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Msg  308 of 312  at  8/17/2009 12:26:19 PM  by


Access Pharma (OTC: ACCP): Upcoming Catalysts Key to Unlocking Value

Access Pharma (OTC: ACCP): Upcoming Catalysts Key to Unlocking Value
Written by Mike Havrilla   
Saturday, 15 August 2009 05:58

The stock research section of has been updated to reflect my new 19-page PDF report and update for Access Pharma (OTC:ACCP) (ACCP.OB) following the Company's SEC 10Q filing for 2Q09 on 8/13/09 and my Q+A with the CEO, Jeffrey B. Davis, earlier this week.

1.) Key financial metrics include cash + equivalents as of 8/12/09 of $1.55 million (M) versus $1.23M as of 6/30/09 and $2.2M as of 3/31/09. Access continues to maintain a very low cash burn rate through 1H09, averaging about $241,000 per month or about $0.72M per quarter. In addition, Access received $1M as part of an existing licensing agreement after the end of 2Q09 with a $5.5M convertible note due 9/13/11 as the Company's only outstanding debt.

Access reduced general & administrative expenses during 2Q09 by $0.8M from year-ago period to $1.5M while R&D spending was cut in half at $0.6M versus $1.2M during 2Q08 (excluding the impact of a $9.7M non-cash charge in the year-ago period reflecting the MacroChem acquisition).

2.) A full slate of near, intermediate, and long-term catalysts remain for the Company with the potential to unlock substantial shareholder value from the current $4/share price and fully diluted market cap of around $90M.  

a.) Final results (all 280 patients over the entire seven-week duration) expected "in several weeks" for SpePharm's UK post-approval marketing study of MuGard with interim results demonstrating no cases of oral mucositis in 140 patients with head and neck cancer being treated with radiation therapy. Also, a continuous flow of clinical data (including journal publications and presentations at medical/scientific conferences) for MuGard expected throughout 2H09 as SpePharm is also conducting post-approval marketing studies in Germany and Italy. Access also expects to initiate similar marketing assessment studies within three months (mid-November) in North America as well.

b.) Listing on either the AMEX or NASDAQ exchanges is expected to occur "much quicker than before year-end" timeframe with key requirements now met for share price and market cap.

c.) MuGard launch in Asia expected during 2H09

d.) North American Commercialization Strategy for MuGard: Access has already met with one big pharma and one big biotech has more meetings scheduled for August. The Company's strategy is to initiate GMP manufacturing of MuGard; continue to put the reimbursement strategy in place (get codes, etc.);  and then go back to about 5-6 leading OM doctors to conduct US-based post-approval marketing studies.  Access will proceed "as-if" preparing for a commercial launch alone while taking a position with potential new North America partners that they can do a new license deal (with better economics for Access, but give them control to do it all themselves), or a "co-promote" deal where Access retains the rights to co-promote MuGard in North America.

e.) ProLindac + Thiarabine Clinical Development: During 2H09, the Company plans to start multiple Phase 2 clinical trials evaluating both ProLindac (Europe + Asia) and thiarabine (data expected mid-2010). Access intends to design all clinical studies of ProLindac in accordance with FDA standards and intends to use the clinical data from all three planned clinical trials in the Far East to further development in North America and Europe.  Access has the right to all clinical data generated in the Far East under the agreements entered into with its partners in that region, and as previously announced, believes that these trials run by its ProLindac partners will save Access between $20-30 million in clinical development expenses.

Discussions are ongoing for global and/or regional partnerships to develop and commercialize ProLindac with the final report pending for the Phase 2 ovarian cancer clinical trial conducted in Europe. In early August, Access announced the initiation of a new clinical study of ProLindac in France. The study will examine dose levels and regimens of ProLindac mono-therapy in cancer patients, provide additional data to support design of combination studies, and extend the safety database for the drug. Two ovarian cancer patients have been enrolled in the study to date, and the Company expects to enroll 6-12 patients this year before beginning to enroll patients in clinical trials evaluating ProLindac in combination with other chemotherapies (likely to involve ProLindac plus paclitaxel--Taxol and/or gemcitabine--Gemzar).

f.) Planned sale of the Company's anti-infective dermatology assets (EcoNail - topical econazole and Pexiganan - a novel topical anti-infective) with ongoing discussions as Piper Jaffray continues to manage this process (the timeframe for completing this process is difficult to predict).

g.) Licensing discussions for the Company's cobalamin-based nanopolymer drug delivery technology for the oral administration of a basal (long-acting) insulin product following mid-June announcement that two bio-pharmaceutical companies will conduct preclinical, animal studies before proceeding to more formal negotiations. The results of these preclinical studies will be made public, including one North American biotech company and one European biotech company.  Access is providing the oral insulin while the two interested companies will conduct one animal study each (including a rat and dog model) with data expected in about three months. Ongoing discussions with these companies may result in the evaluation of other drugs utilizing this delivery platform, including human growth hormone (hGH) and erythropoietin (EPO).

The MuGard earnings model in my report reflects 2X initial commercial partner peak sales estimates of $350 million based on the potential for a preventative indication for the product in patients undergoing radiation and/or chemotherapy Additional post-approval marketing study results and clinical experience with MuGard will ultimately determine its sales potential as the estimated cost of $1,000 per six-week treatment cycle is low compared to the cost of anti-cancer therapeutics and treating the complications of mucositis.

The published estimates outlined below highlight the major global opportunity for MuGard of at least 1 million people, which translates into a potential market of $1 billion for MuGard and $4/share in earnings power for Access based on a 20% royalty rate. However, as Mr. Davis pointed out in the Q+A earlier this week, "You don't really know in advance which chemotherapy patients (or radiation therapy patients) are most likely to get OM, therefore you can make the argument that MuGard can be used prophylactically," which addresses a potential global market opportunity of $5 billion based on the sheer number of people who are either diagnosed or receiving treatment for cancer.

The Medscape eMedicine entry for Chemotherapy-Induced Oral Mucositis estimates that about 400,000 patients per year in both the U.S. and international markets may develop acute or chronic oral complications during chemotherapy. Some degree of OM occurs in about 40% of patients who receive cancer chemotherapy while at least 75% of patients who receive conditioning regimens (chemotherapy with or without total body irradiation) in preparation for hematopoietic cell transplantation (HCT) develop OM. The incidence is also higher in patients who receive continuous infusion therapy for breast and colon cancer and in those who receive adjuvant therapy for head and neck tumors. However, in patients of the same age with similar diagnoses and treatment regimens and equivalent oral health status, the incidence of OM may vary considerably as Mr. Davis points out above in his statement.

Based on National Cancer Institute statistics, the incidence (number of diagnoses) of cancer in the U.S. is expected to be about 1.5 million people in 2009. Please note this number does not even include any patients receiving chemo or radiation therapy who were previously diagnosed with cancer (prevalence includes individuals who are newly diagnosed, in active treatment, have completed active treatment, and those living with progressive symptoms of their disease). The World Health Organization (WHO) estimates that cancer rates (incidence) could further increase by 50% to 15 million new cases in 2020 from 10 million new cases diagnosed globally in 2000. Developed nations with the highest overall cancer rates include the U.S., Italy, Australia, Germany, The Netherlands, Canada, and France.

 Access should have sufficient liquidity to fund operations at the current level until reaching positive cash flow in mid-2010 based on my projected MuGard sales ramp, the Company's current cash/equivalents of $1.55M, a very low cash burn rate, expected partnership + licensing upfront + milestone payment, MuGard royalties, and the possible sale of anti-infective dermatology assets (EcoNail - topical econazole and Pexiganan - a novel topical anti-infective).

My report projects positive operating cash flow by mid-2010 or earlier depending on MuGard sales, post-marketing study results, and clinical experience. However, my earnings model does not even account for expected upfront licensing and clinical milestone payments for the Company's cobalamin drug delivery technology, thiarabine, ProLindac, or earlier stage compounds, which have the added potential for $100M in licensing deals (upfront + milestone payments and royalties) for oral basal insulin product, oral hGH, ProLindac, and thiarabine within the next 12-18 months (with $20-30M possible in upfront payments from such deals).

Please visit the stock research section of to view or download my 19-page PDF research report for Access Pharma published on 8/14/09, which includes an earnings model for MuGard through 2012 and key upcoming catalysts for the Company that are expected to unlock substantial shareholder value. The stock research section also includes an updated report for Access written by Griffin Securities with a buy rating and $11 price target in addition to the most recent corporate presentation for the Company.  Check out Access Pharma's Pro-Active News Room site for a compilation of links, videos, presentations, and social media sites for the Company.

Access Pharma is also a component in my Cancer Diagnostic & Therapeutic (Dx/Tx) Micro-Cap Index, which is one of the new stock indexes I have created to track modern healthcare trends, such as Global Generic Drugs, Health IT, Stem Cells, Preventative Medicine, and others.  

The index constituents reflect a cross-section of emerging cancer companies with market caps below $250 million at the inception date of 4/12/09, including (1) diagnostics (molecular diagnostics and device-based diagnostics), (2) lab services (personalized medicine applications to guide and track the effectiveness of cancer treatments), (3) drug discovery (screening and modifying compounds to achieve anti-cancer effects during the early stages of preclinical and Phase 1 clinical studies), (4) immunotherapy (a.k.a. cancer vaccines which are designed to stimulate the immune system to eradicate cancer), and (5) commercial or late-stage (Phase 2-3) clinical development.

Disclosure: Long ACCP.OB

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