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Monday, January 01, 2007 9:35:30 PM
The logic of the in-licensing--which I finally 'get', doesn't alter or detract from the fundamental value of the technology. It simply needs to be developed by a large pharma with carve outs for Fragile X and Huntington's. Personally, I think the key to unlocking the value of the company is not what happens with the FDA in 2/07(as important as this is), but rather when the high impacts get developed. And yes, it was upsetting to me that I looked on the in-licensing 'thing' as setting aside high impact development, ie the core focus--but this is misguided thinking. There are at the lead optimization phase with their high impacts; with more money they would have been in the clinic, but this misses the point of the large amount of money and scientific focus it will take to find the right high imact compound. This should be left in large pharmas hands.
Now one can make a philosophical case that internal development just might not be Cortex mission. Since 1993, how many ampakines has Cortex created and how many have been tried in man? I count two: CX516 and CX717 to date; I wouldn't count CX619-ORG24448 since it was taken from Cortex by Organon not too long after birth--so the overwhelming bulk of the safety/efficacy data in man was done by Organon. So, you have a proof of concept CX516 and CX717. To blame Stoll may 'feel good' but it doesn't address the big picture here. Would we have been better off doing a deal in 1995,1996,19997,1998,1999(you get the picture) for five million in upfronts, five million a year for five years coupled with royalties for the high impacts?
We are dealing with chronic lack of funding to exploit the real value driver of the company. So, doing a neurodegeneration deal in early '07(whether by choice or brought to the alter kicking a bit)will be viewed as the key inflection point of '07 when viewed through the lens of history . . . at least IMHO. To save or hold back the high impacts for the perfect deal has only cost us time, money and patent life.
So there are major problems with the whole structure of Cortex as a vehicle to exploit the ampakine technology. But this is not Stoll's fault. In fact, he recognized this early on with comments concerning the import of having several ampakines in the clinic--not just CX717--long before the hold was issued.
I would hope that 2007, turns out to(finally)be one of transformation for the company . . . perhaps thought of finally getting on the 'tracks' in the carwash and letting the track of large pharma push us through the carwash a bit. We've tried the do it alone approach since the 1990's; now it's 2007. I would be happy with a 5 million upfront high impact deal, five million plus milestones with a motivated large pharma with research support for three to four years. I hope for a second deal as well for CX717 if the hold is lifted in '07. If the hold is not lifted, I would hope for a deal for CX701 sooner rather than later as well.
Whether you agree with my 'approach' to Cortex or not may be getting immaterial. I don't see any good financing options here if the dosing is not liberalized. What looks like too low of a price for a financing is a moving target of sorts. But doing two deals: for the high impacts and for CX717/701 for ADHD, or some sort of combination deal is what I want most to happen in 2007. It will transform the perception of Cortex, it will allow an infusion of blood into rusty pipes of the ampakine platform, it will allow a higher stock price to do a financing if needed, it will allow Cortex to focus only on a few very niche applications like Fragile X and Huntington's Disease where it may makes sense for a small company to make sure all the i's and t's are dotted and crossed, and it would also allow for a quality in-licensing to move forward, or if done to be developed. Stoll is in public talking about possibly early '07 to do a high impact deal; would bad news in 2/07 change this target. Hardly, it would speed it up.
One can always make the counterpoint, well we can develop this or that to the phase IIb approach, we will lose if we do a deal at the early level, but it looks like those points may become moot given current fiscal realities. Of course, if Stoll and company pull the rabbit out of the molecular hat in 2/07 and ADHD becomes viable, and the stock soars back to life, then a phase IIb for ADHD and AD could then be contemplatd, but perhaps this can and should be used as "ammunition" whereas Cortex can pressure the large pharma for a decent deal in '07 instead of waiting for 2008.
By 2008, I expect almost all ampakine development will be out of Cortex hands. I expect one large--or most likely two smaller deals--with research support and Cortex retaining the rights for Huntington's and Fragile X(not sleep). I expect a financing as well at better terms than 1.24 a share--perhaps in the 2-3 range. And I expect Cortex to maturate as a company by 1. clinical milestones by our partners in Schizophrenia, ADHD, Depression, Alzheiemr's with high and low impacts as well as parkinsons with the high impacts(will it be 'one' or 'three' partners?). 2. Internal work in a focused setting for Huntington's and Fragile X and perhaps Rett's Syndrome. These are in the domain of a small company. 3. In-licensing another CNS compound(s) at the phase II level.
Outside of this, I see a buyout for what I view as small change for a large pharma. Eitherway, I just don't see a lot of downside risk; it's just a matter of what terms are acceptable to both parties in any negotiation; that too is a moving target.
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