Simple bear case question…..

If the probability of successful commercialisation was high….

Why has big pharma not purchased Clarity already ?

Surely their ability to research, consider and make an educated opinion on both the scientific and commercial challenges far exceed any “research” one individual could do?

Their resources are huge.

Every Clarity holder I talk to sounds like a bbq hype share victim who sees world domination and a big pharma acquisition as a certainty….

it really feels like a pyramid scheme to me with every holder endlessly talking about price only and seemingly convincing the next person to buy a holding inturn increasing their own holdings value without mentioning any of the enormous attached risk (and yes, even late stage trial biotechs are extremely risky).

The ceos are all incredibly salespeople as they always are.

I think the comparison with resource exploration is apt.

Still a “wait and see” speccy for me until we see commercialisation and sales….then it could be worth a look as an investment.

@topowl to your point on the risks at late-stage pharma the below table shows clinical development success rates from 2011 to 2020. Things may have changed post Covid and may change with AI, but the figures still provide a good guide on how risky even late-stage clinical assets are.

So, on average only 52.4% of Phase 3 assets make it to full approval and for Oncology it is only 43.9%. So, flip a coin on CU6 will give you a reasonable probability for an outsider - insiders and well-informed large pharma companies will have better odds, but they get a lot wrong and play a "portfolio" approach due to the risk.

Hope this helps.

Source: ClinicalDevelopmentSuccessRates2011_2020.pdf (bio.org)

Cheers

Yes it's funny, even if each company has a 50/50 chance of success, there's no great guarantee of success using a portfolio approach.

I was talking to my colleague chat gpt, you may have heard of him...lol

He said, taking into account variability. The possible number of successes can range from 0 to 10 for a 10-company portfolio such as this, each being a coin flip is....

Using a binomial probability distribution:-

• The probability of exactly 5 companies succeeding is about 24.6%.
• The probability of having 0 successes is about 0.1%—unlikely but possible.
• The probability of having 10 successes is also about 0.1%—again unlikely.

But there's still a real existential risk of essentially zeroing out in total....and that's ignoring the factors of real life randomness, other scientific events, market conditions....and even a bit of luck.

I don't think I'd have a weighting of more than 1% to 2% in a company that I believed had a coin-flip chance of success.....let alone a portfolio built around them.

It's much less time-consuming to just go to the casino and hit the tables.....lol.

Having said that, I hope Clarity gets up, I know a lot of reasonably large holders who got in at 75c....

They won't even consider selling.....

Unfortunately, it's pretty much their only holding.....cripes.

In the rare case where they mention it to me, I always smile and softly suggest they sell it all now.

Take the W as they say in american sports.

@Tom73 that's a good paper - I've been working off older sources, but directionally, the % numbers are consistent with what I assume.

When you work through $CU6's portfolio, apply 1) the CoS's and 2) the timelines to revenue (also in that paper) and you start to model it, you will quickly see that $2.5bn of value is assuming quite a lot of future success.

While it is tempting to model the $CU6 multiple assets/trials as independent events, I don't think we can do that because the common platform means the drivers of success or failure are likely to have some level of correlation.

Modelling each trial as independent, you get quite a low CoF that all 7 assets in clinical development fail. That's probably what you need for $CU6 to go to $0. E.g., assuming 3 x Phase 3, 2 x Phase 2 and 2 x Phase 1, then the probability of all failing is in the ballpark (0.5x0.5x0.9x0.9x0.95x0.95) < 20%.

So, if I believe there is a c. 20% chance that $CU6 goes to zero, then I agree with @topowl, I'd probably only hold a 2% position, giving my risk appetite. This is my intention, once I have completed my review of everything that's readily available in the market, subject to valuation. (I hope your acquaintances understand the risk they are taking in having $CU6 as their only holding!)

But because the assets are not independent, but linked through the common platform, the chances of a total failure are higher, as each trial should not be considered as statistically indepedent. That's tougher to assess, because how do you even frame this? You have to make competely arbitrary assumptions on the conditional probabilities. Well, perhaps not arbitrary. For example, for safety, you can take a look at the information to date across all the clinical studies so far. (We've seen an example of this earlier this week, where the FDA have allowed $NEU's NNZ-2591 to have a less onerous safety protocol in Phase 3 due to the results from the multplie Phase 2 readouts for that drug.)

Equally, should the lead candidate advance positively through Phase 3, then that conditionality works in our favour, as the platform becomes de-risked. Success then becomes how many assets can be developed off the platform, and with what timeline. I think at that time, big pharma are most likely to make a move. The oncology leaders will - once the platform is de-risked - be better able to assess the potential for other indications than the market can. Because the platform is unqiue and radiopharmaceuticals are a relatively new area, then the assessment is hard even for the pharmaceutical companies. Furthermore, each will assess the attractiveness of $CU6 against it's own pipeline. And that's where you will find a lot of divergence in "willingness to pay up". Because the decision to allocate capital to acquire $CU6 is weighed up against the alternatives within their own pipelines.

The fly in the ointment is SECURE, where the adaptive Phase 1/2a format (see below), with reporting of individual cohort and patient results, is providing a more dynamic flow of information than is often the case in clinical studies. If we continue to see positive results, with progressively lowering PSA through each of the 4 cycles for cohort 4 and for each patient, then I think you might reasonably model an improved chance of success for this asset. I'm watching this one very closely.

The reason for going into this detail, is to highlight that I wouldn't think of $CU6 as a 50:50 coin toss. It's chances of success are much better than that. (In this, I am talking about the chances of going to near zero, and not about today's valuation.)

Equally, developing a reasonable view of risk-reward is - for me at least - quite hard at this stage. Personally, I haven't yet found an edge or insight that is giving me the confidence that I normally require when investing in this space. By confidence, I don't mean a high CoS, but confidence that my analysis is reasonable,... that I am assessing the risk-reward correctly.