is in full swing, the revenue could be up to $US 800 mill per year.

Royalties could amount to 10% from Revenue.
What does that mean per share?

For starters, PGL had $16 mill cash on 2 Dec. 2003, enough to last 18 months. That is well past the end of Phase II. At that point, a Milesone payment from the Partner could take place.

Also, there are 4.2 mill options to convert on 31 May 2005 @ $2.50. That brings in $10.5 mill. That one alone will extend the previously quoted 18 months.

So, if the options can be converted, then there is no reason to raise cash for say 2.5 years or more. By that time, the drug could be marketed.

But the overriding argument is that PGL has only 33.9 mill shares at present. Fancy big royalties going to small number of shares.

Assuming this all took place then in time the 10% royalty per share is $US80 mill or $US56 mill after tax. That is $A74.6 mill (0.75). Say by then we have 36 mill shares or the income per share is $A 2.07.

A P/E of 15 will give a value of $A31.05, say $30.80; A P/E of 20 will give a share price of $41.40 or say $41.20: that includes the expenses associated with running a company.
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But there is more! Who says this drug with its triple head of inhibitors (then add chemo) will only treat Melanoma?

Here is another one:

2. Myeloma
Myeloma is a cancer arising in the plasma cells in the BONE MARROW. The deathtoll can be high.

July 8, 2003: Progen Industries Ltd (ASX: PGL, Nasdaq: PGLAF) announces the completion of the PI-88 Phase II trial in Multiple Myeloma and achievement of the study’s primary efficacy endpoints.

"The primary endpoint of the study was to investigate clinical efficacy in patients who had exhausted other treatment options.

For the purposes of this study, a clinical response was pre-specified as patients remaining stable or experiencing a decrease in blood levels of paraprotein (a marker of multiple myeloma disease severity). This endpoint was achieved in 39% of patients in the study".

Comment: More work needs to done here on M Myeloma, but it is a promising start!

Gerry
Circumstances can change. Readers, please do your own research and you decide if and when to buy, hold or sell any stocks.

Info on PGL:
http://www.hotcopper.com.au/post_thread.asp?fid=1&tid=84527&sym=PGL&MSGNO=227592#227592