Access Pharma: MuGard Sales, Pipeline Offer Big Upside Potential

Jul.26.09 | About: Access Pharmaceuticals, (ACCP)

Access Pharma (OTCQB:ACCP) is an emerging bio-pharmaceutical company which is focusing on the development of a late-stage, diversified oncology pipeline in addition to a treatment called MuGard is cleared for marketing in the U.S., Europe, and other key global markets for a common side effect of some cancer treatments known as mucositis (painful sores in the mouth and GI mucosal lining).

In addition, the company is developing earlier stage compounds in its pipeline and has an oral cobalamin nanopolymer drug delivery technology which has demonstrated positive results for the delivery of insulin by mouth in preclinical animal models.

The MuGard earnings model included in my report reflects 2X initial commercial partner peak sales estimates of $350 million based on the potential for a preventative indication for the product in patients undergoing radiation and/or chemotherapy.

Final post-approval marketing study results and clinical experience with MuGard will ultimately determine its sales potential as the estimated cost of $1,000 per six-week treatment cycle is low compared to the cost of anti-cancer therapeutics and treating the complications of mucositis.

Access should have sufficient liquidity to fund operations at the current level (net cash burn rate for 1Q09 was $0.5M) through at least 2H10 based on its current cash/equivalents ($2.2M at the end of 1Q09) + expected upfront, royalty, and milestone payments from additional partnerships, MuGard royalties, and sale of anti-infective dermatology assets (EcoNail - topical econazole and Pexiganan - a novel topical anti-infective).

Positive operating cash flow is expected by mid-2010 or earlier depending on MuGard sales and clinical results/experience.

The earnings model does not account for expected upfront licensing and clinical milestone payments for the company’s cobalamin drug delivery technology, thiarabine, ProLindac, or earlier stage compounds. The commercialization for lead compounds ProLindac and thiarabine is expected by 2013.

There is the potential for $100 million in licensing deals (upfront + milestone + royalties) for oral basal insulin, ProLindac, and thiarabine within next 12-18 months.

Expected Upcoming Milestones include the following:

  1. Final results expected during 3Q09 for SpePharm’s post-approval marketing study of MuGard;
  2. Listing on AMEX or Nasdaq exchanges from current OTCBB status expected during 2H09;
  3. MuGard launch in Asia and U.S. markets expected during 2H09;
  4. During 2H09, the company plans to start multiple Phase 2 clinical trials for ProLindac (Europe + Asia) and thiarabine (data expected mid-2010), in addition to selling off its anti-infective dermatology assets;
  5. In mid-June 2009, Access announced that the company has signed evaluation agreements with two bio-pharmaceutical companies for its cobalamin drug delivery technology and both companies plan to evaluate oral insulin in preclinical studies before entering licensing discussions.

Disclosure: Long ACCP.OB