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Replies to post #75803 on Amarantus Bioscience Holdings Inc (AMBS)
06/05/13 12:10 PM
So what is the play?
At this time the only publicly traded company that is playing in this field is Amarantus (AMBS.OB). Amarantus owns sequence patents on MANF which were upheld in court after Hermo Pharma challenged them. As Henri mentioned, they challenged the patents because they believed that they covered too many possible variants of the protein and it therefore "causes "an undue burden" to anyone who would like to test these variants for activity". The only way I can interpret this is that anyone looking to test different variants of MANF will be forced to go through AMBS as it has patents "that cover all sequences with 90% homology to MANF".
After looking further at AMBS I came away with a list of some positives and negatives. Negatives always come first when assessing a micro-cap investment.
Negatives:
1.) Balance sheet is a risk, despite recent financing efforts. The company currently has roughly $600k in cash and a history of losses.
2.) There is still a stigma surrounding delivery methods of these neutrophic factors to the brain and other areas of the body; however, Henri seems to believe that there is already a good deal of progress on this front.
3.) Dilution risk - given that the company is very small and has had to issue shares in the past to raise capital, there is still further risk that they will need to raise capital via equity raises. Additional capital will need to be obtained through partnerships with larger pharma companies or through grants.
4.) The company is tiny, with only 3 full time employees and an outsourced clinical staff. While this is not uncommon (e.g., Hermo Pharma has 4 full time employees and an outsourced staff of around 20), it places additional emphasis on working with well seasoned advisors and directors that have had big pharma experience.
Positives:
1.) Probably the most important positive: Patent protection on MANF that was recently upheld in court.
2.) Almost equally as important, the company has a strong group of advisors with big pharma backgrounds and experience in bringing novel drug therapies to market. Below is a list of recently appointed advisor and what they had to say about the company's MANF program.
Dr. Joseph Rubinfeld, co-founder of Amgen, was recently appointed as an advisor to the company and had some very glowing things to say about MANF: "I believe in MANF," said Dr. Rubinfeld, "I have reviewed a great number of technologies in my 45 year career in the biopharmaceutical field, and I believe that MANF could be one of the biggest successes that I have ever seen. The fundamental scientific premise of reducing protein misfolding is basic, yet very profound. The data, while early, demonstrates very clearly at the cellular level and in animals that MANF reduces apoptosis, improves cellular function, and restores behavioural deficits in a number of disease models, including Parkinson's, Stroke, Myocardial Infarction and Traumatic Brain Injury. These are all indications with very large markets and clear unmet medical need. I believe that if we are able to further de-risk MANF with positive toxicology studies and early clinical data, the Company's new orphan drug strategy could get MANF to market rather expeditiously. MANF has the commercial potential to become a blockbuster drug."
Dr. Robert Zimmerman from Bayer (BAYZF): "I have been involved with Amarantus formally and informally for the past three years supporting the founders as they work tirelessly to advance MANF to a stage where it has real commercial potential," said Robert J. Zimmerman, SD. "While that effort has been centered on Parkinson's disease, I believe additional opportunities exist to diversify this therapeutic candidate. Ischemia/reperfusion, cardiovascular disease, stroke, traumatic brain injury, diabetes and potentially other disease conditions appear to be impacted by MANF based upon preclinical studies and the literature."
Clinton O. Allen from Bristol Myers Squibb (BMY): "I am very excited to join Amarantus at this critical time in its growth cycle," said Clinton O. Allen, newly appointed advisor to Amarantus. "The team at Amarantus has been working tremendously hard over the last few years to bring the MANF Program closer to actualizing its true potential. Now that the Company is looking at various partnering and funding opportunities to drive shareholder value, it is an opportune time to join the team in order meticulously evaluate proposals and make recommendations for future growth."
3.) The company has received two separate grants from the Michael J. Fox Foundation in 2010 and 2011 as well as a grant from the Center of Excellence in Apoptosis Research.
If AMBS is able to continue showing positive results in toxicology studies and preclinical data it is possible that larger pharmaceutical companies will seek a partnership with them. Having patent protection will certainly help them in negotiations and having a recent patent challenge upheld in courts could prove to be quite positive for them.
RISKS:
As always, micro caps are subject to significant risks and uncertainties. The micro cap field is littered with a lot of pump and dump companies and traders looking for short term moves. Volatity in this space is very high. Please do your own due diligence.
Disclosure: I am long AMBS.OB.
Additional disclosure: After doing a good deal of research on this field I am long AMBS. Please understand the risks of micro cap companies. They are highly volatile and subject to significant risks.
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