I had the very great pleasure to attend an investor briefing with the Benitec ($BNIKF) executive team in Australia during the week. The discussion was very broad, however some key points are worth sharing - noting that they reflect my own observations and in no way represent the official views of the company:
- In investor meetings, CEO Peter French now mentions BLT is the only gene silencing and the only ddRNAi company in Australia. Not long ago the admission of either would have resulted in a distinct lack of an audience! The tide has certainly changed on this front. French sees the current interest in RNAi therapeutics as a gold rush - and while Benitec missed out on the first gold rush in 2008 while defending its IP, he is adamant that company will not miss out this time around.
- The company is not under the false impression it can market its own drug programs. Market success will be achieved through partnering with big-pharma, and the nature and level of interest in Benitec from big pharma has markedly increased. Rather than Benitec calling them, it's now the other way round. Not surprisingly there is now widespread, genuine interest in Benitec from the 'big boys'. The clear implication is there will be very strong competition for a partnering deal with Benitec (assuming clinical success) with TT-034.
- Despite Gilead's Sovaldi being heralded as the 'most successful drug of all time' clinical success with tt-034, and an effective partnering (and pricing) strategy would allow Benitec to become a very significant thorn in their side. Just as Gilead prospered at the expense of Vertex, it is entirely possible that one day the Benitec shoe may be on the other foot!
- The company is acutely aware that the shareholder approval of the second tranche of funding is critical to a number of the current programs progressing into and through the clinic to their desired stages of evolution. In particular, reaching Phase IIB for TT-034 is seen as a critical milestone in value creation for the company. It was noted that Gilead's $11 Billion acquisition of Pharmasset was achieved after a successful phase IIB. The management team sees no reason why Benitec cannot emulate this experience.
- While Benitec has no direct competitors, its 'comparators' all have far higher markets caps (Alnylam 5.5b, Arrowhead 900m etc). This is despite the fact that Benitec may have the most novel (and if successful) effective solution. The HepC market alone reflects 170 million sufferers world wide - including 1% of Americans. Anecdotal evidence suggests HepC sufferers react very well to the notion of a 'one shot cure' - with at least some individuals already planning to await the results of the Benitec clinical trial before commencing any other therapies. The implication is that if clinical success is achieved, the valuation disparity between Benitec and its peers may no longer hold true.
- The HepC clinical trial is seen as a critical validation of the potential for a HepB cure (a further reason why the Benitec team want to get HepC to Phase IIB).
- TT-034 trial results are likely to be available after 3 months and every 3 months thereafter - noting the first two patient cohorts will produce safety readings only, as the doses are sub-therepeutic in nature. Cohorts 3, 4 and 5 will provide efficacy reads over a 9 - 12 month period. However, HepC safety results are likely to offer a parallel validation of the company's HepB potential, and are therefore seen to be a key milestone for engaging with prospective partners.
- Some very interesting discussions are commencing regarding the potential treatment of pre-transplant donor liver organs with TT-034 to avoid post-transplant reinfection with HepC. It is possible this work could be conducted in Australia, and that the approach has the potential to achieve breakthrough status from the FDA.
- The point was clearly made that the company has the necessary team, capability, and deal making experience to ensure that Benitec's true potential is not undersold. The Board and executive team and have their eyes wide open, and are confident in their ability to realise the value inherent in the company's intellectual property estate and clinical path.
- Regarding the recent addition of US institutional investors to the share register, it was underlined how rare it is for an Australian based company to be the subject of investment from groups with reputations (and investee portfolios) like that of RA Capital. The clear implication is that the due diligence conducted by these parties, and their subsequent investment reflects very well on the company, its management, and its future prospects.
- Nonetheless, Benitec intend to remain very conservative with their funds. They do not intend moving from their current offices, will consider only a small number of additional staff to support the increased clinical activity and international investor relations activity, and invest in some enhanced laboratory facilities to assist TT-034 and additional research activities. Put simply, the approach to cost management seems both prudent and conservative.
- All options are being considered for access to capital to support the company's future activities, including a potential NASDAQ listing of Tacere. This is entirely appropriate IMO, and exhibits a genuine preparedness to consider all avenues, including leveraging the strong US networks now available to the company.
The session only served to strengthen my belief in the very bright future that lies ahead for Benitec. I also continue to be impressed by the high quality of the management team running this company. The team strikes me as being on top of their game, and exhibits a strong self-belief in their ability to guide Benitec through to a dominant market position in multiple focus areas.
As a shareholder this is extremely comforting, but investment aside it is pleasing to know that the enormous potential contribution Benitec can make to modern medicine is in very good hands.
Disclosure: I am long BNIKF.