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I am a retail investor managing my personal IRA. My goal is to find and thoroughly research undervalued biotech companies. I typically hold stocks 6 months or longer based upon growth potential.
  • Mast Therapeutics Is Ready To Set Sail 16 comments
    Aug 7, 2013 2:24 AM | about stocks: BCRX, NVS, PFE, MSTX

    One of the most exciting biotechnology companies in the market today is Mast Therapeutics (NYSEMKT:MSTX), a little known company developing an Orphan designated investigational agent (MST-188) that has potential to reduce ischemic tissue injury and end organ damage by restoring microvascular function. MSTX's current clinical focus is on two Orphan diseases: Sickle Cell Anemia ("SCD") and Acute Limb Ischemia ("ALI"). MSTX has already received Orphan Designation for SCD in the U.S and EU, and for ALI in the EU. The stock currently trades at 30 percent below its cash position, has no debt, and existing financial resources are more than adequate to fund the ongoing Phase 3 study in SCD, Phase 2 study in ALI, as well as additional studies for other indications. With a potential pharmaceutical treatment for multiple medical conditions affecting millions worldwide, MSTX is a significantly undervalued biotech with exponential upside.

    The Company

    Effective March, 2013, Adventrx Pharmaceuticals become known as Mast Pharmaceuticals, taking its name from the acronym (NYSE:M)olecular (NYSE:A)dhesion & (NYSE:S)ealant (NYSE:T)echnology Platform. In 2009, the majority of business operations were suspended and the workforce was reduced to only two employees. From 2009 to 2011 the company's primary focus was in oncology and the reformulation of drugs previously approved by the FDA. Like many small biotechs, the company's attempts to gain FDA approval for their oncology based drugs proved unsuccessful, and the company instead focused on clinical development of MST-188 for Sickle Cell Anemia (Phase 3) and Acute Limb Ischemia (Phase 2). MST-188 is the most clinically-advanced drug for SCD, and MSTX initiated a Phase 3 study in March 2013. MSTX expects to begin its Phase 2 study for ALI in late Q4 or early Q1 2014. They have received Orphan Designation for MST-188 for SCD in the U.S and EU and for ALI in the EU. Management intends to file for Orphan Designation for ALI in the U.S. later this year.

    Key Statistics

    • 52 week range: $.41-$.87
    • Outstanding Shares: 102.7 Million
    • Market Cap: $ 44 million
    • Institutional Ownership: Approximately 50%. Among others, Institutional investors include Franklin Templeton and Deerfield Capital Management.
    • Short Interest: 4%

    Analyst Rankings

    • Initiated at Overweight by Piper Jaffrey with a price target of $1 (June 2013).
    • Vista Partners placed a twelve-month price target of $2.25 (July 2013).
    • Initiated at Market Outperform by JMP Securities with a price target of $2.00 (April 2013).

    Analyst price targets suggest the short-term (12 month) upside potential for MSTX ranges from 1x to 4x, based on the current share value.

    Fundamentals

    The Company's net loss for the second quarter of 2013 was $4.9 million, or $0.09 per share (basic and diluted), compared to a net loss of $4.2 million, or $0.09 per share (basic and diluted), for the same period in 2012.

    R&D expenses for the six months ended June 30, 2013 were $6.3 million, an increase of $2.0 million, or 45%, compared to $4.3 million for the same period in 2012. The increase was due to increases of $3.7 million in external clinical study fees and expenses, $0.2 million in personnel costs and $0.1 million in share-based compensation, offset by a $2.0 million decrease in external nonclinical study fees and expenses. The increase in external clinical study fees and expenses was primarily related to EPIC and the thorough QT/QTc study of MST-188. The decrease in external nonclinical study fees and expenses resulted primarily from a decrease in research-related manufacturing activities for ANX-514. As of June 2013, the Company had cash, cash equivalents and short-term investments totaling $53.4 million. Stockholders' equity amounted to $57.9 million as of June 30, 2013.

    In June 2013, the company completed a secondary offering, effectively doubling the number of outstanding shares. The offering consisted of 50,000,000 units, each unit consisting of a fixed combination of one share of common stock and one warrant to purchase 0.5 of a share of common stock, at a public offering price of $0.50 per unit. Proceeds from this offering totaled $22.9 million. The warrants (25 million) have an exercise price of $.65. Exercise of the warrants would generate an additional $16.2 million. The underwriter chose to exercise the over allotment option, increasing the number of shares by an additional 7.5 million.

    Current cash and expected proceeds from warrants are sufficient to fund the company through the Phase 3 study for SCD, Phase 2 study for ALI, as well as all other ongoing clinical developments.

    MST-188

    As part of the company's April 2011 acquisition of SynthRX, the company gained control of MST-188. MST-188 is a purified form of a nonionic, triblock copolymer (P188). It is an investigational agent that binds to hydrophobic surfaces on damaged cells and improves membrane hydration and lowers adhesion and viscosity, particularly under low shear conditions. Research has demonstrated that P188 prevents adhesion and aggregation of soluble fibrin and formed elements in the blood and maintains the deformability of red blood cells, the non-adhesiveness of unactivated platelets and granulocytes and the normal viscosity of blood. MST-188 has the potential to reduce ischemic tissue injury and end-organ damage by restoring microvascular function, which is compromised in a wide range of serious and life-threatening diseases and conditions.

    (click to enlarge)

    Sickle Cell Disease

    Sickle cell disease is an inherited blood disorder in which red blood cells contain an abnormal type of hemoglobin and frequently take on a sickle- or crescent-shape. These defective red blood cells can block small blood vessels, which can lead to tissue damage or even stroke. Other complications include anemia, jaundice, gallstones, severe leg and arm pain, and spleen, liver and kidney damage.

    (click to enlarge)

    In a recent University of Florida study, researchers evaluated data from the Florida Medicaid program on 4,294 sickle cell patients. The study found that the annual cost of medical care in the US for people who suffer from sickle cell disease exceeds $1.1 billion. Roughly 80% of the costs were associated with inpatient care; 3.2% of costs were associated with emergency department (NYSE:ED) use, 0.9% with physician visits, and 3.6% with prescription drugs. The remaining 11.7% of costs were attributed to various forms of care, to include home health and nursing home care.

    Currently, treatment for sickle cell anemia is usually aimed at avoiding crises, relieving symptoms, and preventing complications. Bone marrow transplants offer the only cure for SCD, but this is an expensive, difficult procedure with significant risk. Other treatments may include medications to reduce pain and prevent complications, blood transfusions, and supplemental oxygen. Hydroxyurea has been found to be effective in reducing the frequency of painful episodes in adults with SCD, but is not useful as a treatment for patients who are experiencing an acute painful episode, nor is it approved for use in children. During the past 25 years, a number of pharmacological agents have been evaluated as potential intervention strategies that might be capable of shortening or reducing the severity of painful episodes; yet each of these therapies has been found to be either too toxic or only marginally effective.

    MST-188 for Sickle Cell Disease

    Patients with SCD are known to experience severely painful episodes associated with the obstruction of small blood vessels by sickle-shaped red blood cells. These painful episodes are commonly known as acute crisis or vaso-occlusive crisis. Reduced blood flow to organs and bone marrow during vaso-occlusive crisis not only causes intense pain, but can result in tissue death, or necrosis. In previous clinical studies of SCD, MST-188 has demonstrated the ability to restore microvasular function, reducing pain, as well as decreasing the duration of the vasco-occlsive crisis.

    Previous Phase 3 Study

    In 2001, SynthRx, before its acquisition by MSTX, published the results of the Phase 3 study evaluating MST-188 for the treatment of SCD in the Journal of the American Medical Association. The study found that those who received MST-188 experienced a decrease in the duration of painful episodes and experienced fewer symptoms when compared to those only receiving placebo. The difference between these groups was significant, but relatively small. In subgroup analysis, a more significant effect on both parameters was observed in children and in patients who were receiving concomitant hydroxyurea. Additionally, the researchers concluded that MST-188 was safe and well tolerated.

    In reviewing their findings and study design, the investigators concluded that they made serious missteps when establishing the primary endpoint of the study. The use of an extremely stringent definition of crisis resolution (168 hours) represented a very conservative approach to the analysis of the data. As the 2001 article stated:

    "It is important to emphasize that in an earlier Phase II study, even greater benefits had been observed. This disparity may be explained in part by the assumptions used in our definition of crisis duration, the primary endpoint in the study. Specifically, we observed that fewer patients achieved crisis resolution within 168 hours than in patients in the earlier study had led us to anticipate. The current study used a very stringent definition of crisis resolution, one that required repeated assessments of pain throughout the entire hospitalization, including the period following discontinuation of parenteral analgesics. In a number of instances, patients were discharged from the hospital before pain relief had been confirmed by a second pain assessment. In either case, the analysis plan required that these patients be considered failures and that the worst case duration of the crisis (168 hours) be inputted for them."

    Thus, the uses of parenteral analgesics were not controlled for and incomplete pain data for the study participants were considered a failure when performing the statistical analysis. Additionally, pain severity was assessed via the patients subjective self-report of pain, an unreliable method that is difficult to quantify.

    Ongoing EPIC Phase 3 Study

    In developing their pivotal Phase 3 study, MSTX has worked closely with the FDA, eliciting feedback to determine clear, quantified, endpoints. Utilizing the lessons learned and information gleaned from the initial study, MSTX developed the EPIC ((NYSE:E)valuation of (NYSE:P)urified 188 (NYSE:I)n (NYSE:C)hildren) study. This is a randomized, two-arm, double-blind, placebo controlled study design. 388 patients will be enrolled between the ages of 8-17 across 40 centers in the U.S. and 30 centers outside of the U.S. The primary endpoints include the duration of the crisis and the time from randomization to the last dose of parenteral opioids. Secondary endpoints include rate of re-hospitalization for vaso-occlusive crises (within 14 days) and acute chest syndrome within 120 hours of starting participation in the study (randomization). The first active site was March 2013 and completed enrollment and data readout are expected in 2015. As detailed in the illustration below, management has developed clear, quantifiable endpoints when compared to the previous evaluation to MST-188. From their investor presentation:

    (click to enlarge)

    Peripheral Arterial Disease- Acute Limb Ischemia

    Acute limb Ischemia is a form of Peripheral Arterial Disease (PAD) characterized by the sudden decrease blood flow to a capillary bed in an extremity that threatens the viability of the limb. Symptoms develop over a period of hours to days and range from new or worsening intermittent pain in the foot or leg while the person is at rest, muscle weakness, and paralysis of the affected limb. If left untreated it can lead to rapid tissue death and amputation. PAD is estimated to affect 12% to 15% of patients over age 65 years and between 8 and 10 million people in the United States. As the population ages, becomes more obese, and as diabetes becomes more common, experts anticipate the number of cases to increase exponentially. In 2010, a total of $4.37 billion was spent on PAD-related treatment. Specifically, the PAD therapeutics market was estimated at $606 million in 2009 and expected to reach $1 billion by 2017.

    Current standard of care for ALI is tissue plasminogen activator (tPA) a protein involved in the breakdown of blood clots. tPA is commonly used for diseases featuring blood clots, such as pulmonary embolism, heart attack, and stroke. In treating ALI, tPA is administered through an arterial catheter directly to the site of occlusion in the case of peripheral arterial thrombi and thrombi in the proximal deep veins.

    MST-188 for Acute Limb Ischemia

    As previously discussed MST-188 binds to the hydrophobic surfaces on damaged cells and improves membrane hydration and lowers adhesion and viscosity. This in turn increases blood flow to extremities, minimizing the effects of the vaso-occlusive crises such as ALI, preventing the onset of tissue death. Research has found that the combination of MST-188+ tPA significantly minimized reperfusion injury, which is tissue damage caused when blood supply returns to the tissue after a period of ischemia or lack of oxygen, when compared to the use of tPA alone. The absence of oxygen and nutrients from blood during the ischemic period creates a condition in which the restoration of circulation results in inflammation and oxidative damage through the induction of oxidative stress rather than restoration of normal function. Additionally, the combination of MST-188 + tPA resulted in a statistically significant increase in the time before reocclusion, when compared to the use of tPA alone. Thus the ability of MST-188 + tPA to restore microvascular function as well as minimize reperfusion injury following periods of ischemia in early stage studies has proven successful.

    At the present time, MSTX intends to initiate a Phase 2, proof of concept study for MST-188 in ALI, to examine the effect of MST-188+tPA vs. tPa in patients with catheter directed thrombosis. The study will be a dose finding, randomized, double-blind, active controlled evaluation of MST-188. The study will be initiated late 2013/early 2014, consist of 60 subjects, with complete enrollment and read-out within 15 months of study initiation. Once completed, the company intends to expand MST-188 to other indications of PAD as well as Cardiovascular Disease (i.e. stroke, heart attack).

    MST-188 -Ongoing Research

    When conducting due diligence, I believe it is important to seek out information not provided by the company to help assess the validity of the investigational agents they are developing. If other researchers, not affiliated with the company, are examining the same compound/mechanism and finding similar results, this lends credence to the approach taken by the company. In performing my analysis of MST-188, I reviewed a number of peer reviewed journal articles obtained through a search of PubMed for "Poloxamer 188." Results from my meta-analysis suggest robust efficacy of MST-188/P188 in restoring microvascular function as evidenced by various researchers detailed below.

    Moloughney and Weisleder stated:

    "Extensive loss of cells can compromise the integrity and function of tissues and leading to disease. Thus, methods to increase membrane resealing capacity could have broad utility in a number of disease states. Efforts to find reagents that can modulate plasma membrane reseal found that specific tri-block copolymers, such as poloxamer 188 (P188, or Pluronic F68), can increase the structural stability and resealing of the plasma membrane."

    Boa, Wang, and Zhang et al., concluded that P188 attenuated TBI-induced blood-brain barrier damage leading to decreased brain edema and reduced cellular death:

    "Plasma permeability plays an important role in the secondary neuronal death induced by traumatic brain injury (NYSE:TBI). Previous works showed that Poloxamer 188 (P188) could restore the intactness of the plasma membrane and play a cytoprotective action…All these results revealed that P188 attenuates TBI-induced brain edema by resealing BBB and regulating AQP4 expression, and suppressed apoptosis through extrinsic or intrinsic pathway."

    In another study conducted by Gu, Ge, Li et al., titled "Poloxamer 188 protects neurons against ischemia/reperfusion injury through preserving integrity of cell membranes and blood brain barrier," the researchers concluded:

    "Therefore, the present study concludes that P188 can protect against cerebral ischemia/reperfusion injury, and the protection involves multi-mechanisms in addition to the membrane resealing."

    Based upon a review of the current empirical literature, the ability of P188 to reestablish the intactness of the plasma membrane in damaged cells, restoring microvascular function, is well documented. By restoring microvascular function, ischemic tissue injury and organ damage can be avoided or minimized. Ongoing research is currently investigating the use of P188 to treat specific disease states such as acute myocardial infarction (heart attack), cerebrovascular infarction (stroke), peripheral arterial disease, traumatic brain injury, muscular dystrophy, heart failure, neurodegenerative disorders and electrical injuries, and to facilitate biomedical applications such as transplantation.

    MST-188- Future Potential

    The growing foundation of empirical literature supporting the therapeutic mechanism behind MST-188 creates a myriad of opportunities for MSTX further develop this poloxamer in other indications related to cardiovascular function. As evidenced below, the company is preparing to investigate MST-188 in resuscitation following major trauma, acute heart failure, blood transfusion, and stroke. According to Global Industry Analysts, Inc., the estimated global market for Acute Heart Failure (AHF) therapeutics is projected to reach $4.8 billion by the year 2017. GlobalData estimates that the global acute ischemic stroke therapeutics market is expected to reach approximately $880m by 2018.

    (click to enlarge)

    Mast Therapeutics and the Year Ahead

    At the present time, the future of Mast Therapeutics appears promising. Data from the tQT/Qtc study found MST-188 met its primary endpoint and demonstrated that, based on analysis of electrocardiograms; it did not have an adverse effect on cardiac repolarization, as measured by prolongation of the QT interval. MST-188 was generally well-tolerated at both therapeutic and supra-therapeutic doses. They have already secured Orphan Designation for SCD in the U.S and EU. The Phase 3 EPIC study has already activated their first site and has begun dosing patients. Additionally, they have filed additional patent applications relating to their proprietary purification process, methods of using poloxamers, and the use of poloxamers in combination therapy.

    Upcoming objectives for the remainder of the year include submitting applications for U.S. Government funding for a Phase 2 study of MST-188 for the resuscitation of shock following major trauma, requesting Orphan Designation for MST-188 for ALI in the U.S, initiating a nonclinical proof of concept study in heart failure, open the first ex-U.S. clinical site for the EPIC study, and initiating a Phase 2 study in ALI.

    In addition to these goals, MSTX is actively pursuing partnership to assist in ongoing product development. In a March 2013, MSTX hired ESC Advisors to identify partnering opportunities for MST-188. When discussing this development, CEO Brian Culley remarked:

    "Given the high unmet need and limited treatment options, sickle cell disease is experiencing significant levels of interest from strategic partners. MST-188 is now the only new molecular entity in Phase 3 development in sickle cell disease. Based on its stage of development, the absence of competitive, novel and late-stage products, its designation as an Orphan Drug in the U.S. and Europe and its potential utility in additional indications, we believe there will be substantial interest in MST-188 from potential partners, both in the U.S. and globally, and we intend to pursue strategic alliances aggressively."

    On another occasion, Mr. Culley stated:

    "Our recently announced plans to investigate MST-188 in acute limb ischemia, a complication of peripheral arterial disease, also may bolster our partnering efforts. Indeed, we already have been approached by at least one pharmaceutical company that wished to discuss our near- and long-term plans in arterial disease, which we announced just three weeks ago."

    Investment Thesis

    When choosing to invest in any company I review the following factors: the entity being developed, current and past clinical studies, finances, ownership, and the potential market for drug to help assign value. In examining these factors in respect to Mast Therapeutics, I come to the following conclusions:

    MST-188 has been proven to be safe and effective in previous studies for SCD and ALI. Other researchers, not affiliated with the company, have replicated the therapeutic action of P188 in animal and human subjects for other medical conditions. Thus the therapeutic action for which the company is utilizing MST-188 is supported by an abundance of empirically validated studies, published in peer reviewed journals. Previous Phase 2 and Phase 3 studies of MST-188 provided statistically significant results. In regards to the earlier Phase 3 study, the researchers concluded that their experimental design was poor, resulting in the statistically significant, but relatively small effect. The failure of this previous study is debatable, as it allowed Mast Therapeutics to utilize the lessons learned when developing the ongoing EPIC study. As detailed above, it is evident that management has taken advantage of this by focusing the present study on adolescents between the ages of 8-17, with whom MST-188 has already been found to have a more significant effect. Additionally, by working with the FDA they have developed clearly defined, quantifiable endpoints, a serious limitation of the previous study. The refined study design combined with the proven effectiveness of MST-188 in children aged 8-17, significantly increases the likelihood that their Phase 3 EPIC study will be a success. Furthermore, hydroxyurea, the most common pharmacological treatment for SCD is not approved for use in children increasing the demand for MST-188 in this population.

    The recent financing completed by MSTX was a significant blow to their shareholders, effectively doubling or more, the number of outstanding shares. While unfortunate, this allows an excellent opportunity for new investors and creates a solid financial foundation for the company to progress their development of MST-188. Often, companies enter into smaller rounds of dilutive financing, a practice that can erode shareholder confidence and increase risk to any potential investor. By completing one, large financing, MSTX management has given themselves sufficient financial resources to advance their current pipeline as well as initiating future clinical studies. Given the current burn rate of $5-6 million a quarter and available cash of $69.6 million (once all warrants are exercised) MSTX has adequate financial resources for at least 3 years, which would allow them ample time to bring at least one application of MST-188 to market.

    Another benefit to the recent offering was the significant increase in institutional ownership. A review of current SEC 13g's indicates that institutional investors such as Franklin Templeton and Deerfield Capital Management have established significant holdings in MSTX. At the present time, large institutions own approximately 50% of MSTX. The presence of these large institutions not only shows confidence in MSTX and their Phase 3 study, but should also give retail investors confidence in investing in MSTX.

    Given the novelty of MST-188 and the Orphan designation of SCD, assessing market potential and value to MSTX is difficult. To develop a basic idea of potential value, one can examine the merger and acquisition activity of other pharmaceutical companies attempting to treat the same indication. In September 2012, Novartis entered into an exclusive option to acquire Selexys following the completion of a Phase II study in patients with SCD. Upfront, acquisition, and milestone payments from Novartis (NYSE:NVS) have the potential to reach upwards of $665 million. In another deal, Pfizer (NYSE:PFE) entered into a partnering with GlycoMimetics for their investigational GMI-1070 compound for the treatment of vaso-occlusive crisis associated with SCD. The potential value for this partnership is estimated at approximately $340 million. Based upon the recent merger and acquisition activity, it is estimated that the SCD application of MST-188 is valued at $340-$665 million. It is my opinion that the value should be estimated towards the high end as MSTX is the only company with an ongoing Phase 3 study for SCD.

    Assessing MST-188's market potential and valuation to in respect to cardiovascular related diseases is much easier. According to leading analysts, he Peripheral Arterial Disease therapeutics market is expected to reach $1 billion by 2017, the estimated global market for Acute Heart Failure therapeutics is projected to reach $4.8 billion by the year 2017, and global Acute Ischemic Stroke therapeutics market is expected to reach approximately $880m by 2018.

    It is clearly evident that MSTX is grossly undervalued with a market cap of only $44 million, while its leading product has multi-billion dollar potential. Appreciation of 5x to 10x ($2.25- $4.50) in the two years leading up to the Phase 3 results is not unreasonable and may occur sooner based on partnerships and Phase 2 ALI results (18 months). This hypothesis is further supported by the recent rise in another Orphan drug company, BioCryst Pharmaceuticals (NASDAQ:BCRX). While these two companies differ in respect to the products being produced, they both have ongoing Phase 2 and Phase 3 studies for market indications valued in the billions.

    Summary

    In sum, I believe MSTX represents a significantly undervalued biotech with exponential upside. Current clinical focus is related to high profile Orphan designated diseases, SCD and ALI, and the company has only begun to explore the use of its key drug in treating other pathologies, to include cardiovascular related diseases. Recent financing has created a financial foundation for the company to engage in partnership discussions or develop MST-188 alone, as well as reducing investor risk. The success of the tQT/Qtc study and safety profile of MST-188 significantly limits the potential for any unexpected, negative study outcomes due to safety. The EPIC study has been well designed around an indication for which MST-188 has already been found to be effective to a statistically significant degree. Furthermore, MST-188 is being evaluated for multiple indications relating to cardiovascular diseases with a market potential measured in the billions.

    Disclosure: I am long MSTX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Themes: long-ideas Stocks: BCRX, NVS, PFE, MSTX
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Comments (16)
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  • KarinCA
    , contributor
    Comments (356) | Send Message
     
    I've initiated a small position on MSTX this morning. Not being sure of bottom makes me hesitate on going larger. But, it looks like the recent financing is the only reason for the tankage here.

     

    Thanks for taking the time to post this information here. ;)
    7 Aug 2013, 11:44 AM Reply Like
  • MacsJV
    , contributor
    Comments (28) | Send Message
     
    Great article! Any reason why you chose to blog rather than have it published?
    7 Aug 2013, 01:06 PM Reply Like
  • KarinCA
    , contributor
    Comments (356) | Send Message
     
    MacsJV... I was wondering the same thing. Too bad it isn't published for wider viewing.
    7 Aug 2013, 01:22 PM Reply Like
  • jbem777
    , contributor
    Comments (39) | Send Message
     
    Author’s reply » I tried to have it published but it was rejected on the grounds that I was a first time author and it's a micro cap stock. I was suprised as there was no issue with the massive pump and dump article about SNTI yesterday. It was a bit disappointing as the stock is a solid play. I would appreciate it if it could be shared with as many as possible.
    7 Aug 2013, 01:55 PM Reply Like
  • thaze
    , contributor
    Comments (30) | Send Message
     
    Does it not concern you at all that the top three employees bring in over 1.35 million a year in salary and the market cap is only 42 million? EXTREMELY overpaid executives IMO. Also, the companies cash burn rate is accelerating at a rapid pace currently - even if the increased "research" expenses justify it, its still high in comparison to total cash holdings ($33 mil according to yahoo as of July 15th). I agree the prospects for the company are nice, but these facts are a bit a disconcerting to me...
    7 Aug 2013, 09:13 PM Reply Like
  • jbem777
    , contributor
    Comments (39) | Send Message
     
    Author’s reply » Cash burn of less than $5 million a quarter in comparison to most biotechs is small. Especially given that they just started a Phase 3 trial, completed the qT study, and are setting up a Phase 2 study. My figures of over $50 million in the bank is from their quarterly report just a couple days ago. Not to mention the other $16 million from warrants with an exercise price of $.65. Cash burn with any small biotech is reason for concern, but having the coffers full with over $50 million gives MSTX sometime to prove their science without the risk for dilution. High cash burn and overpaid management are the hallmarks of small biotechs.
    7 Aug 2013, 09:57 PM Reply Like
  • jbem777
    , contributor
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    Author’s reply » Cash burn for the last 3 quarters has been $4 million, $5.5 million and $4.9 million respectively. Hardly a sharp in increase when compared to when they were Adventrx. R & D cost also decreased this Q compared to last Q.

     

    Maybe I am missing something. Your concerns are valid as with any small biotech, $$$$ is always an issue, but nothing seems out of line here.
    7 Aug 2013, 10:23 PM Reply Like
  • thaze
    , contributor
    Comments (30) | Send Message
     
    My calculations were based off of yahoos numbers as of July 15th so there are obviously some major discrepancies in my math. However, (according to your facts) in relation to cash burn, burning 1/8 of your market cap per quarter (1/10 of cash supply) AFTER massive dilution is not normal even in start up bio-companies.The projected end of phase 3 MST188 isn't until December 2015 which is still 9 quarters away, giving them plenty of time to burn through the new cash supply - 5 million * 9 quarters = 45 million + 3 million (2 and 1/4 years worth of salaries) = Total Costs of 48 million. This calculation is based on assumed averages - it also does not considering any unknown expenses that may occur along the way. IMO, Warrant should not be counted towards cash supply until they are exercised. This post is not meant to be bearish against the company or your article, just some things I have ran across while reviewing it. Please feel free to correct me on any mistakes made above as it was quick "napkin math".
    7 Aug 2013, 11:37 PM Reply Like
  • jbem777
    , contributor
    Comments (39) | Send Message
     
    Author’s reply » Lol! You're "napkin math" is correct. I can understand not assuming warrants into their cash position, but seeing that 50% of the company is owned by large institutions, I don’t see it staying below that. If it does break $.65, then they are good to go through the end. If cash burn were to increase, I think there would be room for concern. The likelihood of MSTX staying below $.65 in light of another Orphan designation, initiation/completion of P2 trial, and P3 SCD results is slim to none. Thus, cash position should be of little concern at this point.

     

    With that being said, here is my investment strategy. If it drops below $.40, I would likely cut my losses. I am not one to hold onto a pipedream when the market disagrees. Their cash position now gives them enough time to develop partnerships, complete a P2 trial, receive Orphan status, and seek grants from the government. If they fail to achieve these goals, the share price will likely remain stagnant or bleed slowly. Failure to achieve these goals should also cause shareholder concern. At this point, they have the financial resources to reach these milestones. Success, which they have demonstrated so far this year, should cause gradual share price appreciation. Also, as we move closer to catalysts and investor awareness increases, so will share price.

     

    They’ve got the money for now, I’ve got the time for now. But I won’t take the pain like an AMRN long. LOL!
    8 Aug 2013, 12:01 AM Reply Like
  • Thomas Almond
    , contributor
    Comments (363) | Send Message
     
    Mast Therapeutics Inc; A Potential Ten Bagger http://seekingalpha.co...
    19 Aug 2013, 05:44 PM Reply Like
  • javier perez
    , contributor
    Comments (6) | Send Message
     
    this link will show, who manages the smart money,
    and where is the smart money, MSTX
    60 MILLION BOUGHT BY MAJOR INSTITUTIONAL SHARES
    during summer 2013 ...........
    think like the big .....
    http://bit.ly/19g095V
    3 Sep 2013, 05:23 PM Reply Like
  • jcri33
    , contributor
    Comments (11) | Send Message
     
    Javier,
    I'm right with you on the significance of the 13F institutional investors!!! Any thoughts on what the upcoming 12/30 13F filings will look like for MSTX!!!!!!

     

    Thanks Buddy,

     

    JC
    17 Dec 2013, 12:07 PM Reply Like
  • jcri33
    , contributor
    Comments (11) | Send Message
     
    Jbem, you have put some outstanding DD together here, and from what I have read on IHUB. I find it to be some of the best research I have seen on these sites ands down! Were you planning on submitting another MSTX article to SA, with new company updates from Q3-Q4 2013 and company outlook involving catalysts for 2014-2015. Certainly interested in your thoughts on MSTX whenever you have time. Have a wonderful holiday season.
    JC
    15 Dec 2013, 09:33 PM Reply Like
  • jbem777
    , contributor
    Comments (39) | Send Message
     
    Author’s reply » At the present time, MSTX is being heavily manipulated. That's fine by me as my investment window is 12-18 months, but it spooks traders. The bashers have 2 main points that the are using, dilution and R/S. Currently, they have enough money to complete all of their studies, but I am wary of any biotech that has less than 1 year of cash on hand. When that's the case, I usually stay away. Towards the end of 2016, this will be the case. However, it is foolish IMO to not invest now because they might dilute again in 2 years. There is plenty of room for this to run before that, which will likely be the case and this will allow the exercise of the warrants. They R/S theory is just nonsense and typical bashing, not a concern until they have 200 million shares outstanding.

     

    The MSTX bears also cite the lack of partnership as evidence that MST-188 is a sham. MSTX didn't own MST-188 when it was going through P2 trials, which was a number of years ago. In fact, it wasn't even acquired by MSTX until 2011. The previous P3 study, completed by SynthRx, was published in 2001, so it has been a number of years since MST-188 has been studied in this application. Expecting a deal from big pharma after a drug has sat on the shelf for a decade is a bit unreasonable and suggesting that its an indication of the drugs efficacy, or lack thereof, is absurd.

     

    I think the most telling indicator of MST-188's potential for success is the data compiled by other researchers that supports the effectiveness of Polymer 188. Most biopharms have these new molecules that are created in house. MST-188 on the other hand has been evaluated in other research setting across the world with effective results. The research community knows it works and how it works. MSTX is applying the known mechanism and effectiveness of the drug to human conditions. What's different is that MST-188 acts as a hydrating lubricant for a cell, it does not have another biological mechanism that changes the way a cell works. It's simply like spraying WD-40 on something so that it works more efficiently. That's why I believe it with be found effective in ALI, stroke, and other vaso-occlusive medical conditions. A simplified description, but accurate.
    16 Dec 2013, 10:20 AM Reply Like
  • jcri33
    , contributor
    Comments (11) | Send Message
     
    Jbem 777,
    ThAnk you for your reply. Clearly manipulation and short selling will continue aggressively while we are at these sub $1.00 levels. That being said.... What do you believe management can do in the near term to increase New investor confidence and interest in MSTX?
    I assume that they will continue to present at biotech conferences, (with the next being the Bio-CEO investor conference in NYC in Feb 2014), as well as release quarterly reports as required. They certainly have several catalysts upcoming such as the release of data from the POC for Heart Failure and the first patient dosing in Phase II for ALI, both of which should be in Q1 2014.
    Besides that, do you forsee other avenues for management to take?
    Do you see other potential catalysts in the near term?

     

    Did you have an opinion on the wording and tone surrounding Brian Culley's brief mention of partnerships within the EU/Japan from the PJHC audio cast?

     

    Do you predict that when the Q4 +45days release of 13f holdings for institutions comes out that we will see new and significant positions of MSTX being held? With all recent clinical results looking good an d our current cash position healthy, and stock trading below that cash value, you would think that more institutional investment would be taking place just on a risk-reward basis alone.

     

    Guess that's enough questions for now. Thanks Again JBEM
    JC

     

    17 Dec 2013, 11:24 AM Reply Like
  • jbem777
    , contributor
    Comments (39) | Send Message
     
    Author’s reply » Management just needs to keep doing what they are doing IMO. They set milestones and are achieving them on time. I hear people complain in just about every biotech that “management needs to do more.” I am not sure what they expect management to do? They are presenting at professional conferences, such as the 2nd Annual Sickle Cell Disease Therapeutics conference, as well as a myriad of investor conferences. They are creating investor awareness and are able to effectively recruit institutional investors. Sounds like they are doing a pretty good job to me.

     

    I don’t see the potential for any unforeseen catalysts in the immediate future. Perhaps a partnership for the ALI indication, but I don’t think that it is likely until after the P2 study. This is not necessarily a bad thing as it means management is making shareholders aware of their goals and obtaining them.

     

    In formulating my opinions about any biotech, I do not include the potential for partnerships. There are just too many variables and it is often nothing more than a hope as it is next to impossible to predict what will happen.

     

    In regards to an increase in institutional ownership, your guess is as good as mine. It does appear as if the stock is trading sideways and slow accumulation is occurring, but it is nothing more than a guess.
    18 Dec 2013, 01:20 PM Reply Like
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