Is Cortex undervalued. You note an enterprise value of 35 million. Compare the company to EPIX is instructive from two standpoints. One, that a good deal can raise our market cap by 3-4. Two, a good deal and deals are in the cards. A vast gold rush of large pharma money is going to rush through the biotech hills of California, raising all biotech in its wake. This is not a maybe; this is a must for large pharmas to justify their market caps, market caps that depend on what have you done for me lately, and what will you do for me once the Lipitor patent bites the dust. The Epix drug that was part of a cluster of early, phase I drugs partnered was a 5-Ht4 modulator, spawning Acetylcholine release; it is at the phase Ib level, basically on the cusp of phase II. I’m sure there was a lot of interesting preclinical animal science to back up development of EPIX’s Glzxo partnered drug, partnered for 35 million in upfronts(the enterprise value of Cortex) and up to 1.3 billion in ultimate milestones, royalties if all programs ‘max out.’ Royalties are said to be in the double digits. I believe the phase Ia or Ib trials had some EEG testing showing the signal of efficacy that Cortex has designated the PET scan to represent proxy of effect. This post is not to bash EPIX or its product, but merely to point out the galloping horses of starving large pharma are in Pasadena and rapidly moving to Irvine. Cortex’ partnering days are ahead of her. It’s technological backbone of ampa-receptor modulators is every bit as impressive as EPIX or anything else I’ve seen in recent memory.
The enterprise value of Cortex at 35 million is for CX717 in phase IIa. I would argue that this figure assumes the worst for 717, with little chance of success. The enterprise value of Cortex at 35 million dollars also factors in Organon’s completed phase IIb monotherapy study and ongoing studies in depression at phase II and combination therapy approach for improving cognition in schizophrenia. The enterprise value of Cortex values all backups of CX717—such at CX701 and CX1501 to be valued at 35 million dollars. Cortex has obviously put CX701 though its paces to see if there is a problem and hasn’t found it. Organon has not found a histological problem with ORG24448. Finally, this enterprise value of Cortex at 35 million then factors in the high impacts with disease modifying potential in parkinson’s, stroke, fragile X, Huntington’s, ALS, Alzheimer’s and the low impact potential in ADHD and sleep at 35 million dollars along with its vast use and structure patents estate at 34-35 million dollars.
35 million dollars plus 10 million cash on hand leads to a market cap of about 45 million dollars. The patents, use and structures, the validation by proxy of Organon and LLY spending tens of millions in ampakine research and development, the significant animal research in upregulation of BDNF, modification of dendritic spines, the neuroprotective effects on striatal neurons in Parkinson’s animal models in MPTP models of toxicity, the human effects in sleep, cognition, ADHD: all valued at a total market cap at 45 million dollars. This in the context of multi-billion dollar market caps like Pfizer with their internal pipelines decimated, starving for biologicals at all stages of development. 45 million market cap; 35 million dollar enterprise value; risk? What risk? Seems to me the risk is factored into the price.
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