I have to admit that Prescient Therapeutics (ASX : PTX) hasn’t particularly been on my radar, never really looked at it. With a market cap of $3m, I could probably be forgiven for this except for the fact that this forum is supposed to be about the Long Tail of the ASX, and PTX is pretty much at the end of the tail. To be honest, I probably wouldn’t have bothered poking around the company if it wasn’t for the recent announcement that CEO Rob Crombie was stepping down. I’ve always liked Rob – bright guy, and a very nice person. As such it sort of prompted me to take another look.
Frankly, at first blush, PTX has a bunch of black marks against it. It’s the usual reverse-merger “special”, which a lot of investors are rightly wary of. That doesn’t mean that there aren’t (or can’t be) good opportunities that elect to back-door into an existing shell, but they are the exception rather than the norm. With a $3m market cap and not a lot of trading volume, it’s obviously a bit of a challenging stock to get stuck into … and plenty of volatility to boot. It also doesn’t have a lot of cash but has a huge execution story in the form of a big pipeline and multiple clinical trials, which sort of leaves the average Joe scratching his head, wondering how much of the company is just fabrication. Obviously with a pittance of cash, nobody is going be running any serious clinical studies – and with the current market cap, raising any meaningful $s is going to be painful from a dilution vantage.
That’s the basic problem with PTX – it’s doesn’t pass the initial “sniff test” very well. Presumably that’s the reason why it’s trading below six cents.
But digging around under the bonnet, there is ample evidence that there might be something to PTX. For a starters, the science behind their two clinical candidates is not half bad if you can be bothered to dig out a few publications around Ras/Ral/Rho pathways – particularly Ras-like (Ral) signalling (PTX100). Unfortunately, the company does very little to help investors to understand the science behind the individual programs and the website and investor materials are pretty underwhelming. But this is a serious target space for cancer drugs and although there are plenty of competing initiatives in the overall MAP Kinase domain, drugs with multiple modes of action are still interesting and are worth studying in the clinical setting – decent academic cancer centres like Moffitt and Albert Einstein certainly seem to think so. The AKT program (PTX200) is probably a little less interesting because PI3K/AKT went through a huge phase of attention but has had some mixed outcomes, mainly because of practical issues concerning the design of clinical trials, potential toxicities and the fairly low likelihood of finding a therapeutic index when targeting such a fundamental cellular pathway. For the uninitiated, PI3K/AKT is a key cell survival pathway and is ridiculously complex.
So the science – and scientific collaborators – passes cursory assessment. And even if targeting AKT is a drug development challenge (the PTX200 program), a quick search on clinicaltrials.gov reveals that there is already an NIH-funded Phase I/II program evaluating PTX200 (triciribine phosphate monohydrate) along with fairly standard “chemo”. It’s a bog standard academic-looking open-label safety study, but as a shareholder this is exactly what you want to see happen before the company spends any real $s on the program. In fact both of PTX’s programs appear to have a fair amount of NIH money behind them, which is sort of interesting to me and the company would do well to explain this instead of spruiking a pipeline of clinical trials in such a way as to convince the reader that all that activity is happening under the company’s command, and with the current pitiful balance sheet.
And that’s probably a good thing, because as far as I can tell – the company doesn’t have much by way of execution resources, especially now that Rob has left. Paul Hopper is a very talented guy but he isn’t going to be rolling-up his sleeves and running a clinical development program any time soon, Terrence Chow is essentially a hired gun, and Professor Said Sebti is basically an academic stakeholder in the core technology. So a big part of getting Prescient to the next level is going to be articulating the basis of a team that really can deliver on the clinical development needs of the company, particularly if INDs are going to be moved from small physician-sponsored studies, to company-sponsored studies (i.e. a bit more rigorous, extensive and multi-centre).
By the way, I like the fact that Steve Clarke is on the board. He has a highly evolved (we’re talking pico-molar sensitivity) bullshit detector…
To me, it’s pretty amazing that you can have a company with basically two Phase II programs, manufactured drug (clearly, because they are running studies), luminary US academic stakeholders, reasonable IP, not completely shonky science, and have a $3m market cap. Only in the Land Down Under. Quite frankly, if Novogen (ASX : NRT) had this company’s assets and scientific “articulation” (as woeful as it is) I would probably just leave it alone, and wouldn’t have much to say. The market cap probably wouldn’t be too far out of line either. As such, the whole situation really suggests that the company is doing something fundamentally wrong, and in the interest of being an added-value commentator, I am going to throw in my 2c worth:
1) The company needs a CEO ASAP. But the CEO is going to need to have more than a Crombie-esq caliber of scientific competence (i.e. robust), that person is going to need to have some star power to push hard on a series of programs that are a tough call in a competitive space. I would prefer someone who knows how to raise money, than someone who can talk science – Prof. Sebti can do that in spades. That person is also going to need to have some support because running 5 clinical programs is ridiculous. I think as soon as people can really see a team delivering, and not just another financial engineering exercise coupled with a smidgin of a clinical story, it will build confidence.
2) The company’s articulation of the technology is woeful. It lacks substance, it doesn’t draw upon the scientific pedigree of the programs and it doesn’t elucidate the significant amount of NIH backing these programs have enjoyed. It’s bland, it’s generic, and it’s undifferentiated. It doesn’t have to be like that because it’s a potentially very good story. Oh, and the company name and logo sucks too. I’m slightly embarrassed to admit that I didn’t really even know what the word “prescient” meant until I looked it up in the dictionary. As for the logo, it’s so generic, it’s basically the same as half a dozen other ASX-listed companies (I note that both TIS and PNV also have 4 “molecule blobs” as logos – equally unexciting). The company just feels vanilla all the way around. An afterthought.
3) The company appears unfocused. Too many indications. Even pipeline is competing with each other in the same disease areas. It just doesn’t make sense. The academic studies should be articulated as academic studies and the (valuable!) de-risk to shareholders explained, not implied to be “internal” initiatives. If I were PTX I would choose one major indication and build an image around that – say, AML or something where there is still a huge unmet need for effective drugs. These days if you are developing a drug for breast cancer, you need to have a pretty robust articulation of why it’s a good idea and what little “niche” you are going to occupy.
In summary – there is quite a bit to like about PTX, especially the price. It will be interesting to see how the company moves itself ahead, as there are some genuinely bright people involved who must surely have the prescience to to see some of the same positioning flaws as I do?
PTX has some good irons in the fire and now Hopper et. al. need to transition it from a story, to a company…
The futuristic mind-bending beauty is taken from the cover of a 1952 Science Fiction Quarterly magazine. (v2 #1, November 1952).