Pour a mug or a glass of your preferred bevvie cause this will take a while to plow through.
My takeaways from the call today is all very positive and a tonne to unpack here and I mean a metric sh**-tonne to unpack.
Lots of blue sky on the horizon and there are a few minor "Whoomps!" and one "Whoomp! There it is!" in there to take notice of.
Biosynthesis:
Started off with the hire of Mike Woudenberg. I think we can thoughtfully consider his background and how the CEO laid it out. 20+ years of experience in biologics manufacturing; has led a team of 50 staff covering manufacturing, R&D and business development for a generic biologics company. This is the resume of someone who has been conducting commercial biosynthesis operations as a general manager. This means that InMed looks to have a strong leader who can take over the whole biosynthesis portfolio and grow it into a revenue-generating asset.
The CEO noted that biosynthesis will supply their own needs as well as represent incremental revenues. That is, enough production of pharmaceutical grade cannabinoids for their own purposes and will have capacity left over to produce cannabinoids for other pharmaceutical companies' research projects, and revenue is expected. Also, sales or licensing deals to a pharmaceutical or OTHER companies are part of the strategy.
The questions on biosynthesis were enlightening.
First, the gist of the question was pretty pointed, but the answer was great. In short, why do we have to do this with NRC and TBA partner when you said you could already do it? The solution was clear but let me summarize with the bigger picture. InMed is confident that they can do this and they already know the methodology for scale-up. However, saying you can do it and proving you have done it are different things. If you are going to do a licensing deal, you will get better terms if there is no more experimentation and when you are following a well-documented process. Also, when you are filing a Clinical Trial Application (CTA for Canada) or Investigative New Drug (IND for FDA), they require a highly detailed report on how the IND compound is manufactured and this is a good segway to INM-750 and clinical trials.
The three steps for biosynthesis scale-up and partners are also more transparent. InMed already has figured out the genetic engineering of the e-coli bug with UBC and no partner needed for scale-up. NRC is focusing on the stage 2 hot tub. I have described this before as an engineering process and not really a science experiment. They know how to do it, but now it's time to prove it at scale and tweak the process to create an exact, documented process for partners to follow.
The unnamed downstream partner is only working on extracting the cannabinoids at volume, and this answered a couple of my own questions on the specifics of what downstream purification actually meant. First, the CEO stated that the manufacture of the cannabinoids is completed in the fermentation stage (NRC) and no more assembly is required.
LET ME REPEAT THAT! No more assembly of the cannabinoids is required after fermentation! For anyone who is still carrying a yeast infection worry, there is another necessary step in the yeast process to put the cannabinoid building block components together before the purification process can start.
Whoomp! There it is! The yeast process is inferior.
Downstream purification is understood, and the unnamed partner is demonstrating or perfecting the documentation on how to do it at scale. The process is known, and we just need to show we can do it at large scale and provide the documentation for future licensing partners.
Why unnamed? The downstream partner is purifying a controlled substance. It may or may not be legal in jurisdictions that the company currently operates so no need to poke the bear before you have to. Considering the current state of sentiment to cannabis, better to just wait for the legalization legislation ... n'est pas?
Clinical Plan.
Everyone's question should be, "Why does this take so long?" The documentation is mountainous, and the attention to detail is a top priority. Also, planning out a clinical experiment requires a lot of experience and insight into describing a good outcome and how you measure it. It's not enough to say it works; you have to quantify how much it works. Also, as noted above, they need to state where the drug comes from, who makes it and how it meets the minimum requirements for quality and GMP certification. In other words, they are writing a really thick book where the whole plot is understood and planned, but the details need to be filled in. Some parts are still under the verification processes but meeting the timeline to get everything done on time.
The CEO noted that they are screening CRO's to choose a company to conduct the clinical trials. In this context, a CRO is a Clinical Research Organization that specializes in doing clinical trials. Almost all small biotech or specialty pharma companies use CRO's because they have the infrastructure in place and employees in every relevant city around the globe to oversee the trials. In other words, InMed doesn't need to hire more people or pay for expensive IT systems.
Long Awaited Question Answered:
In between the lines, we got the answer to what's going on with the French 3D Skin Company ATERA. A lot of people who've been here a while wanted to know about the ATERA experiments. I think we got the answer. They have been testing to see which formulations could safely and effectively penetrate the skin and deliver the right payload of cannabinoids. It sounds like the results are still being tabulated but are as expected and are positive. Even though they know what the outcome will be for these additional invivo experiments, they need to be completed to bolster their CTA/IND applications. It's best to have more facts are supporting the theory.
INM-750 is on course to get to clinical trials, and preclinical experiments are ongoing.
Still Unpacking!
The CEO gave some positive insight into the valuation of the clinical program and the strategies.
INM-750 is on pace, but there is no intention to partner it at this point for a couple of reasons. Firstly, and this is my interpretation, the designated target market for EB is small, accessible and known. As a result, there isn't a need to have a significant distribution partner. This is a very high-value market, but the distribution channel is small enough that a courier or the postal service could handle the complete distribution more effectively than a pharma partner. Also, the product doesn't need to be sold like other therapies so no need for a large sales team. Secondly, a more accurate valuation of INM-750 would become evident in Clinical Phase II. This is where they have completed safety trials and are seeing how well the therapy will work. Careful planning of the clinical trials is vital to ensure you can measure how well it works and the better the accuracy can result in a faster approval process and therefore a better the valuation.
Currently, the company should have enough cash to get INM-750 to phase II and possibly beyond so there is no need to rush to find a partner. For our valuation purposes, doing this alone would mean keeping all the proceeds from sales if they manufacture the cannabinoids themselves.
Also, covered was how INM-750 works. I mentioned this in a post before and to summarize, EB sufferers lack the naturally occurring glue (faulty or inadequate keratins) that keeps the two layers of skin attached, and INM-750 helps to stimulate the keratins to establish the missing bonds normal skin has. New in the description was that one cannabinoid speeds healing, reduces pain, itch and inflammation while the other cannabinoid stimulates the keratin regrowth.
INM-085 and INM-045 for glaucoma and pain are earlier-stage, and the current focus of the cash is to prioritize biosynthesis and INM-750. As a result, they are open to doing a co-development licensing deal for both. Since there is no timeline on a partner for either, it is possible that this could be done soon ... or not ... but there is a reasonable likelihood it will happen.
Last thing to unpack!
The analysts had more questions about the clinical program which means an evolving investment thesis. Esther from Oppenheimer was more interested in the clinical program and the regulatory process. Great news for us because now we can start to get more exposure as to how to evaluate the current INM-750 and the pipeline. Also, it sounds like Esther represents a biotech audience of investors.
During this update, you needed to listen carefully to what is going on. Very little in the way of hype and a lot of substance. This is the type of update that gives more comfort than adrenaline unless you know what you are looking for.
On the whoompiness-scale, I rate this a 7.5 out of 10 because we can transparently argue where we are in the process of commercialization with a high degree of certainty InMed will hit their stated milestones. Overall, I think InMed made a big step in reducing the perceived risk of this investment. Biosynthesis is going to happen. They know what they are doing. Also, they have set out a timeline that can meet our February 20, 2020 party: we could see the completion of phase I and an announcement of the phase II clinical plan. And THAT is when the party begins both figuratively and perhaps literally!
#STMF
