Changes to Pitch reveal what Investors are Worried AboutI didn't do a very good job of that last post. Let me try again.
Changes from one presentation to the next show what big investors are most worried about. Where they seem to fall asleep, simplify or delete those pages. Where they start asking a lot of difficult questions, add a page to address that topic. Here is what I deduce based on changes from the February version (Paris partnering conference) to the April 1 version (Bristol Smart Teleconference) to May 4 (Bloom-Burton investor conference).
Investors think the key risk is whether the FDA is really serious about deciding solely on the basis of one Phase 3 clinical trial.
- Added a page on Regulatory Dialogue (currently page 15)
- Added a page describing the Phase 3 trial design (page 16)
- Committed to transparent disclosure of FDA dialogue (page 5 and 23)
- Offered "meeting minutes/correspondence available for review under CDA" (confidential disclosure agreement?) (page 23)
- Added a page on safety results in the appendix since a key selling point is it is non-toxic compared to BCG. Pages about competition are unchanged.
Investors are probably wondering about the partnering process going on behind the scenes. This could have a material impact on the economics of an institution's investment in the stock, but the partnering process is a black-box for institutional investors.
- Changed page 3 from "MCNA specialty product profile validated by 3rd party expressions of interest" to "MCNA specialty product profile validated by strong partnering interest."
- Added a page on the Palladin partner deal for Canada/Mexico/SA
- Page 11 now reads "MCNA was discovered by Telesta", implying TST controls the intellectual capital decisions.
If this is so good, why does it have such a small market cap?
- Added to page 3 "Investor Relations effort to introduce Telesta to US/Institutional investors" under the "new management team" bullet.
- "Value Summary" pages now split into two: "Value for MCNA" and "Value for Telesta"
How long will your cash last? Tell us about plans beyond the 4Q/2015 runway on page 6.
- There is no page on this, probably because it is illegal to selectively disclose non-public financial information. If asked, they would have to decline to answer. Hence, they also do not discuss the VMC sale process, or the collection of the working capital adjustment and holdback from the Animal Health business sale.
- They have stopped mentioning their application to the FDA for exemption from certain filing fees.
If the US market is worth >US$400m annual revenue at peak, how much is the rest of the world rights worth?
- They have a page on 3rd Party Market Assessment for the US (page 22)
- But they removed all reference to the market size for the rest of the world, likely because it generated questions from the audience about proof of estimate, how long it would take to get approval and how much the clinical trials would cost. They don't have bullet-proof work on this, and the US value is big enough to make Telesta a huge opportunity anyway.
When will revenue start to flow?
- They changed page 3 from "potential US approval in Q1/2016" to "potential US approval as early as Q2/2016". Audience members may have been sceptical about it taking only 6 months, or perhaps Berendt wants to deliver earlier than promised rather than later.
Will you move the company to the US where valuations for Biotechs are better?
- Page 5 says for the first time: "Postion company as independent US specialty pharma" if they don't partner, joint-venture or sell the company.