TELESTA THERAPEUTICS INC T.TST

Summary by Chris Parry

[thePlayer]

It's a good take, worth repeat. From front page of Stockhouse, by Chris Parry:

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Canadian biopharm company Telesta Therapeutics (TSX:TST, Forum) dropped like a stone Tuesday after the United States Food and Drug Administration (FDA) told the company it would require additional phase III clinical trials to move its MCNA treatment to approval.
 
The markets reacted loudly, with stock selling off from $0.345 right down to $0.06 before firming to $0.09 – a 73.91% drop on the day.
 
According to a company statement, “The FDA communicated that an additional Phase 3 clinical trial for MCNA would be necessary to adequately establish MCNA's efficacy and safety. The FDA also encouraged Telesta to meet with them to discuss further clinical development of MCNA.”
 
Telesta ‘s Dr. Michael Berendt was disappointed in the decision, noting that MCNA would have been the first new bladder cancer treatment since 1998, if approved.
 
“Since we began our dialogue with the FDA in February, 2014, we have clearly communicated that we believe that MCNA is a safe and efficacious agent for the treatment of high risk non-muscle invasive bladder cancer patients who have failed front line BCG therapy,” he said. ”The FDA decision, at this point, to require an additional clinical trial, is a setback for under-served bladder cancer patients, our dedicated staff, and our investors who have funded our efforts to obtain MCNA approval in the US.”
 
Executives said they would work closely with the FDA to analyze the path forward, the competitive landscape, and any strategic options available.
 
REACTION:
Telesta is oversold, now trading at below the value of its cash in hand, with trading volume of a whopping 34m on the day.
 
OUR TAKE:
We’re buying. The current valuation treats the company as if it was about to go bankrupt, which it isn’t. In fact, it has some $34 million in hand, and management quietly referred to this in their news release when they said, “The current climate of uncertainty in the financial markets has created opportunities for well-capitalized companies that were simply not available even a few months ago.”

If you thought TST was a good bet before today, you should understand that, after today, it’s no different a company, other than in the timelines (and dollars) necessary to get to approval. Only now you get the stock at ¼ of yesterday’s price - and less than a tenth of what it sold for in October of last year.
 
Telesta may or may not go for another round of Phase III clinical trials. Or they might sell the asset and go buy a bunch of other things. Or, heck, maybe they’ll liquidate and pay a dividend. But either way, they’re worth a lot more than today’s share price.
 
As the panic dies off, buying will commence at a pace. We will be among those buyers.
 
--Chris Parry
https://www.twitter.com/chrisparry
Read more at https://www.stockhouse.com/news/newswire/2016/02/02/telesta-therapeutics-t-tst-slammed-down-76-after-fda-delay#SRrBr4phkUGKE3BQ.99