Access Pharmaceuticals: Gaining Momentum

Access Pharmaceuticals (ACCP.OB), a once struggling and troubled company, Access has put these issues behind them and is emerging as one of the top undervalued players in the BioPharma industry. Not only does this company have products which target a large and extensive market, but they are also implementing solid fundamentals within business management principals.

Among other things is a favourable stock price, management and board are significant shareholders (4.53M), and a low number of outstanding shares (21.9M), of these 11.3M common, 10.6M preferred which will be converted to common. Thus, the market cap on Yahoo / Google finance is greatly understated by approximately 50%, as at $2 PPS it should be roughly $44M. This certainly shows belief in the future outlook of the potential revenue from their products rather than dilution. StocksHaven Investments believes they are poised for a turnaround and will soon see fit to be on the Nasdaq and AMEX exchanges. Moreover, Griffin Securities has given Access a 12-month target PPS of $7.50 (.pdf), and it has received the maximum possible Buy Rating from Reuters.

*All numbers above have been verified with Access Pharmaceuticals upper management

About: Access Pharmaceuticals, Inc. (Access) is a biopharmaceutical company focused on developing products based upon its nanopolymer chemistry technologies and other drug delivery technologies. As of December 31, 2008, the Company has one FDA approved product, one product at Phase III of clinical development, four products in Phase II of clinical development, and four products in pre-clinical development. On January 4, 2008, the Company acquired Somanta Pharmaceuticals, Inc. On February 25, 2009, Access acquired MacroChem Corporation.

Products & Potential:

*All information below has been provided by Access Pharmaceuticals Investor Relations

As an introductory analysis, as well as for the company overview, StocksHaven Investments will concentrate on their main product: MuGard [Source of data]

What is MuGard?

MuGard is a viscous, mucoadhesive rinse which provides a protective coating to the oral mucosa. In a comparison of patients undergoing standard care with patients using MuGard, the incidence and severity of mucositis was significantly lower for the MuGard group. MuGard has received marketing allowance in the United States under a 510(k) from the Food and Drug Administration.

What is oral mucositis?

Oral mucositis is a frequent complication of cancer chemotherapy or of radiation therapy to the head and neck region. Currently available products are usually inadequate, and more effective treatment to minimize the extent and duration of mucositis is clearly needed. Historically, treatment of mucositis has been palliative and aimed at minimizing mucosal trauma. Treatments include frequent mouth cleansing and rinsing with buffered saline and fluoride solutions and administration of topical and systemic antimicrobial agents. Mucositis and infection of the mouth have remained major complications despite the usual oral care provided for patients with cancer. Addressable market is estimated at over $1 billion dollars.

Clinical Trials of MuGard

Access has conducted a clinical trial of MuGard, the results of which were compared to historical data from two different sources for patients at risk of developing mucositis and who had received prior standard of care treatment. (Cancer; 1999, 85 (10): 2103-2113, and Cancer; 2000, 89 (11): 2258-2265). In both cases, it was shown mucositis scores, as measured by the oral mucositis assessment scale (OMAS), were lower for patients using MuGard than for similar patients on standard care.

Clinical Data

The clinical results for MuGard are shown in the following graph. This displays the average mucositis score (OMAS scale; 0=no mucositis, 5=severe mucositis) for patients during 28 weeks of radiation therapy for head and neck cancer. The patients using MuGard (red line) starting using MuGard on the first day of therapy and continued using the product throughout their cancer treatment. Retrospectively, MuGard results were compared with a very similar patient population that were on standard care for mucositis. As can be seen on the graph, their average mucositis score was much greater than that for MuGard.

Management of mucositis

One of the most striking features of a comparison of MuGard to standard of care is that 43% of patients on MuGard experienced no mucositis (OMAS score never exceeded 0.5) compared with only 7% in the historical control group

These data were the basis for Access’ 510(k) application for marketing allowance for MuGard.

Partnership Strategies & Future Outlook

Access has completed 6 partnerships in the past 18 months.

Four of the partnerships pertain to the commercialization of MuGard. The first is SpePharma, B.V., based in France and Belgium, is an oncology supportive care company in Europe — they got regulatory approval for MuGard, have already commercially launched in a number of countries, and will launch in the remainder throughout 2009. Milestone Biosciences is a private company made up of former MGI Pharma executives; they will launch in the US before the end of the year. Access have two partnerships in the Far East, who also plan to launch this year: RHEI Pharmaceuticals has rights to China and eight southeast asian countries. JCOM, Ltd., an affiliate of DongA Pharma, is the MuGard licensee in Korea. That’s four. In all cases, ACCP gets a royalty that starts at 20% of net sales, and scales up to 25%.

The other two partnerships are co-development deals on ProLindac, in the Far East. In China, our partner is Aosaikang Medicinal Group in Nanjing, China (“ASK”) which is a major seller of platinum chemos in China. They paid upfronts, are committed to run two controlled clinical trials which ACCP designs and monitors, and they pay a royalty on sales (this is all for Greater China, which is defined as China, Taiwan, Hong Kong and Macau). The other partner is JCOM, Ltd, in Korea (the same partner as our MuGard partner in Korea). Same deal – upfronts, commitment to run ONE clinical trial that we design and monitor, and royalties. In addition to distribution, the key is the commitment to develop ProLindac — which Access estimates that it saves them $30 million in clinical development costs.

Key Acquisitions

ACCP has bought Somanta Pharmaceuticals, Inc. and MacroChem Corporation over the past 18 months (both were publicly traded). ACCP bought Somanta Pharma to get Angiolix, a novel monoclonal antibody that has a unique target (lactadherin). ACCP bought MacroChem for Thiarabine, a novel nucleoside analogue, that’s been in two Phase 2 human solid tumor trials, and which we’ll put in two Phase 2 leukemia/lymphoma trials. Both are key oncology assets, and were purchased to fill out our oncology pipeline. Both were acquired in a stock-for-stock deal, very cost effective (for example, Access paid 2.5 million common shares for MacroChem).

According to Mike Havrilla of BioMedReports.com, given a very low cash burn rate of about $4M per year, a diverse/late-stage pipeline, extensive partnership agreement, and the pending global commercialization of MuGard by 3Q09 with a 20-25% royalty rate, the current market valuation of around $44M does not appear to fully account for both the breadth and depth of the pipeline in addition to the large commercial markets the compounds are designed to serve. If MuGard reaches just $20M in global sales at a 20% royalty rate, this alone would cover the current low rate of cash burn itself.

StocksHaven Investments has confirmed a follow up conference call to be held with Access CEO, Jeffrey B. Davis. Submissions regarding inquiries and questions will be open closer to the date of the interview.

Comments

[svygear:]

BioMedReports also wrote up about ACCP: seekingalpha.com/artic...

Jun 12 12:21 PM