Canaccord update - for what ever its worthCompany Update Call it a comeback; progress injects life into the story; maintain BUY, C$2.00 price target
We recently had a chance to sit with Prometic management in San Francisco and come away from the meeting encouraged that recent changes at the company – while difficult to implement – position Prometic to create value for shareholders as Ryplazim reaches market and PBI-4050 progresses into late-stage Alstrm work. As such, we think 2019 will be a pivotal year for the name and we’re closely watching the following: 1) a potential commercial partnership for Ryplazim that could bring external validation to the story; 2) a Ryplazim refile midyear; 3) progress with PBI-4050 in Alstrm Syndrome, with a potential commercial partnership (but secondary to any Ryplazim commercial work); and 4) importantly, continued work to stabilize Prometic’s capital structure and balance sheet. Maintain BUY.
Changes at the top bring a new focus as the story evolves toward commercialization.
Prometic management conceded that the sudden change in leadership was tough for some inside the company to digest, but a month+ later, many inside Prometic agree that the change brings a new focus as the company is rapidly evolving from high science to commercialization. At the same time, management doesn’t feel pressure to move too quickly or fire-sale assets during the transition; in our conversations with the company, we come away with the impression that the board may let the current leadership structure remain in place to see how NT partnership/capital opportunities play out then move on a potential CEO candidate with a strong, US-focused, biotech background.
Passage of time should be kind to the Prometic story.
We see 2019 as a pivotal year for Prometic as the company works to fix its balance sheet and create value inflection points for investors through the year. With the balance sheet, management commented to us that the ATM facility is working nicely to access capital to fund NT operations ahead of a potential capital injection from a combination of 1) commercial partnerships for Ryplazim and PBI-4050; and 2) some sort of thoughtful financing at some point along with a potential listing in the US capital markets. In terms of value inflection points, Prometic expects to resubmit the Ryplazim BLA midyear with a potential approval at the end of the year or in early 2020. The company is assessing potential commercial partnerships for Ryplazim with “pharma-like” partners; we think external validation could be a strong value driver, even if inbound cash on a partnership may be light. Likewise, PBI-4050 presents an interesting partnership opportunity and the company plans to launch what we see as a manageable phase 3 program in Alstrm Syndrome later this quarter that could serve to validate earlier clinical work for the product in potential partners’ eyes.
Ryplazim refile creates two sources of potential capital.
The CMC issues associated with the complete response letter were generally associated with in-process controls – essentially documentation and limits – but required new assays to validate. Management indicated that the hard work of the refile is done; all that remains is to run validation batches and write up the response. Recall, along with the potential up-front cash a partnership may provide, an approval would come with a priority review voucher that could be worth US$80-100 million.