Q BioMed Inc (OTCMKTS:QBIO) Continues To Strengthen, More To Come On Catalysts
Q BioMed Inc (OTCMKTS:QBIO) was one of our focus biotech stocks back at the end of September, when the company started to run up on positive news. We highlighted it as being one to watch, and recent action has vindicated out highlighting. The company is trading around the $4.5 mark, up more than 200% on July lows, and is running up as we speak on the highest volume seen across the last two months.
So, is there more to come? We think so.
For those not familiar with Q BioMed, it’s a biotech and healthcare company with a relatively simple model – it acquires assets and either develops them towards registration, or – if they are already approved – markets them to the target indication population. Right now, it’s got two assets that fall within these two categories respectively, called SR89 and MAN-01.
The first, and the most recent in terms of acquisition, SR89, is a pain relief asset. It’s already approved in the US, and is a generic formulation of Strontium Chloride. Readers may already be familiar with the formula – it’s used pretty widely already in various types of cancer patients, administered in a variety of novel ways. It’s put in the toothpaste of some bone cancer patients, for example. The Q Biomed version of the asset is a radioactive formulation, administered through IV, meaning it’s far more effective in severe pain than the absorption type admin of the toothpaste methods. This one’s approved, ready to go, and as we’ll get into in a little more detail shortly, is funded for manufacture and marketing.
The second is QBIO’s by way of a license agreement, and is a development stage drug targeting glaucoma. It’s an eye drop, and while it’s still early days for the asset, it’s got a huge potential market if it can reach registration phase. Glaucoma affects more than 2.7 million individuals age 40 or older in the United States — approximately 1.9 percent of the population. It’s underserved on the topical side of things, and would be a big win for QBIO if it gets a shot at the market.
So what’s driving the latest gains outside of the pipeline and portfolio updates?
Well, the company just announced (mid last week) that it has entered into a funding agreement with Yorkville Advisors Global. It’s a convertible debentures agreement, which right off the bat isn’t great for shareholders, but it’s not too dilutive, with a couple of key components of the agreement limiting the impact. Specifically, there’s a first tranche of $1.5 million already closed, and a further $2.5 million expected to close near term. Conversion of both shall be at the lower of $4.00 or a 7% discount to market, with a floor price of $2.00. It’s a discount, but it’s not too much of a hit, and the cash is going to provide the necessary capital to push the company into the market with its SR89 asset.
Once this asset starts to generate revenues, and we expect it to at some point during the first half of next year, Q BioMed will be in a solid position to both fund the development of its licensed glaucoma asset, and set itself up to acquire further assets, and flesh out its portfolio and pipeline. In advance of this cash isn’t that bad, coming in at just shy of $140K at September 30 (this, of course, doesn’t take in to account the latest debentures), and debt comes in at $1.26 million. Again, not a bad number for a company of this size, and in this position.
We’re looking for the kick starting of the marketing campaign for the generic asset as the next major catalyst, and beyond that, some level of insight into what’s going to be required to get MAN-01 moving along its development pathway.
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