Wednesday, July 08, 2015 2:03:38 PM
AKAO DD..5.91
Achaogen is a clinical-stage biopharmaceutical company passionately committed to the discovery, development, and commercialization of novel antibacterials to treat multi-drug resistant, or MDR, gram-negative infections.
AKAO has significant institutional ownership, a low float, low market cap and recent insider buying. It has fast track designation, QIDP and a phase 3 program under SPA protocol. The price has unfairly being beaten down due to slow enrolment of one of their phase 3 trials. The story is unchanged and offers a great investment opportunity to buy undervalued shares with potential for significant price appreciation.
AKAO Company Presentation: files.shareholder.com/downloads/AMDA-2JY46Z/349323084x0x828511/1E165827-2E8E-4CFD-8E4A-E088CDFB074F/Achaogen_Presentation_-_BoA_-_2015-05-12.pdf
Current Market Cap: 110.29M
Shares Outstanding: 18.05M
Float: 9.83M
Institutional Ownership:
Institutional Holdings: 57.17% or 10,318,905 shares held, See below
Top 5:
1. FMR LLC 2,652,097
2. WELLCOME TRUST LTD (THE) AS TRUSTEE OF THE WELLCOME TRUST 1,398,850
3. VERSANT VENTURE MANAGEMENT, LLC 1,281,152
4. MAZAMA CAPITAL MANAGEMENT INC 675,059
5. OMEGA FUND MANAGEMENT, LLC 481,694
The well known Baker Bros Own 100,000 shares.
www.nasdaq.com/symbol/akao/ownership-summary
Insider Ownership:
www.nasdaq.com/symbol/akao/insider-trades
Recent Insider Buying:
June 10 2015:
Director John Doyle: 10,000 @ 5.53
Director ROBERTS BRYAN E 10,000 shares @ 5.53
Director Smither John W 10,000 shares @ 5.53
Director WALSH CHRISTOPHER T PHD 10,000 shares @ 5.53
Director STEA GREGORY 20,000 shares @ 5.53
Total Investment: $276,500
Note: Some sources suggest institutional ownership may be around 85.98% or 15,518,772 shares. This would mean that the float is actually around 2.5M which is miniscule. The float is in the range of 2.5 to 9.83M.
Source: www.reuters.com/finance/stocks/companyOfficers?symbol=AKAO.O
AKAO IPO’d for $12.00 per share on the 12th March 2014 and shortly after investor excitement pushed the price up to $19.00 per share. The stock has recently fallen below the IPO price and currently trading in the $6.00 range. Investors have reacted poorly to the delay in enrolment for their Phase 3 CARE study which evaluates their lead candidate plazomicin in patients with bloodstream infections (BSI) and pneumonia due to carbapenem-resistant Enterobacteriaceae (CRE). CRE is a top global threat in infectious diseases often associated with significant morbidity and mortality. The company initially was on track to file a NDA in the middle of 2017. However, the delay in enrolment has now pushed the NDA filing to the middle of 2018. Further to this in Q1 2015 the company announced an additional trial which will evaluate plazomicin in patients with complicated urinary tract infections, or, cUTI. With the addition of this trial the company will remain on their initial target for a mid 2017 NDA filing. Even though the NDA filing date remains the same, investors sold the stock off and at these levels which offers the medium term investor an opportunity to buy undervalued shares.
With the current price drop short interest has increased and as from June 2015 short interest is 7.4% of the float or 857,028 shares. This would take approx. 8 days to cover at current trading volume. I believe this will add more fuel to the fire when the stock breaks out from its current price consolidation.
www.nasdaq.com/symbol/akao/short-interest
At $6.00 per share the market cap is 110.29M which is extremely low for a company who is in phase 3. A 100M market cap is mostly associated with earlier stage biotechnology companies. Here is how AKAO’s market cap stacks up against its peers and one of the reasons why there may be significant increase in price per share during their phase 3 program:
Market Cap:
CEMP: 1.54B
TTPH: 1.74B
PRTK: 450M
DRTX bought out for $675 Million
TSRX bought out by CBST for $707M Market caps are 6x to 15x that of AKAO
Small cap focused-antibiotic companies such as DRTX and TSRX who were in phase 3 trials similar to AKAO traded to price highs of $24 per share and $14 per share respectively prior to being acquired. Investors have been impatient with AKAO and at current market cap is grossly undervalued. I see this is a medium to long term play with upside in the range of 100-350% during the current phase 3 plazomicin program.
Clinical Trials:
AKAO’s lead candidate plazomicin is currently being evaluated in two phase 3 trials to treat serious bacterial infections due to Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae (CRE) which is a top global threat in infectious diseases. The CDC labelled CRE as a ‘nightmare bacteria’ indicated that CRE pose a public health threat requiring “urgent and aggressive action.” These bacteria are commonly MDR (Multi Drug Resistant), exhibiting resistance to not only carbapenems, but also to nearly all antibiotics commonly used to treat gram-negative infections, including cephalosporins, beta-lactam/beta-lactamase inhibitor combinations, fluoroquinolones, and currently marketed aminoglycosides. Most CRE express enzymes called carbapenemases which break down the carbapenem antibiotic molecule before it can kill the bacteria. Due to the lack of effective therapies, CRE infections are associated with significant mortality, with up to 50% mortality observed in patients with bloodstream infections.
Two phase 3 trials for lead candidate Plazonmicin:
The first phase 3 study is their on-going SPA Phase 3 CARE study which is being evaluated in patients with bloodstream infections (BSI) and pneumonia due to CRE. As guided in Q1, the Company has worked with the FDA on a protocol amendment with the goal of improving patient enrolment in the CARE study. The amendment also changes the primary endpoint to include not only mortality, but also other significant disease-related complications, which increases the statistical power of the study and which the Company also believes provides a more sensitive measure of the antibiotic treatment effect. Achaogen's goal is to complete the CARE study, and submit a supplemental NDA during the second half of 2018.
The second phase 3 study which the company recently announced in 1Q 2015 evaluates plazomicin in patients with complicated urinary tract infections or cUTI. This additional study significantly expands the market opportunity for plazomicin to include the population of patients with cUTI infections caused by MDR (multi drug resistant) Enterobacteriaceae. The additional cUTI phase 3 study is a single global phase 3 trial which is due to begin enrolment in Q4 2014. This trial will enrol 530 patients which is significantly smaller than other industry sponsored phase 3 cUTI trials. AKAO believes that this reflects the FDA’s recognition of the unmet need for new antibiotics to treat MDR bacterial infections with high morbidity and mortality. The trial cost is estimated at 45-50M (current cash: 101M) from 2015 to 2017 which the company anticipates will primarily be accessed via non-dilutive sources such as government contracts (BARDA), grants, and debt. Top line results and NDA submission are expected in the second half of 2017.
Despite the delay in enrolment for the phase 3 CARE study; the inclusion of the second cUTI trial means the company is still on track to achieve their original goal of a NDA filing in 2017. This indicates that the recent price drop is due to investors losing patience with the CARE study even though the NDA filing target is essentially unchanged.
A look at the limitations of existing therapies:
No agents approved for CRE infections of any type; existing therapies colistin and tigecycline have limitations. Colistin is a decades old drug that fell out of favour due its nephrotoxicity which is toxicity to the kidney and is one of the last resort antibiotics to treat Multi Drug Resistant bacteria’s. Tigecyline: The FDA recently approved a new boxed warning due to increased risk of death when IV tigecyline is used for FDA approved and non FDA approved uses. A Boxed Warning is the strongest warning given to a drug. Pzifer sells the Tigecycline under the name Tygacil with revenues $335 in 2012, $358 million in 2013 and $323 in 2014.
Sources:
Colistin: https://en.wikipedia.org/wiki/Colistin
www.huffingtonpost.com/2013/09/27/tygacil-fda-warning-death-antibiotic_n_4005236.html
[url]www.fda.gov/Drugs/DrugSafety/ucm369580.htm[/url
As the CDC has stated the CRE family of germs are difficult to treat due to high levels of resistance to antibiotics. Existing therapies have the limitations and dangers as expressed above. It is clear that AKAO will be filling a critical unmet medical need. The FDA has provided strong recognition of the unmet need for new antibiotics: In 2012 the FDA granted fast track designation for plazomicin to treat serious and life-threatening CRE infections. Additionally in 2014, plazomicin received Qualified Infections Disease Product, or QIDP designation from the FDA which provides certain incentives for the development of new antibiotics, including priority review and an additional five years of market exclusivity. Further to this the recently announced Phase 3 cUTI trial will have 530 patients which is significantly smaller than other industry sponsored phase 3 cUTI trials and the company believes that this reflects the FDA's recognition of the unmet need for new antibiotics that treat MDR bacterial infections with high morbidity and mortality.
Funding:
The plazomicin program is funded in part with a contract from the Biomedical Advanced Research and Development Authority, or BARDA, for up to $103.8 million.
Through March 31, 2015, a total of $64.3 million under the BARDA contract has been recorded as revenue, with $39.5 million remaining available from the funding currently committed under the contract.
The company has as of March 31, 2015 $61.6 million in cash. The company has indicated that they will use the money from the IPO funding and BARDA contract to fund both phase 3 trials. This provides cash of 101.1M (Cost of PH3 cUTI 45-50M) which alleviates the risk of future dilution.
Outstanding Warrants: Exercisable at $15.40, $12.36 and $11.99 per share
Series A: Isis Pharmaceuticals: Convertible preferred stock at a fair value of $15.40 per share
Series C: Loan agreement to Oxford Finance LLC and SVB to purchase 20,016 and 10,008 shares, respectively, of its Series C convertible preferred stock at an exercise price of $11.99 per share.
Warrants to purchase 30,024 shares of common stock at an exercise price of $11.99 remain outstanding as of March 31, 2015.
Management:
Kenneth J. Hillan M.B. Ch.B. Chief Executive Officer
Dr. Hillan joined Achaogen in April 2011 as Chief Medical Officer and was appointed Chief Executive Officer and a member of its board of directors in October 2011. Prior to joining Achaogen, from August 1994 to April 2011, Dr. Hillan served at Genentech, Inc. (acquired by Roche in 2009), a pharmaceutical company. Dr. Hillan was responsible for numerous successful drug approvals and led the medical and scientific strategies for its Immunology, Tissue Growth and Repair drug portfolio. He served in a number of key leadership positions in research and development, including Senior Vice President Clinical Development, Inflammation, Vice President Immunology, Tissue Growth and Repair (ITGR), Vice President Development Sciences and Vice President Research Operations and Pathology. Dr. Hillan also previously served as Senior Vice President and head of Clinical Development and Product Development Strategy in Asia-Pacific for Roche in Shanghai, China.
Dr. Hillan has an M.B. Ch.B. (Bachelor of Medicine and Surgery) degree from the Faculty of Medicine at the University of Glasgow, U.K. Dr. Hillan is a Fellow of the Royal College of Surgeons (FRCS), and a Fellow of the Royal College of Pathologists (FRCPath). Dr. Hillan has authored dozens of scientific publications and is a named inventor on almost 50 issued patents.
Derek A. Bertocci Senior Vice President and Chief Financial Officer
Mr. Bertocci has served as our Senior Vice President and Chief Financial Officer since February 2014. Prior to joining Achaogen, Mr. Bertocci was Senior Vice President and Chief Financial Officer of Accuray Incorporated, a publicly traded radiation oncology company, from January 2009 to September 2013. From October 2006 through December 2008, Mr. Bertocci served as the Chief Financial Officer of BioForm Medical, Inc., a publicly traded medical aesthetics company. From June 2005 to July 2006, he was Chief Financial Officer of Laserscope, a publicly traded provider of lasers and fiber optic devices for urology and aesthetic surgery. Prior to that, Mr. Bertocci spent a number of years in various roles at VISX Incorporated, a publicly traded provider of systems for laser vision correction surgery, including as Chief Financial Officer from March 2004 to May 2005 and Vice President and Controller from 1998 to March 2004. Mr. Bertocci holds a B.A. from Stanford University and an M.B.A. from the University of Southern California. Mr. Bertocci is also a Certified Public Accountant (inactive).
Ian R. Friedland, MD Chief Medical Officer
Dr. Friedland joined Achaogen in 2014 as Chief Medical Officer. Prior to joining Achaogen, Dr. Friedland served as Vice President, Clinical Development at Cubist Pharmaceuticals, a publicly traded, global biopharmaceutical company focused on the research, development, and commercialization of pharmaceutical products addressing significant unmet medical needs in the acute care environment. At Cubist, he led the development of the anti-infectives, pain, and gastroenterology therapeutic areas while also managing the biostatistics, medical writing, clinical pharmacology and pharmacovigilence programs. Specific anti-infective experience included leading the development of ceftolozane/tazobactam, surotomycin and late stage daptomycin studies. Before Cubist, Dr. Friedland was the Chief Medical Officer at Calixa Therapeutics, a San Diego-based private company focused on the development of a novel cephalosporin to address the expanding problem of multi-drug resistant organisms, which was acquired by Cubist in December of 2009. Prior to Calixa, Dr. Friedland held senior managerial positions at Merck & Co where he served as Director, Clinical Research, Anti-Infectives and Johnson & Johnson as Senior Director, Clinical Research.
Directors:
http://investors.achaogen.com/directors.cfm
Notably: Christopher T. Walsh Ph.D. Hamilton Kuhn Professor of Biological Chemistry and Molecular Pharmacology, Harvard Medical School
Dr. Walsh has served on Achaogen’s board of directors since October 2008. Dr. Walsh has been the Hamilton Kuhn Professor of Biological Chemistry and Molecular Pharmacology at Harvard Medical School since 1991 and formerly was president of the Dana-Farber Cancer Institute from 1992 to 1995 and chairman of the Department of Biological Chemistry and Molecular Pharmacology at Harvard Medical School from 1987 to 1995. He has performed extensive research in enzyme stereochemistry, reaction mechanisms and the mechanisms of action of anti-infective and immunosuppressive agents. Dr. Walsh serves on the Scientific Advisory Board for LS9, Inc., Epizyme Corporation, Verastem, Inc., Hua Medicine, and Abide Therapeutics. Dr. Walsh is also a member of the board of directors of Ironwood Pharmaceuticals, Inc., a publicly traded pharmaceuticals company, and Proteostasis Therapeutics, Inc., a privately held biotechnology company. Dr. Walsh has an A.B. in Biology from Harvard University and a Ph.D. in Life Sciences from The Rockefeller University, New York.
Chris Walsh is a scientist of tremendous importance and stature in the world of biochemistry. He has authored over 650 publications since 1965 with an average of over 15 publications per year for 42 years. He has the following awards:
Eli Lilly Award in Biochemistry
Arthur C. Cope Scholar Award in Organic Chemistry
Repligen Award in Biological Chemistry
Alfred Bader Award in Bioorganic and Bioinorganic Chemistry
Promega Biotechnology Research Award from the American Society for Microbiology (ASM).
Chart:
I have been watching AKAO now for a month and it has held up very well in the face of overall weakness in the market. It trades very thin and small volume moves the price very quickly. On a day the IBB dropped over 1.5% AKAO stayed green and on other days it was minorly down on the day. The strength in this price consolidation may mean the significant selling is behind us. I use this relative strength to gauge the supply and demand of market participants. If the market is down huge and your stocks are not getting killed it may mean the price bottom is in. The chart below shows the quiet accumulation and the new price floor.
Conclusion:
AKAO’s phase 3 program is hugely undervalued relative to peers. Others have a market cap 6-15x that of AKAO. AKAO is a focused antibiotic company and may trade like DRTX and TSRX while still in their phase 3 programs rose to price highs of $24 and $14 per share. I expect significant price appreciation from current levels while AKAO moves Plazomicin through its phase 3 program.
Achaogen is a clinical-stage biopharmaceutical company passionately committed to the discovery, development, and commercialization of novel antibacterials to treat multi-drug resistant, or MDR, gram-negative infections.
AKAO has significant institutional ownership, a low float, low market cap and recent insider buying. It has fast track designation, QIDP and a phase 3 program under SPA protocol. The price has unfairly being beaten down due to slow enrolment of one of their phase 3 trials. The story is unchanged and offers a great investment opportunity to buy undervalued shares with potential for significant price appreciation.
AKAO Company Presentation: files.shareholder.com/downloads/AMDA-2JY46Z/349323084x0x828511/1E165827-2E8E-4CFD-8E4A-E088CDFB074F/Achaogen_Presentation_-_BoA_-_2015-05-12.pdf
Current Market Cap: 110.29M
Shares Outstanding: 18.05M
Float: 9.83M
Institutional Ownership:
Institutional Holdings: 57.17% or 10,318,905 shares held, See below
Top 5:
1. FMR LLC 2,652,097
2. WELLCOME TRUST LTD (THE) AS TRUSTEE OF THE WELLCOME TRUST 1,398,850
3. VERSANT VENTURE MANAGEMENT, LLC 1,281,152
4. MAZAMA CAPITAL MANAGEMENT INC 675,059
5. OMEGA FUND MANAGEMENT, LLC 481,694
The well known Baker Bros Own 100,000 shares.
www.nasdaq.com/symbol/akao/ownership-summary
Insider Ownership:
www.nasdaq.com/symbol/akao/insider-trades
Recent Insider Buying:
June 10 2015:
Director John Doyle: 10,000 @ 5.53
Director ROBERTS BRYAN E 10,000 shares @ 5.53
Director Smither John W 10,000 shares @ 5.53
Director WALSH CHRISTOPHER T PHD 10,000 shares @ 5.53
Director STEA GREGORY 20,000 shares @ 5.53
Total Investment: $276,500
Note: Some sources suggest institutional ownership may be around 85.98% or 15,518,772 shares. This would mean that the float is actually around 2.5M which is miniscule. The float is in the range of 2.5 to 9.83M.
Source: www.reuters.com/finance/stocks/companyOfficers?symbol=AKAO.O
AKAO IPO’d for $12.00 per share on the 12th March 2014 and shortly after investor excitement pushed the price up to $19.00 per share. The stock has recently fallen below the IPO price and currently trading in the $6.00 range. Investors have reacted poorly to the delay in enrolment for their Phase 3 CARE study which evaluates their lead candidate plazomicin in patients with bloodstream infections (BSI) and pneumonia due to carbapenem-resistant Enterobacteriaceae (CRE). CRE is a top global threat in infectious diseases often associated with significant morbidity and mortality. The company initially was on track to file a NDA in the middle of 2017. However, the delay in enrolment has now pushed the NDA filing to the middle of 2018. Further to this in Q1 2015 the company announced an additional trial which will evaluate plazomicin in patients with complicated urinary tract infections, or, cUTI. With the addition of this trial the company will remain on their initial target for a mid 2017 NDA filing. Even though the NDA filing date remains the same, investors sold the stock off and at these levels which offers the medium term investor an opportunity to buy undervalued shares.
With the current price drop short interest has increased and as from June 2015 short interest is 7.4% of the float or 857,028 shares. This would take approx. 8 days to cover at current trading volume. I believe this will add more fuel to the fire when the stock breaks out from its current price consolidation.
www.nasdaq.com/symbol/akao/short-interest
At $6.00 per share the market cap is 110.29M which is extremely low for a company who is in phase 3. A 100M market cap is mostly associated with earlier stage biotechnology companies. Here is how AKAO’s market cap stacks up against its peers and one of the reasons why there may be significant increase in price per share during their phase 3 program:
Market Cap:
CEMP: 1.54B
TTPH: 1.74B
PRTK: 450M
DRTX bought out for $675 Million
TSRX bought out by CBST for $707M Market caps are 6x to 15x that of AKAO
Small cap focused-antibiotic companies such as DRTX and TSRX who were in phase 3 trials similar to AKAO traded to price highs of $24 per share and $14 per share respectively prior to being acquired. Investors have been impatient with AKAO and at current market cap is grossly undervalued. I see this is a medium to long term play with upside in the range of 100-350% during the current phase 3 plazomicin program.
Clinical Trials:
AKAO’s lead candidate plazomicin is currently being evaluated in two phase 3 trials to treat serious bacterial infections due to Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae (CRE) which is a top global threat in infectious diseases. The CDC labelled CRE as a ‘nightmare bacteria’ indicated that CRE pose a public health threat requiring “urgent and aggressive action.” These bacteria are commonly MDR (Multi Drug Resistant), exhibiting resistance to not only carbapenems, but also to nearly all antibiotics commonly used to treat gram-negative infections, including cephalosporins, beta-lactam/beta-lactamase inhibitor combinations, fluoroquinolones, and currently marketed aminoglycosides. Most CRE express enzymes called carbapenemases which break down the carbapenem antibiotic molecule before it can kill the bacteria. Due to the lack of effective therapies, CRE infections are associated with significant mortality, with up to 50% mortality observed in patients with bloodstream infections.
Two phase 3 trials for lead candidate Plazonmicin:
The first phase 3 study is their on-going SPA Phase 3 CARE study which is being evaluated in patients with bloodstream infections (BSI) and pneumonia due to CRE. As guided in Q1, the Company has worked with the FDA on a protocol amendment with the goal of improving patient enrolment in the CARE study. The amendment also changes the primary endpoint to include not only mortality, but also other significant disease-related complications, which increases the statistical power of the study and which the Company also believes provides a more sensitive measure of the antibiotic treatment effect. Achaogen's goal is to complete the CARE study, and submit a supplemental NDA during the second half of 2018.
The second phase 3 study which the company recently announced in 1Q 2015 evaluates plazomicin in patients with complicated urinary tract infections or cUTI. This additional study significantly expands the market opportunity for plazomicin to include the population of patients with cUTI infections caused by MDR (multi drug resistant) Enterobacteriaceae. The additional cUTI phase 3 study is a single global phase 3 trial which is due to begin enrolment in Q4 2014. This trial will enrol 530 patients which is significantly smaller than other industry sponsored phase 3 cUTI trials. AKAO believes that this reflects the FDA’s recognition of the unmet need for new antibiotics to treat MDR bacterial infections with high morbidity and mortality. The trial cost is estimated at 45-50M (current cash: 101M) from 2015 to 2017 which the company anticipates will primarily be accessed via non-dilutive sources such as government contracts (BARDA), grants, and debt. Top line results and NDA submission are expected in the second half of 2017.
Despite the delay in enrolment for the phase 3 CARE study; the inclusion of the second cUTI trial means the company is still on track to achieve their original goal of a NDA filing in 2017. This indicates that the recent price drop is due to investors losing patience with the CARE study even though the NDA filing target is essentially unchanged.
A look at the limitations of existing therapies:
No agents approved for CRE infections of any type; existing therapies colistin and tigecycline have limitations. Colistin is a decades old drug that fell out of favour due its nephrotoxicity which is toxicity to the kidney and is one of the last resort antibiotics to treat Multi Drug Resistant bacteria’s. Tigecyline: The FDA recently approved a new boxed warning due to increased risk of death when IV tigecyline is used for FDA approved and non FDA approved uses. A Boxed Warning is the strongest warning given to a drug. Pzifer sells the Tigecycline under the name Tygacil with revenues $335 in 2012, $358 million in 2013 and $323 in 2014.
Sources:
Colistin: https://en.wikipedia.org/wiki/Colistin
www.huffingtonpost.com/2013/09/27/tygacil-fda-warning-death-antibiotic_n_4005236.html
[url]www.fda.gov/Drugs/DrugSafety/ucm369580.htm[/url
As the CDC has stated the CRE family of germs are difficult to treat due to high levels of resistance to antibiotics. Existing therapies have the limitations and dangers as expressed above. It is clear that AKAO will be filling a critical unmet medical need. The FDA has provided strong recognition of the unmet need for new antibiotics: In 2012 the FDA granted fast track designation for plazomicin to treat serious and life-threatening CRE infections. Additionally in 2014, plazomicin received Qualified Infections Disease Product, or QIDP designation from the FDA which provides certain incentives for the development of new antibiotics, including priority review and an additional five years of market exclusivity. Further to this the recently announced Phase 3 cUTI trial will have 530 patients which is significantly smaller than other industry sponsored phase 3 cUTI trials and the company believes that this reflects the FDA's recognition of the unmet need for new antibiotics that treat MDR bacterial infections with high morbidity and mortality.
Funding:
The plazomicin program is funded in part with a contract from the Biomedical Advanced Research and Development Authority, or BARDA, for up to $103.8 million.
Through March 31, 2015, a total of $64.3 million under the BARDA contract has been recorded as revenue, with $39.5 million remaining available from the funding currently committed under the contract.
The company has as of March 31, 2015 $61.6 million in cash. The company has indicated that they will use the money from the IPO funding and BARDA contract to fund both phase 3 trials. This provides cash of 101.1M (Cost of PH3 cUTI 45-50M) which alleviates the risk of future dilution.
Outstanding Warrants: Exercisable at $15.40, $12.36 and $11.99 per share
Series A: Isis Pharmaceuticals: Convertible preferred stock at a fair value of $15.40 per share
Series C: Loan agreement to Oxford Finance LLC and SVB to purchase 20,016 and 10,008 shares, respectively, of its Series C convertible preferred stock at an exercise price of $11.99 per share.
Warrants to purchase 30,024 shares of common stock at an exercise price of $11.99 remain outstanding as of March 31, 2015.
Management:
Kenneth J. Hillan M.B. Ch.B. Chief Executive Officer
Dr. Hillan joined Achaogen in April 2011 as Chief Medical Officer and was appointed Chief Executive Officer and a member of its board of directors in October 2011. Prior to joining Achaogen, from August 1994 to April 2011, Dr. Hillan served at Genentech, Inc. (acquired by Roche in 2009), a pharmaceutical company. Dr. Hillan was responsible for numerous successful drug approvals and led the medical and scientific strategies for its Immunology, Tissue Growth and Repair drug portfolio. He served in a number of key leadership positions in research and development, including Senior Vice President Clinical Development, Inflammation, Vice President Immunology, Tissue Growth and Repair (ITGR), Vice President Development Sciences and Vice President Research Operations and Pathology. Dr. Hillan also previously served as Senior Vice President and head of Clinical Development and Product Development Strategy in Asia-Pacific for Roche in Shanghai, China.
Dr. Hillan has an M.B. Ch.B. (Bachelor of Medicine and Surgery) degree from the Faculty of Medicine at the University of Glasgow, U.K. Dr. Hillan is a Fellow of the Royal College of Surgeons (FRCS), and a Fellow of the Royal College of Pathologists (FRCPath). Dr. Hillan has authored dozens of scientific publications and is a named inventor on almost 50 issued patents.
Derek A. Bertocci Senior Vice President and Chief Financial Officer
Mr. Bertocci has served as our Senior Vice President and Chief Financial Officer since February 2014. Prior to joining Achaogen, Mr. Bertocci was Senior Vice President and Chief Financial Officer of Accuray Incorporated, a publicly traded radiation oncology company, from January 2009 to September 2013. From October 2006 through December 2008, Mr. Bertocci served as the Chief Financial Officer of BioForm Medical, Inc., a publicly traded medical aesthetics company. From June 2005 to July 2006, he was Chief Financial Officer of Laserscope, a publicly traded provider of lasers and fiber optic devices for urology and aesthetic surgery. Prior to that, Mr. Bertocci spent a number of years in various roles at VISX Incorporated, a publicly traded provider of systems for laser vision correction surgery, including as Chief Financial Officer from March 2004 to May 2005 and Vice President and Controller from 1998 to March 2004. Mr. Bertocci holds a B.A. from Stanford University and an M.B.A. from the University of Southern California. Mr. Bertocci is also a Certified Public Accountant (inactive).
Ian R. Friedland, MD Chief Medical Officer
Dr. Friedland joined Achaogen in 2014 as Chief Medical Officer. Prior to joining Achaogen, Dr. Friedland served as Vice President, Clinical Development at Cubist Pharmaceuticals, a publicly traded, global biopharmaceutical company focused on the research, development, and commercialization of pharmaceutical products addressing significant unmet medical needs in the acute care environment. At Cubist, he led the development of the anti-infectives, pain, and gastroenterology therapeutic areas while also managing the biostatistics, medical writing, clinical pharmacology and pharmacovigilence programs. Specific anti-infective experience included leading the development of ceftolozane/tazobactam, surotomycin and late stage daptomycin studies. Before Cubist, Dr. Friedland was the Chief Medical Officer at Calixa Therapeutics, a San Diego-based private company focused on the development of a novel cephalosporin to address the expanding problem of multi-drug resistant organisms, which was acquired by Cubist in December of 2009. Prior to Calixa, Dr. Friedland held senior managerial positions at Merck & Co where he served as Director, Clinical Research, Anti-Infectives and Johnson & Johnson as Senior Director, Clinical Research.
Directors:
http://investors.achaogen.com/directors.cfm
Notably: Christopher T. Walsh Ph.D. Hamilton Kuhn Professor of Biological Chemistry and Molecular Pharmacology, Harvard Medical School
Dr. Walsh has served on Achaogen’s board of directors since October 2008. Dr. Walsh has been the Hamilton Kuhn Professor of Biological Chemistry and Molecular Pharmacology at Harvard Medical School since 1991 and formerly was president of the Dana-Farber Cancer Institute from 1992 to 1995 and chairman of the Department of Biological Chemistry and Molecular Pharmacology at Harvard Medical School from 1987 to 1995. He has performed extensive research in enzyme stereochemistry, reaction mechanisms and the mechanisms of action of anti-infective and immunosuppressive agents. Dr. Walsh serves on the Scientific Advisory Board for LS9, Inc., Epizyme Corporation, Verastem, Inc., Hua Medicine, and Abide Therapeutics. Dr. Walsh is also a member of the board of directors of Ironwood Pharmaceuticals, Inc., a publicly traded pharmaceuticals company, and Proteostasis Therapeutics, Inc., a privately held biotechnology company. Dr. Walsh has an A.B. in Biology from Harvard University and a Ph.D. in Life Sciences from The Rockefeller University, New York.
Chris Walsh is a scientist of tremendous importance and stature in the world of biochemistry. He has authored over 650 publications since 1965 with an average of over 15 publications per year for 42 years. He has the following awards:
Eli Lilly Award in Biochemistry
Arthur C. Cope Scholar Award in Organic Chemistry
Repligen Award in Biological Chemistry
Alfred Bader Award in Bioorganic and Bioinorganic Chemistry
Promega Biotechnology Research Award from the American Society for Microbiology (ASM).
Chart:
I have been watching AKAO now for a month and it has held up very well in the face of overall weakness in the market. It trades very thin and small volume moves the price very quickly. On a day the IBB dropped over 1.5% AKAO stayed green and on other days it was minorly down on the day. The strength in this price consolidation may mean the significant selling is behind us. I use this relative strength to gauge the supply and demand of market participants. If the market is down huge and your stocks are not getting killed it may mean the price bottom is in. The chart below shows the quiet accumulation and the new price floor.
Conclusion:
AKAO’s phase 3 program is hugely undervalued relative to peers. Others have a market cap 6-15x that of AKAO. AKAO is a focused antibiotic company and may trade like DRTX and TSRX while still in their phase 3 programs rose to price highs of $24 and $14 per share. I expect significant price appreciation from current levels while AKAO moves Plazomicin through its phase 3 program.
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