another perspective on the recent Cresence transaction Prescient Reports
Date: June 2022 Sector: Biotech Author: Staff Writer Title: The rebirth of an old company…. I had a good friend ask me about the recent Bioasis (BTI) news, dealing with obtaining “clinical assets”. He asked because he thought it seemed to him, that it was somewhat good news, but as usual with this stock, the market and the current shareholders responded like it was a dud. So, I thought I would do some investigating and ask a number of other BTI shareholders what their thoughts were and as usual, pretty much to a “T”, most said “well I don’t know much about this, but Stockhouse didn’t like it”. Every time news comes out on BTI it is dissected online in a Stockhouse billboard, or should I say “bullboard”. I tell my friends not to read this
(for the most part pure garbage), as the posters are clearly not educated in Biotech or Biopharma, so their comments are not founded in fact nor science, just uneducated speculation, that often looks like sad attempts at market manipulation which, unfortunately, is easy to do during thin trading sessions. Heck, it doesn’t even have to be intentional. During the summer doldrums all it takes is one seller needing/wanting to sell 50k shares to drop the price. Selling could be for many reasons including needing to pay bills, buy something (a house, a car, a wedding), or ease some tension in the rest of their portfolio in a tough stock market right now. As painful as it was, I read the recent BTI posts and now I can see where my good friend and the others were coming from. If you want to hear another view point – one that is industry science based, along with market expectations, again industry based, then read on.
So, my friend owns a lot of this stock and from reading the posts he assumed the worst, that this company was doomed and the technology he was enamored with was/is a failure. I told him to sit back, take a breath, take off the “bullboard” glasses and follow…. Let’s deal with the failure part first. If you look at all the data this company has amassed, they used independent very reputable organizations such as; The National Research Council of Canada, Texas Tech University, MedImmune (a division of AstraZeneca) whom published an exceptional paper on their work, Dr. Mauricio Scarpa a world class clinical expert on rare disease LSD’s – just to name a few. Did any of these programs fail? on the contrary they were very successful, the technology platform worked, at least in animal models. In fact, I can attest that xB3 has succeeded (or expressed another way … not failed ;) in
any internal or partner testing or studies. Pharmas have their own timeframes and priorities that get shuffled and reshuffled and sometimes their smaller partners just have to wait till all is aligned perfectly at the Pharma before proceeding. That might the subject for a future article. At least the transporter technology isn’t the issue. Whew! It doesn’t mean I, and other shareholders, shouldn’t be frustrated that these things take so long to come to fruition but also remember things like this … why would the largest Pharma in the world, Johnson & Johnson, the biggest of all the fish in the biotech/pharma sea, enter a research collaboration in April/2022 with the tiniest of minnows and let us tell the world in a press release (which they rarely allow)? Think about that long and hard before you buy or sell your BTI stock!
The company got off track when a new CEO came in and focused on “bagging a big deal” and trying to make a name for himself. Fortunately, he was removed and the then Chairperson stepped in to take over operations. However, she, like her predecessor, focused on bagging the “big” deal. The search for the holy grail in Blood-Brain Barrier technology is
not a sellable story to big Pharma, for the price she and her predecessor where trying to get at least. Like they say, never fall in love with your own story. The strategy should have been to deal with the technology simply as a utility platform. Give it away!! Microsoft did and look where it got them. Let Pharma use it for free until they prove it works for them and then take a utility license for it. Well as we know this did not happen and my friend is still depressed.
Well along comes June 17, 2022 – Bioasis announces the acquisition of “phase 2 ready assets”. Note the plural there - multiple assets. So, in one transaction, Bioasis has transformed from a preclinical company to a clinical company. Valuing a preclinical vs clinical biotech, is like climbing up Mt Everest vs taking a helicopter down. Once the market and more importantly the Bioasis shareholders realize what they
now have, things
will change. If BTI executes on these assets, funds them properly, I told my friend his stock will be quickly valued by the new assets and maybe the company will wake up and treat xB3 (The Bioasis xB3 patented platform provides researchers with a solution to one of medicine’s most stubborn challenges: how to transport medicines across the blood-brain barrier at doses sufficient to have a therapeutic effect) like it should be, a utility platform … pretend you’re Microsoft, your shareholders will love ya! Heck, there are many biotech stocks trading in the USA with a single clinical asset in early phases valued at over a $100m market cap (Annexion Biosciences, Nasdaq:ANNX, is one such company and they also have $34m USD of debt which we do not) – that’s 10x Bioasis’ market cap and we have several pipeline programs with the Cresence assets
plus our own de-risked preclinical pipeline programs using xB3 based on already approved, well-established drugs (like Herceptin)
plus the xB3 platform licensable to Pharmas to carry their own therapeutics across the BBB.
Yes, they have to raise money to further run the clinical studies, but obtaining positive clinical results will put a large smile on my friend’s face. The team that comes with these “assets” are
world class and with them driving the clinical work programs we don’t have to rely on the current management team and they can focus on other internal programs and xB3.
For the most part, preclinical Biotech’s (like BTI
was), get very little if zero attention from analysts and institutional players,
but clinical Biotech’s on the other hand get analyst coverage which drives institutional interest -- get that and watch your valuation do what it is supposed to do.
I have been pretty hard on this Board of Directors, but I have to commend them on this move. They recognized that xB3 was / is a tough sell (at least for the return and time frames they want) so they did exactly what they should have done (funnily enough the same move Ryan Watts has done at Denali as their CEO), find a clinical asset and in-license it!! – and this asset(s) seems to be a “goodie”.
Right move Bioasis board!!,
this just put a 10-20X on our chances of seeing the valuations we had once hoped for. Disclaimer: The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of Prescient Reports. Examples of analysis performed within this article are only examples. Assumptions made within the analysis may be not reflective of the position of Prescient Reports. One of the contributors of this Prescient Report, holds public securities in the company named in this article.