PYC (ASX) PYC conference call in 15 minutes 0830WA time

Originally posted by ds ↑

I thought the call was great for a first engagement with existing shareholders - a little too scripted but you have to expect that from both as it was their first time and technically Ms Unwin hasn't started the executive role yet. The salaries question is typical Aussie tall poppy crap with the preamble of 'get you to negotiate for me in future' but ended up in the right place by saying we expect big things from people we are paying a lot of money to. Comparing it to the predecessors salaries simply fails to acknowledge that those predecessors also didn't achieve what shareholders want (although they did continue to get us to this stage so I don't want to diminish their scientific achievement). The base pay is basically what both would earn (the CEO's can be verified by publically available annual reports from her previous employer) so the question simply is 'do you want people of their calibre on not?' I say yes but I have HIGH expectations of them and from what I can gather the next 12-18 months will require the focus of a commercial & legally experienced CEO and a globally respected CSO - this latter part is simply not being recognised yet - the experience and contacts Hayes brings is critical. With him and Kendall we have transformed from the Perth R&D lab that gets on planes to shop their wares to one with international presence and door opening cred. I hope the new Chair is also offshore based and globally connected with a commercial background but within a relevant sector. If this works the way I expect then in 2-3 years this will be run from the Northern Hemisphere under a global CEO or it will have been bought so both run significant career risk of being (successfully) unemployed in that time frame and still took up the opportunities - obviously if they are that successful then the performance part of their remuneration will have rewarded them for this outcome.

It sounded like they want to make absolutely sure they have patent protection before they publish so I am keen to hear what this is but agree it may be a few months before all this comes to light. The quality of the upcoming Advisory Board will also give an indication on interest levels - if it is of the same calibre of the Hayes/Kendall appointments then I'll be happy.

I really liked their willingness to identify what success and failure look like and even suggested timeframes. Even happier that those measures are tangible deals and milestones - in the past I have found it difficult with the ever shifting power points with vague targets and timetables. I assume that by the AGM this will all be documented into a transparent strategy shareholders can understand and assess progress against - the real value of a commercial CEO is that they are happy to be measured against KPIs that are transparent - obscure objectives and a fear of failure is a death sentence for a good CEO and Ms Unwin seems to be willing to define success and failure simply and clearly and it is well aligned with shareholders interests.

I agree with Akki on the Pk/Pd stuff but I think it was telling that Hayes spoke of the shift towards where PYC has been heading and I suspect he knows that if they can nail this final stage there are significant deals available within 12 months - Unwin seemed confident of this as well so it wouldn't surprise me if some of these MTAs are closer to fruition than we think. Hayes seemed very relaxed about toxicity even mentioning that it was the part that would keep him awake at night - obviously it is not. I'm glad he is not wedded to MYC as the only pathway - I have thought that the risk of failure here is significant (no one has succeeded in 30+ years) and proving the FPP ability would be the most value adding step in the short term - this could be applied as a platform to so many goals and cement the underlying value of the company - if MYC is successful then start the SP at 40c+ but there is a journey to that point that won't have us requiring seat belts for the ride . . .

The Trojan Horse analogy is looking like a better one than the tractor - If we own the TH we can carry in anyone's soldiers - going for MYC is like owning the horse and the SAS soldier - both are valuable but the Horse is replicable and we can sell its use over and over again - training the MYC soldier is a degree of difficult 9.99 - massive payoff - maybe even billions. Hayes sounded like he understands this well and is looking to prove the FPP ability (this is where I think nearer deals would be) and have MYC as the moonshot. Frankly if either get close then I think the company will have serious takeover approaches made - that will get really interesting with the concentration of ownership - no one is going to get this cheap.

Great question from TB on the next Genentech payment - we don't know the timing (Ms Unwin said she would review the agreement to see if there is more information that can be shared) but we do know it is a multiple of the USD$2m remembering each step is binary ie the only way through to the next phase is by making the payment or walking away. I suspect Hayes being our CSO has only increased the level of relationship with Genetech - something that I think came across in the call.

6 months is the right time to review this for progress - I suspect they will be having some serious negotiations around JPM if they get their timing right on the patents, publications, MTAs and promotions. Alongside 2 more quarterly notes and conference calls I think we should be well informed by then on how things are really going. It also gives Ms Unwin time to do a couple of domestic road shows to local HNW & small cap insto funds and maybe even a few localised catch ups with existing investors.

In the meantime there is PLENTY of cash to take them through to the end of 2018 with 2 x R&D rebates on top of what they have so any equity exposure will have to be bought on market for now - seems close to 4c is hard to get but between 4.5-5c there is a little bit of liquidity. I suspect the ex CEO has been selling and excercising options (don't know for a fact - just seems to be the pattern) which would make good financial sense - I have collected some of this and hope to get more as close to 4c as I can. Other than that I suspect we rise over time in anticipation of Q1 2018 - what level do you got into that at? No idea but somewhere between 5-10c I suspect.

Expand

A couple of quick additions -

CPP v FPP - I finally understood the reason they have coined the term FPP over CPP. Cell Penetrating Peptides (CPP) exist and many others have got this far but Phylogica are calling theirs Functional Penetrating Peptides/Phylomers (FPP) in order to differentiate the fact that theirs escape the endosome to deliver a cargo.

Also - MYC is more like Trojan horse with Robocop - it's never been done so SAS soldier doesn't cover how big it is.

DS out.

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1.285	58876	2
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(20min delay)
Last $1.27		Change -0.015(1.17%)		Mkt cap ! $729.0M

Open	High	Low	Value	Volume
$1.29	$1.29	$1.25	$4.615M	3.648M

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