Ergomed Share Discussion Threads

[carnivale] 31/1/2017 22:54

thank you Timbo

I am new to this stock , so please bear with me

I am surprised to see no comment on today's RNS on the completion of Zoptrex P3 trial
a drug on which i believe we are entitled to 18% of revenues

I appreciate that we have to wait for full results to be analysed and revealed in April but the wording of the RNS seems to be upbeat

Am i barking up the wrong tree ?

[onlyahobo] 29/1/2017 11:03

Timbo

Thanks for sharing your meeting notes.

A couple of thoughts.

- indicated growth rates for CRO and PV seem somewhat disappointing

- Hate the way these guys talk about market cap rather than per share value

- the Zoptrex royalty is capped at 4x cost which if I recall correctly is STG48m. Same deal for Multikine. They were unable to get uncapped on these deals because they we're already advanced to P3

- on that slide they still have Multikine for P3 readout in 2018. If you follow the Cel-Sci story it quickly becomes apparent that the management there is a disaster, that the Multikine P3 trial has been suspended by FDA and that there are IDMC recommendations that it should be terminated completely for safety reasons. I consider the likelihood of this coming home to be zero at this point.(One of the disadvantages of ERGO's model is that they find themselves supporting third tier deals that have not been able to get support from the serious players in the market?)

- The peri anal warts story is dead too. This is public information and SS including it in his presentation talking it up as a possibility is misleading BS IMHO.

- hadn't picked up the Loredpilon market size potential and low double digit royalty - could be very good in time

- Zoptex is on the other hand very much more promising. Some good reasons why the CoS for Zoptrex should be substantially better than the c.30% baseline P3 for oncology via an SA contributor Erik Ganesh:
1.
Known effective agent: Doxo is already a well known effective agent against these tumors. AEZS-108 just ups the dosage 4.5 times. This would normally kill the patient and the tumor, but by directing it more specifically to the tumors the patient survives (with less side effects) and the tumor dies. The medical logic is sound.
2.
Large study: The study is quite large with 500 patients. This gives us a greater chance of statistical success given that the actually compound works better than just regular Doxo.
3.
Open label: Too many studies fail due to “unexpected good results in the placebo arm”. This applies even to advanced cancers. By not blinding this bias is reduced drastically.
4.
Two independent DSMB reviews showed efficacy at 124 and 192 events respectively. Chances are, it will also show efficacy at 384 events. This is probably the most compelling argument.
5.
FDA special protocol assessment: the study is carefully designed with the FDA when looking at the (very good) P2 data.
6.
Loved by clinicians and patients: The trial was fully-recruited well before expected, many patients and caregivers wishing to participate had to be denied.
7.
Delay of results: The trial duration has been extended three times because some patients are living much longer than expected. If these are patients on the drug, naturally the chances of statistically significant benefit over the old drug is higher.

That all said the valuation of AEZS does not in anyway suggest that the market thinks that this is a serious cancer drug in the making. All to be shortly revealed.

This may come across as glass half full, but am long the stock in good size and optimistic that this set up is going to deliver over time.

Anything new in the Numis report?

[timbo003] 27/1/2017 15:39

>>>>>>mfh

your wish has been granted



The recording does not include the Q&As unfortunately

[mfhmfh] 27/1/2017 09:41

Will yesterday's presentation be available online?

[timbo003] 27/1/2017 08:00

Yikes, I've just had a quick look at the Numis report, it's 48 pages! That will keep me out of mischief this morning.

[timbo003] 26/1/2017 22:20

>>>>>>BS

I will have a better answer for that question when I have seen the Numis research note, which has now arrived in my inbox.

Aeterna Zentaris were only prepared to offer low single digit royalties for macimorelin as they perceived it to have a very high probability of success, presumably Ergomed baulked at the low royalty on offer and walked.

[bermudashorts] 26/1/2017 19:31

Timbo,

As always thanks very much for taking the time and trouble to share another comprehensive report. Lucky escape indeed,which sort of brings me to my question. Do you have any concerns regarding the drive on the co-development front? 10 ongoing projects at any one point in time is quite a commitment and not without risk. 2 or 3 failures in a row could be quite damaging. I should add, not necessarily in financial terms but in regards to sentiment. I guess time will tell and it only takes one or two successes to validate the strategy.

Meanwhile the share price continues to go from strength to strength. As I posted over on LSE, I wish the 3 month chart for the rest of my portfolio looked like this.

[timbo003] 26/1/2017 16:07

I've just remembered another snippit:

See post #74


Apparently Ergomed had negotiations with Aeterna Zentaris regarding a co-development for macimorelin, but they couldn't agree terms. Phew that was a lucky escape!

[mfhmfh] 26/1/2017 14:55

Thanks from me also for your report

[battlebus2] 26/1/2017 14:47

A big thanks for your report Timbo, excellent indeed and a great response this morning.

[timbo003] 26/1/2017 14:25

Stephen Stamp (SS) Ergomed’s group Finance Director gave the presentation at last night’s Equity Development Investor seminar. I’m not sure whether the slides will be made available electronically (we were given paper copies), but I have copied the one which refers to the co-development portfolio (i.e. the most interesting one) below. The presentation consisted of 18 slides and lasted for around 20 minutes with around 10 minutes for Q&As, I also managed to talk to SS for 20 minutes or so over drinks and canapes after the presentations, so I have condensed the most interesting points gleaned throughout the meeting into a few brief notes below:

Ergomed’s market cap is currently around £75m, the aspiration is to build Ergomed into a £billion company (the Chairman has form in this area). Some of the growth will be organic with CRO services currently growing at 7.5% and PV services at 17%. Hopefully the growth in the value of the co-development portfolio will be large, although it is currently assigned zero value in the accounts. Ergomed will also grow by acquisition and will look to make one or more acquisitions in the USA where they are currently under represented. They are particularly interested in acquiring PV operators, as this area is growing rapidly and it provides better quality (sticky) earnings compared to CRO services, where you have to keep “feeding the beast”. SS would prefer to keep dilution to a minimum and debt would be a preferred option (if terms were favourable) for acquisitions.

The CRO /co-development hybrid model is fairly new. Ergomed is the only company in the UK with this model, although there are more companies like this on the continent.

Most of Ergomed’s investors are UK based, although the shares are also quoted on the German market, so they have a number of large German investors. Interestingly the UK investors would like to see the CEO have less of a controlling interest in the company (he currently holds circa 40%), in contrast the continental shareholders see his large shareholding as a big positive.

Ergomed were originally looking at the Haemostatix opportunity as a Co-development opportunity, they liked what we saw, but Haemostatix could not come up with the funding for their contribution to the Haemostat clinical program. Rather than pass on the opportunity, Ergomed negotiated to buy the company for £8m (including debt) and a relatively large milestone driven earn out (£20m). The earn-out is payable in four (or five?) parts, the first two parts could be cash or shares (at Ergomed’s discretion) the remainder would be cash, the first milestone corresponds to when the first patient is enrolled in the first phase II study (which should be this year).

The global coagulant market is currently worth $2.5Bn and is growing at 6% p/a. Haemostat acts twice as quickly as thrombin and requires no preparation time (thrombin, the current standard coagulant, is a lyophilised powder which takes on average 8 minutes to prepare). Ergomed hope to achieve annual sales for their two Haemostat products (gel and liquid) of $500m. The entire clinical program should be inexpensive (£10-15m) and they may opt to out-licence or partner one or both of the products once approved.



The co-development portfolio currently consists of six projects (with five partners)




The aim is to add around two projects per year and to have around 10 projects in the portfolio at any one time, with new projects added as the older projects complete.

Two of the projects (Loredipon and Zoptrex) are due to report this quarter (Lorepidon should report within two weeks):


Loredipon

* Partner: Ferrer
* Phase II for insomnia (potentially best in class, long acting, minimal hangover)
* Peak sales potential: $650m (Ergomed share: low double digit)

Zoptrex

* Partner: AEterna Zentaris
* Phase III Endometrial Cancer (potentially first FDA approved therapy for advanced EC)
* Peak sales potential: $500m (Ergomed share: high single digit)


I asked about the individual value of each project in the co-development portfolio, but they couldn’t give me an immediate answer. Apparently there is a breakdown given in the Numis research note (which I hope to see shortly) and whilst there is not a breakdown in the ED research notes, ED say they could provide one.

[mfhmfh] 25/1/2017 15:32

hxxps://www.equitydevelopment.co.uk/company/?company=Ergomed&c=2QTO

You have to register/log-in to access.

[bermudashorts] 17/1/2017 18:31

Timbo, no, I didn't realise that there was an intention to sell. Have to admit that I've slightly taken my eye off the ball when it comes to this stock and I must get back to it. I tend to post more over on lse but the ERGO board over there is quite a lonely place!

mfhmfh, thanks for that. It's great for once to await clinical trial results without the concern that it's a boom or bust situation. Would be fantastic to get positive results and obviously disappointing if they're poor but it won't be the end of the World for this Company (although it could be for Aeterna Zentaris!)

[mfhmfh] 17/1/2017 17:36

N+1 Singer:

"We believe the co-development business could drive significant upside potential as [drug developer] Ergomed (ERGO) co-invests a proportion of revenue in return for equity or royalty payments," says Singer analyst Sheena Berry. "Positive clinical data provides upside potential to our 293p target price."

[timbo003] 17/1/2017 15:14

I will also have a couple of questions on Haemostatix:

….see this abstract from the Equity Development initiation note on Ergomed (Oct 2016):


Ergomed acquired Haemostatix in Q2 2016 for £8m plus a £20m earn-out based on various milestones. Haemostatix has two products in development for surgical bleeding. Both have the potential to be significant value drivers for Ergomed. With the depth of expertise of the management team, we expect a clear exit plan once the phase II pivotal trial for the lead product is complete in 2017.


I did not realise (or more likely I had forgotten) that there was an intention to sell Haemostatix once the phase II is complete.

In addition to owning a few Ergomed shares directly, I have a decent size holding in Kings Arms Yard VCT (KAY). KAY owned 33% of Haemostatix which they sold to Ergomed (the consideration was mainly in the form of Ergomed shares valued at 140p/share).


I think KAY received just over one million Ergomed shares following the sale, but it sounds like they could be in line for a further £6.6m in the earn-out (terms unknown, but it is probably contingent on a successful phase II clinical and meeting other regulatory milestones).

[timbo003] 17/1/2017 13:34

>>>>BS, yes of course

My main questions will concern a breakdown of the sum of the parts valuation for the company as a whole, and in particular the valuations assigned to each of the co-development projects (both risk free and risk adjusted values), I will also be asking what the future plans they have for buy and build (if any) and what criteria they will be using when assessing further buy and build opportunities.

[bermudashorts] 17/1/2017 12:51

timbo, if you get the chance, any feedback from the presentation would be appreciated.

[timbo003] 17/1/2017 12:27

I'm lookin' forward to attending the Equity Development presentation on the 25th, meanwhile Stephen Stamp puts some meat on the bones of today's trading statement:

[mfhmfh] 17/1/2017 09:02

great update to support the recent share price rise.

investor presentation on the 25th this month should be interesting.

haemostatix is the product that could really make the company money.

[king kong dong] 17/1/2017 07:18

All looking really good here - excellent work backlog providing the base for some outstanding performance.

And you know what they say....when the Dong is long, it ain't never wrong !!! Yessss sirrreeee!!!!!!

[18bt] 17/1/2017 07:12

TS this morning seems to provide backing for the big share price recovery. Market forecasts seem to be for T/O of about £36m

[battlebus2] 29/12/2016 11:51

Continuing to fill that bowl to 165. I see they are presenting for Eqity Development later in January the 15th I believe.

Edit Thanks Timbo I see you have already posted about it.

[mfhmfh] 16/12/2016 12:16

will try to attend work permitting.

otherwise hopefully they'll put a video up of it.

x 3 brokers have a target price of around 270 - can't complain about that.