With IMNP, 20 cents is coming!Biotech Company Comes Back To Life After Positive Study Results
ICO.V CURRENT PRICE: $0.07
ICO.V TARGET PRICE: $0.20
UPSIDE POTENTIAL: 186%
SHARES OUTSTANDING: 84,457,713
MARKET CAP: $5,912,040
WORKING CAPITAL (FROM Q1 2014): $4,863,860
August 19, 2014 -
iCo Therapeutics Inc. (ICO.V) rose 40% to 7 cents on over 17 million shares traded today after the company
announced positive Oral Amphotericin B Study results on the treatment of HIV. From the release:
"There are a number of HIV latent reservoirs that are not inducible and our partners at ImmuneCarta were pleasantly surprised that six of the seven samples had inducible latent reservoirs in our study," said Dr. Peter Hnik, Chief Medical Officer of iCo Therapeutics. "By turning on expression of latent HIV proviruses, reactivation strategies such as Oral Amp B, could contribute to a reduction of HIV infection. Given these promising results, we are now evaluating the next steps in the developmental path for Oral Amp B."
While the sample size of 7 patients is small, the news that this therapy could reduce the risk of HIV infection has brought back life into this company after the stock price got hammered in June following the disappointing results of the
iCo-007 Phase 2 iDEAL Study for Diabetic Macular Edema. ICO is trading below its working capital and investment holding value so investors realized that even with a small study, these results warrant giving substantially more value to
ICO's pipeline. Even though iCo-007 has disappointed thus far, it, Oral Amphotericin B and iCo-008 deserve some market value for the potential that they hold.
ICO's value can be split into three distinct categories:
Working capital was $4.9M according to Q1 results ended March. Assuming a cash burn rate of $1M for the quarter, we can estimate working capital will be $3.9M or
4.6 cents per share.
ICO holds shares in IMNP, pictured below from the Q1 MD&A:
IMNP closed at $4 today so the 654K shares lead to $2.62M US in value. The warrants have a strike price of $2.63 so ignoring all time value that leads to an intrinsic value of $1.37 or $0.17M US in value for a total of $2.79M US or about $3M Canadian.
The holdings in IMNP are worth 3.5 cents per share for ICO. There is great potential for the value in these shares to rise as IMNP is listing on the NASDAQ this week, is seeking analyst coverage and has several ongoing Phase 2/3 Trials, including the ones for Bertilimumab (iCo-008) .
With Amiket and Crolibulin at more advanced stages, IMNP doesn't even need to succeed with Bertilimumab to provide ICO shareholders with upside potential. If IMNP were to increase to $10, ICO's investment in IMNP would be worth 9.5 cents on its own. If IMNP were to reach $20, the value to ICO would be 19.5 cents per share. Any success with the iCo-008 (Bertilimumab) Phase II clinical trial in patients with ulcerative colitis will provide investment gains on IMNP and immeditate increased value to iCo-008 based on its chance of successful treatment of one ailment, leading to a higher possibility that it can treat more.
The largest value potential is ICO's product pipeline. Prior to the disappointing results on iCo-007, Zack's Investment Research had a
90 cent target on ICO, broken down by parts:
Zack's has since released a
15 cent target based on writing off all value for iCo-007. The firm believes ICO has $17.5M in value but uses the fully diluted share count of 115 million to lead to the 15 cent target. The majority of the options and warrants have strike prices above 50 cents. If they were to be exercised they would bring additional cash to the company. But it is fair to assume that at 7 cents, exercise of the options and warrants are not imminent and it is fairer to divide the $17.5M market cap estimate by 84.46M shares to lead to a 20 cent target.
Based on the low share price, TSX Tech News And Analysis believes that further license agreements similar to the one with IMNP is the best course of action to maximize shareholder value at these prices while conserving cash. If iCo-008 and iCo-009 have $35M in value, let's assume a partnership deal would leave ICO with a 25% stake in both of them. $35M x 25% is $8.75M or about
10 cents per share.
Reviewing:
- Working capital: 4.6 cents per share
- Value of holdings in IMNP: 3.5 cents per share
- Value of the pipeline: 10 cents per share
TSX Tech News And Analysis is aligned with Zack's 20 cent target on ICO. If IMNP continues to successfully advance Bertilimumab or another one of the drugs in their pipeline it could be much higher than that.