where to from here..?

With PYC looking like it could come back to an all time low soon one has to wonder what’s going on and where to from here?

Does anyone have any reason to be optimistic or does something need to change – and soon?

One of their points in the guidance section of the recent update was: “drive near-term revenue through new discovery alliances and progress of existing partnerships”, but of the 4 existing deals:

(1) Roche is supposedly the most ‘current’ with a collaboration deal expiring at the end of Feb 2013, so an announcement ‘due’ any time. They are supposedly happy but the lack of detail and / or announcements is more than a little disconcerting. Possibly cash in the next 6 months?
(2) Pfizer was already supposed to have matured but nothing has come of it. Apparently there is some unofficial extension of the deal, which seems to me to be saying that PYC are giving them a free ride – and they’re taking it. Possibly/doubtful cash in the next 6 months?
(3) Jansen (J&J) deals is apparently progressing well and a milestone payment received in 2013. Big(?) tick here. But there is no official extension / expansion of the collaboration and no detail around the outlook. Possibly/doubtful cash in the next 6 months, who knows what’s going on here…?
(4) Medimmune – well, anyone’s guess here.

So, it’s not looking positive on the existing deals, so what of the new deals? Well, there are the plethora of new deals supposedly in discussion, (it was in the high 20’s at one stage I think they said), the Phenomica deals, the in-house projects, and so forth – but as Peace points out it’s been a barren landscape for two years. What’s about to change? And why exactly has it been barren for two years…? Is it the market? Is there a problem with the science? Is management or the board unable to negotiate and deliver?

This lack of delivery really makes a mockery of the second (of the four drivers they list), which was “enhance the platform to improve our negotiating position and secure richer economics” because frankly, if they’re not doing any deals they can’t really secure “richer economics”. 1,000 times $0 is still $0.

Then points 3 & 4 of their business plan is that they say they will monetize some assets and focus on in-house candidates. But let’s be honest, these are more like the actions of a business desperate to do something and are not likely to really make that much of a difference – certainly not turn it into a $400m business they said they would do by around 3 years ago – and probably not in time to give them room on cash flow.

I also thought it a bit damning of the current, supposedly, skilled management team and experienced board, that they had to outsource this…

So, here we are again asking what is going on. They talk a lot about how exciting the market is and how they’re at the forefront of this, so it would seem they have some great IP – but they can’t commercialise it – or at least not before they run out of cash…? Are they simply academics playing at running a business? Good at the science, not so good at the business?

What has to change or are they going to deliver on their promises?