stuart roberts new report on poh

This was emailed to me by Stuart unsolicited so there is no link, and as it was unsolicited, I don't have a problem posting.


RECOMMENDATIONS


Rating

BUY ?


Risk

High


Price Target

$0.26


Share price

$0.10







Company Summary: Phosphagenics has proved in multiple clinical trials over the last decade that its TPM technology, which is based on the ability of phosphorylated Vitamin E to cross the skin, represents an efficient transdermal drug delivery solution. The company’s patches, which avoid the traditional ‘first pass metabolism’ problem of orally available drugs, are notable for the speed and safety of drug delivery and the lack of skin irritation. Importantly, the company has now developed the world’s first patches for the delivery of the opioid analgesics oxycodone and oxymorphone. This is a multi-billion dollar opportunity.

Breakthrough products. Phosphagenics’ oxycodone and oxymorphone patches, the first of their kind, are small, deliver their drug payload either systemically or topically over a 72 hour period, and are suitable for chronic, moderate-to-severe pain.

A large market opportunity. The oxycodone market in the US alone is worth >US$3bn pa, growing strongly, due to increased clinical need for chronic pain relief.

The next Duragesic? When J&J launched its Duragesic patch for the delivery of fentanyl in the early 1990s, the end result was a US$2bn product. We believe that POH can enjoy this kind of commercial success.

Phase II in 2014. POH will go to Phase II with its oxycodone and oxymorphone patches this year. After this there is potential for Phase III studies ahead of 505(b)(2) filings, which could take place in 2016 or 2017.

TPM has been deployed across a range of drug delivery indications. Phosphagenics currently has programmes with various collaborators ongoing in pain, dermatology, various injectable drugs and animal health.

Phosphagenics earns revenue from cosmeceuticals. POH’s Vitamin E-based cosmeceuticals, which sells through various channels, show the ability of the Phosphagenics team to realise commercial value from TPM.

Capable leadership. POH’s CEO, Harry Rosen, has a track record of success in the Life Sciences thanks to Betatene, a company involved in the production of natural beta carotene. We think Rosen can take POH to its next stage of development.

POH is undervalued on our numbers. We value Phosphagenics at 26 cents base case and 63 cents optimistic case using a probability-weighted DCF valuation