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Liquidmetal :
Zalicus - A biopharma with two pending catalysts
Zalicus Inc. (ZLCS) is a developmental-stage biopharma with two pending catalysts for its leading clinical candidate Z160. Specifically, the company has announced that they expect to complete data collection for two Phase II trials for chronic neuropathic pain indications lumbrosacral radiculopathy and postherpetic neuralgia respectively, with top-line results to be announced in late 2013. Z160 is a first in class, oral, state dependent, selective N-type calcium channel blocker that has the potential to be used for a wide variety of chronic pain conditions. Last month, Zalicus also received Orphan Drug Status from the FDA for Z160 as a potential treatment for postherpetic neuralgia.
The potential market size for Z160 as a treatment for neuropathic pain should easily top a billion a year. To back up this assertion, the current market leader in the neuropathic pain market, Pfizer's (PFE) Lyrica, is on track to break the $2B mark this year alone, and has shown steady growth since its initial launch in 2005. Moreover, sales of Eli Lilly's (LLY) Cymbalta for neuropathic pain are also expected to exceed $1B in 2013, showing the strength of this rapidly growing niche-market. Compared to Zalicus's small market cap of approximately $156 M, Z160 thus offers investors a potentially outstanding reward going forward.
Mr. Market has yet to notice Z160's value proposition
While Zalicus is up more than 80% year-to-date, speculative investors, by and large, haven't jumped into this stock with both feet. Namely, the average volume for ZLCS is well shy of 2 M shares per day, despite the fact that company was recently priced around $1 a share prior to its 1 for 6 Reverse Split yesterday. Moreover, the company's market cap still remains demonstrably south of its peers currently performing advanced Phase II trials, e.g., Novavax (NVAX), Inovio (INO)-just to name a few. Essentially, biopharmas with pending top-line Phase II results tend to hover closer to $300 M instead of $100 M in terms of market cap. Based on these comparisons, Zalicus would appear to be undervalued by at least 40% prior to the announcement of its pending Phase II results.
With such a dramatically undervalued market cap, the question potential investors must answer is, why has Zalicus failed to attract the attention of the broader market? I believe the answer to this question is relatively straight-forward but it is critically important for investors to understand.
The answer is that Zalicus is essentially broke, and has a deficit topping $350 M due in large part to the failed development of the company's previous leading drug candidate Synavive. By my estimates, Zalicus only has about $14.5 M remaining in cash and cash equivalents (see hyperlink above), yet is burning nearly $2.5M a month. As the company states in their latest 10-Q, Zalicus only has enough money in the till to keep operating to about February 2014. The message is clear: Zalicus will have to rely heavily on its $25 M purchase agreement with Lincoln Park Capital to keep the doors open, and even this amount won't give the company nearly enough cash to perform a pivotal Phase III trial for Z160-assuming one or both of its current Phase II trials are successful. Even more problematically, a failure of both Phase II trials will undoubtedly be the end of Zalicus; a double failure at this junction will sink the stock and make it nearly impossible to finance the remainder of its drug pipeline. Overall, the serious problems with Zalicus's finances have kept the lid on investor enthusiasm thus far.
Value creation scenarios based on Z160
The risks associated with Zalicus are not exactly a mystery. I believe the company has chosen to perform two Phase II trials simultaneously in order to give themselves the best shot at keeping the business alive, and this strategy gives investors a potentially huge payday waiting in the wings. While the rumor mill about a potential partnership post-Phase II for Z160 has been going strong of late, I believe there are two potential scenarios that could play out if Z160 indeed reports top-line results in the 4th Quarter.
Frankly, Zalicus cannot advance Z160 on its own without wiping out current shareholders. Although the 1-for-6 reverse split has given the company some breathing room to stay listed on the Nasdaq, the size of the offering necessary for a "go it alone" strategy would crater share price; to do so would essentially put a black mark on the company in terms of shareholder trust. Remember, management is supposed to create value for shareholders.
With that in mind, I believe that are two ways for management to maximize shareholder value if Z160 has positive Phase II results. Firstly, there is a strong potential for a lucrative partnership with substantial upfront milestone payments. For example, Pfizer has shown a great deal of interest in locating novel pain medications, and even states on their website: "Pfizer is interested in partnering with innovative collaborators to develop novel and differentiated medicines to address the needs of patients suffering from pain." Secondly, I believe strong Phase II results make a buyout of Zalicus by a real possibility. Big Pharmas have shown no hesitation in snapping up promising pain medications at the Phase II stage, and even paying a hefty premium for pain medication pipelines. The reason is that the pain medication market is growing by leaps and bounds, with some of the top pain meds coming off patent protection.
What's the potential pay-off if I buy now?
As I stated above, Zalicus is already undervalued by as much as 50% based on prevailing market trends in the biotech sector. Even so, I expect the stock to move closer to its peers in the weeks ahead of any data announcement in the 4th Quarter, giving shares of ZLCS a potential upside of nearly 100% solely as a run-up trade. The potential future valuation will subsequently depend on the strength of the Phase II results. Both trials have decent sample sizes (n = 140), are double-blinded and placebo-controlled, meaning that safety and efficacy results should be decent indicators of larger Phase III trials, and the drug's potential for commercialization.
Based on the market size for pain meds (see hyperlinks above), I believe clear-cut Phase II trial results showing that Z160 is safe and efficacious easily earns the company a minimum market cap of $600 M through either a partnering deal or a buy-out. From current levels, Zalicus would thus appear to have a minimum 300% + upside if Z160 reports the expected top-line results. By contrast, if Z160 turns out to be a dud, Zalicus is probably a goner due to its troubling financial situation. Zalicus is thus an unequivocally high risk-high reward biotech.
Thank you for your interest in Zalicus. A Q&A document related to the reverse stock split can be found on the investor relations tab of the Zalicus website http://phx.corporate-ir.net/phoenix.zhtml?c=148036&p=irol-irhome, which I have excerpted below to respond to your inquiry:
While the reverse stock split had no direct impact on the equity market capitalization of Zalicus, we believed that the reverse stock split would provide benefits to the company and our stockholders in a number of ways, including:
• Allowing Zalicus to maintain the listing of its common stock on the Nasdaq Capital Market. Until September 30, 2013, Zalicus’ common stock had not had a closing bid price above the $1.00 per share required for continued listing on Nasdaq since September 7, 2012, and, as a result, was at risk of being delisted from the Nasdaq Capital Market for failure to maintain a $1.00 minimum bid price. Even with recent closing prices above $1.00 per share, the risk remained given the October 21, 2013 deadline for compliance. Zalicus believes that maintaining the listing of its common stock on the Nasdaq Capital Market is valuable to the company and its stockholders by providing a liquid market for its common stock which also facilitates potential future fundraising efforts. Zalicus expects that completing the reverse stock split will allow us to regain compliance with the $1.00 minimum bid price requirement and maintain our listing on the Nasdaq Capital Market.
• Providing a sufficient level of authorized shares of common stock available for future issuance. We require available authorized shares of common stock to provide for any potential future stock issuances to raise capital, effect acquisitions and/or provide equity incentives to our employees. Prior to the reverse stock split, only approximately 19% of the authorized shares of common stock under our Certificate of Incorporation remained available for issuance. The reverse split had the effect of increasing the number of shares of common stock available for issuance, by reducing the number of shares of our common stock outstanding, while not changing the number of shares of common stock authorized under our Certificate of Incorporation.
• Stock Price Volatility. We have been advised by certain institutional investors, as well as by our financial advisors, that a higher stock price might increase the acceptability of our common stock to a number of long-term investors who may not find our shares attractive at their pre-split price due to the trading volatility often associated with stocks below certain prices.
• Stock Price Requirements. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin.
• Transaction Costs. Investors also may be dissuaded from purchasing stock below certain prices because the brokerage commissions, as a percentage of the total transaction value, tend to be higher for such low-priced stocks.
holds well soon will be the split forgotten!
Great day...
very well today anyway. correction was always off
crazy ZLCS day!
PII : the results to come in october?
please LEVEL2 picture ... thanks
NO LQMT
iPhone 5C
NO LQMT
today i hope tomorrow goes up!!!
sell on good news ... it´s normal
Report of unscheduled material events or corporate event
FORM 8-K
http://phx.corporate-ir.net/phoenix.zhtml?c=148036&p=irol-sec
Yes 1 $ ... wowwwwww
monday is Zalicus "Investment Conference" ...
i hope it´s very positive
1 $
YES ...
positive PII news ... Zalicus Fly...
Good luck all ...
best time to buy... PII end...
i hope tomorrow we see green... bad day
Dollar ... go ... we need one and more ...
YES ... bye bye pennystock ...
Press Release:
9.Sep Investment Conference
http://phx.corporate-ir.net/phoenix.zhtml?c=148036&p=irol-newsArticle&ID=1851309&highlight=
Phase II :
http://phx.corporate-ir.net/phoenix.zhtml?c=148036&p=irol-newsArticle&ID=1851266&highlight=
Zalicus Inc. Pre-Market Trading
$.79* 0.08 +11.27%
Go to 1 $ GOOOO
you think next month news update? Or in sep. ??
today is great ... this week: the publication of the Company's quarterly results.
SEE YOU ... GREEN ...
its very still i need news ...
great :
http://ir.trinasolar.com/phoenix.zhtml?c=206405&p=irol-newsArticle&ID=1848618&highlight=
WOOWWW Great ... i like you
Colossus Minerals its so still...
GO GREEN ...
today we see 0.30 ?????
i hope today we see green GO kodak .. 0,18 ????
i hope
yeah go up baby...
we need 2013 iPhone rumors !!!!!
blogger do it...
Thank you for your interest in Liquidmetal Coatings. Despite the shared
name, Liquidmetal (which now goes by the name "Liquidmetal Technologies")
and Liquidmetal Coatings are in fact separate companies. Through 2011,
Liquidmetal Coatings was a majority owned subsidiary of Liquidmetal
Technologies. While Liquidmetal Coatings focused on metallic coatings
based upon amorphous metal technology, Liquidmetal Technologies focused
on bulk metallic glasses. At the end of 2011, Liquidmetal Coatings
became independently owned. We share a common name because of our common
heritage and use the same amorphous materials technology in our products.
For the most part, the two companies' products are used for very
different applications.
Liquidmetal.com adress is:
Liquidmetal® Technologies – Corporate
30452 Esperanza
Rancho Santa Margarita, CA 92688
liquidmetal-coatings.com
Adress is :
302 N Houston Ave
Suite 200
Humble, TX 77338
WHY ????
why they do not own LQMT merchandise store ... keychains with LQMT logo ...
whether in a year ... I'll buy a more favorable ...
Better positioned than ever before. Now even a favorable chance.
i hope for a big future... i dream ...
great news...
now only a good deal...
-6,04% we need news...
all over, and nothing really new... we need real NEWS ...
News
03/19/13
Liquidmetal Technologies to Present at the AeroMat Museum of Flight Event on April 3, 2013
03/07/13
Liquidmetal Technologies to Present at the 25th Annual ROTH Conference on March 20, 2013
02/28/13
Liquidmetal Technologies to Present at the TMS 2013 Annual Meeting & Exhibition Conference on March 5, 2013
good night all longs ... hope for a great LQMT future...
i hope for great news...
it´s time for LQMT ...
not for nothing that Steve Jobs had interest...
Apple has found a big future "product"