Access Pharma (OTC: ACCP.OB) is an emerging bio-pharmaceutical company which is focusing on the development of a late-stage, diversified oncology pipeline in addition to a treatment called MuGard is cleared for marketing in the U.S., Europe, and other key global markets for a common side effect of some cancer treatments known as mucositis (painful sores in the mouth and GI mucosal lining).
In addition, the Company is developing earlier stage compounds in its pipeline and has an oral cobalamin nanopolymer drug delivery technology (based on the uptake process for vitamin B-12 in the gut) which has demonstrated positive results for the delivery of insulin by mouth in preclinical animal models (e.g. 80% oral bioavailability for long-acting insulin taken by mouth rather than injection.
Key factors that influence the M&A process in the small / micro-cap bio-pharmaceutical space and how they make Access an appealing takeover target are outlined below.
1.) Management / Egos: In many cases, issues arise in prospective merger deals over who will control the combined company – however, SCO Capital and another large institutional shareholder (Oracle Partners) have no interest in simply prolonging their employment or leading the combined company in any buyout scenario. The perspective of SCO Capital is one of a large investor in the Company that is proactively trying to increase shareholder value and they utilize a network of scientific advisors, partnerships, and collaborations for R&D, commercialization, and marketing activities.
2.) Valuation Issues: The cost basis for large / institutional shareholders in Access Pharma is estimated by the CEO, Jeffrey Davis, at under $3 per share so that a buyout in the $9-11 range (approximately $200-240 million fully diluted market cap based on 22 million shares) would likely be appealing in my opinion and this is also in-line with the price target issued by Griffin Securities in their most recent report.
3.) Products and Pipeline Prospects: Access offers MuGard for the treatment of mucositis and the product is in the process of a global launch. The worldwide marketing clearance eliminates all clinical development risk and interim data from a post-marketing study in the U.K. by SpePharm is very encouraging for the product, demonstrating 100% prevention of mucositis in patients with head and neck cancer.
MuGard is priced at about $150 per week of treatment, which translates into about $1,000 per patient who receives a seven-week treatment course of radiation and/or chemotherapy (the latter treatment may last for much longer than seven weeks). Also, the $1,000 pricing for MuGard in a seven-week treatment cycle is a fraction of the cost for most anti-cancer therapeutics and less than the cost of treating the complications of severe cases of mucositis (e.g. intravenous feeding/hydration, pain medications, extended hospital stays, and antibiotics for infections that may arise from open sores in the mouth and GI tract).
In addition, targeted marketing of MuGard to oncologists will be an easy sell because of improved patient outcomes / comfort due to greatly reduced or prevented incidence of mucositis which allows patients to continue / complete their course of radiation therapy and / or chemo. Economically, oncologists could even purchase / subsidize the cost of MuGard for their patients on regimens with a high incidence of mucositis since typical treatments have a cost in the tens of thousands of dollars and represent a key source of revenue.
Thiarabine is the Company's next-generation nucleoside analogue (e.g. fludarabine, cladrabine) designed for the treatment of blood-based cancers such as lymphoma and leukemia (in addition to promising preclinical data for the prevention and treatment of rheumatoid arthritis). ACCP is working with the leader in this field, Dr. Hagop Kantarjian, who is Head of the Leukemia Department at the M.D.
