target .27, page-25

Hi Hottod,

Several of your questions I don’t know the answer to. Whether Roberts was paid, why he didn’t mention certain things, what discussions he had with the company.

But on the main issues.

It is confusing the difference between topical and transdermal delivery. So lets go back in time.

For several years POH pursued the idea of transdermal delivery of oxycodone. Ultimately (after resolving patch problems) this led to a P1 study which showed that while the patch got the drug into the bloodstream the amount was not at therapeutic levels.

So this was abandoned in favour of trying with oxymorphone which is 3 times more potent. This seems to have worked as per the recent news about therapeutic levels in the last announcement.

Which is basically where everyone assumed POH was a year or so ago – at double the sp – but with oxycodone.

So what to do with oxycodone? Well if not much entered the bloodstream when you wanted it too – in theory it shouldn’t be hard to stop when you don’t want it to – so topical oxycodone.

Which compounding pharamists are already doing. Topical oxycodone will compete in a market with say a PNOs new sports gel with the active ingredient of arnica. Who unfortunately at 0.001c a share and no buyers are not setting the world on fire.

And so its hard to see exactly why big pharma will be interested in topical oxycodone from POH. Yes there is value in having more a precisely controlled rate of release and predictable levels but with individual variation so high there will probably always be a high degree of experimentation anyway.

But on the upside it is straightforward to get approved – and yes by 2014/15. In theory probably not much more difficult than the acne cream.

Quite what is the path for oxymorphone I don’t think anyone knows Jevalent to (not) answer your question. No doubt the strategy is being developed with POHs advisors in response to changing goal posts.

Whether the POH oxymorphone patch has to demonstrate efficacy compared with placebo, or bioequivilance compared with other methods of delivery is unclear. And probably will remain so until after the P2 studies – and POH maybe have a meeting with the FDA and a clear path forward is articulated.

But virtually whatever the path is required it is more difficult and costly than say an acne trial – or oxycodone study. And beyond the resources of POH without a further cr.

You already have transdermal buprenorphine and fentanyl. What exactly is the special place for transdermal oxymorphone. It certainly wasn’t first choice for POH - which spent many years pursuing oxycodone.

Hence my reservations about the white knight. Which is reflected in Roberts high WACC of 14.7% - big payoff if it comes off – but on 50/50 odds you would be better betting it wont.

As to when as opposed to if? Well who knows. Roberts outlines a very long timeline. P3 recruitment alone for specific pain indication could take a couple of years. Add a year to set up and a year at the end for analysing it and filing an application and theres 2019. With a year lost in the inevitable delays somewhere or other – probably in pursuing whatever is required to demonstrate tamper resistance.

Why Roberts didn’t value the POH extras (cosmetics, horse feed etc) might be because he just ran out of time. More likely he just doesn’t get down to the level of a million here or there. That’s more an accountants job.

It’s the jackpot of $50m (or not) where the interest is. But this is also the more difficult area to analyse and is opaque.

Personally I suspect Roberts has been talking to company and may well have a good handle on these issues – in a manner than ordinary investors will find difficult to. But this is just speculation.

All the best Southoz.