SPL has been a disaster for investors! The fundholders have all recently exited causing the price to crater.

I have previously posted on the perceived merits of the investment thesis, and the destruction of that thesis. If you are unfamiliar with the company it may help to read these to get a greater understanding of their product suite and the bull case.

The biggest failure has been execution. Much of the blame should rightly be laid at management's feet, but COVID severely disrupted their clinical trials pushing back the timeline on an already lengthy program. (They are conducting efficacy, side-effect profile AND survival benefit phase II trials using current chemotherapeutic agents attached to their proprietary DEP platform. This is hoped to reduce side effects and improve efficacy. Survival studies take a loooong time)

After many, many years, the results of those trials are coming out and they don't look too bad.

DEP- Cabazitaxel

DEP-Irinotecan

SPL's strategy has always been to self-fund these drug trials through to the end of Stage 2 and then out-licence the drugs to Big Pharma who would then pay for and run the inordinately expensive phase 3 trials. If these are successful, they receive milestone payments and then a royalty stream. Of course, the numbers attached to these deals is unknown but is likely to be in the order of many hundreds of millions of dollars in the event of a successful phase 3 - for each DEP-drug candidate. And likely single to double digit millions just for the rights.

I am hopeless at modelling these sorts of things so won't embarrass myself by trying, but the current MC is ~$50, and with a $7.5 mill R&D tax refund and the upcoming sale of Vivagel to Mundipharma for $8.5 mill, this gives the company ~$40 mill in cash.

BUT, there is a large cash burn of $15mill/year. This might moderate given the conclusion of these two large trials.

There are a number of other ideas in development but I don't ascribe any near time value to these, indeed just likely value destruction.

Another possible negative is the development of newer, potentially more effective anti-cancer drugs (immunotherapeutic agents) with potentially lower side effect rates. As yet, conventional chemotherapeutics are not showing signs of being significantly displaced, but....

So this comes down to one question: will they sign a deal? If they do, I could easily see this being re-rated by a factor of 20. Bit of casino.

NOT HELD, but thinking about it,

@what'spurpleandcommutes

For me SPL's venture into Viraleze is an unnecessary distraction from it's core businesses. 

1. Getting FDA approval for Vivagel
2. completing adequate trials of their DEP platform

(please see previous straws for what these refer to)

Regarding 1), it would be reasonable to say that they have got the rest of the world licensed and should just see how they go with that, as it is likely the FDA have their hands full at the moment and may well require a further large scale stage 3 trial in the USA, which would be prohibitively expensive. Also, they do not break out Vivagel sales in their reports, but given how meagre revenues are, they might not consider it worthwhile. This seems like a huge lost opportunity for the treatment of bacterial vaginosis is largely unmet.

But for 2) I cant express my frustration with this company in polite terms. Yes, COVID has put a significant handbrake on recruitment, but all of management's attention should be on getting their multiple stage 2 studies to completion ASAP. The longer they delay the greater the risk of another technology usurping their position. The only reasonable "unless" is if they have insight into the results being underwhelming. But from my reading of their results, their is plenty of evidence already that the reduction in side effects is enough to make the DEP taxanes a superior product to what is commercially available, if the survival outcomes are the same. And it seems likely there could be a survival advantage. FFS get on with it!

So, it strikes me as very poor judgement to expend not insignificant capital and attention on what can only be described as fluff. Their claims for Viraleze were laughable, and not unexpectably they got told to reconsider:

 Firstly the main line of sales was stopped: Viraleze removed from sale from a leading online UK pharmacy.

Secondly, they got pinged here in Australia TGA fine .

All a bit Lorna Jane, for a supposed ex CSIRO powerhouse of scientific brilliance.

Both of these events were completely preventable, showing poor management at many levels.

I still have a tiny holding (and getting tinier!), more as a piece of melancholic memorabilia than an investment. (see Osprey post for learning lessons, Grrrr!)

The ASX announcement on 5/7/21 is a bit disappointing. Apparently the TGA had fined them $93,240 for advertising their Viraleze to Australians when the TGA hasn't approved it for sale here. It seems that this is a result of the websites containing the advertising being accessible from Australian IP addresses. The company probably should have been on top of this issue before being fined, but they say that they fixed the problem straightaway and I just checked the website viraleze.co --- sure enough it has almost no information now.

However, they do raise an interesting point: how can they keep Australian shareholders up to date on their new products without breaching the Therapeutic Goods Act? They say that they will ``work closely with the TGA'' to sort it out. Surely other biotechs have come across this problem though, so I hope the TGA can give them some good guidance, and that this is the last we hear about these penalties.

(Disc: held)

VIRALEZE™ to be launched with LloydsPharmacy in the UK

•  Starpharma has signed a sales and distribution agreement for VIRALEZE™ with LloydsPharmacy, one of the largest pharmacy groups in the UK
•  VIRALEZE™ will initially be available exclusively at LloydsPharmacy, one of the largest pharmacy chains in the UK with around 1,400 LloydsPharmacy stores across the UK
•  LloydsPharmacy is part of the global McKesson group, a leading international pharmaceutical wholesale and retail pharmacy company
•  McKesson UK is also one of the largest pharmaceutical wholesalers in the UK (via AAH), supplying over 14,000 independent UK pharmacies
•  The UK is the first country in Europe to launch VIRALEZE™, and Starpharma has a further European roll-out planned
•  VIRALEZE™ is a broad spectrum antiviral nasal spray that contains astodrimer sodium (SPL7013) which is virucidal, irreversibly inactivating >99.9% of SARS-CoV-2 (the virus that causes COVID-19) within one minute
•  SPL7013 has been shown to be highly active against multiple strains of SARS-CoV-2 (the virus that causes COVID-19) as well as a broad spectrum of other viruses including influenza, RSV, SARS, MERS, and HIV

DISC: I hold

It will be interesting to see if this OTC ( over the counter...aka self administered ) product will be popular, especially with all the hype over injections

if anyone is interested, here is more in depth assessment of the risk reward of drug development

So, to continue with the counter-argument

SPL has committed itself to drug development. This is the graveyard of many an aspiring company. Biotechs routinely destroy shareholder value. Even Big Pharma has largely abandoned drug development due to the perversities of Eroom's Law.

This is the opposite of Moore's law as applied to semiconductors. Currently, it takes approximately a billion dollars and 8-10 years to bring a drug from conception to release to the general public, with a failure rate of >90%. Big Pharma commonly just outsources this high risk activity by just watching small companies and then buying them when things look interesing but not too expensive.

Starpharma are to be congratulated in getting Vivagel to market........but we havent got past the FDA yet. SPL management have just met with the FDA in response to their request for "more data". This cause a reduction in the share price of 1/3. The chances of getting through this without a further trial are probably <50%. If they are required to go through another trial this will add several years to the FDA approval in the US and willno doubt have ramifications for some areas in the ROW, that rely on FDA approval as a surrogate for their own approval process. Europe and ANZ and Japan are not beholden to the FDA and have already approved vivagel for sale, however the share price will no doubt take a large hit until there is another reason for a positive rerate. That could either be the anouncement of another highly lucrative deal such as the potentially $2.4 billion AZD deal, or evidence of sales traction of vivagel.

The cost of a new trial would also be considerable (>$5 mill) as it is likely that it may well need to be conducted in the US (I suspect major criticism will revolve around some patient selection issues in countries with different health care systems).

Additional issues could be

• significant delays in proving the validitiy of the DEP platform (these trials take years) and new drugs being developed that negate the need for the current DEP portfolio candidates
• failure of the DEP platform to cause any meaningful  improvement in survival. This is not actually the point, but reductions in side effects with a very large increase in cost (changing from off-patent to on-patent) may not be enough to change clinical practice in cash starved health systems.
• delayed side effects attributable to DEP, or uncommon but catastrophic short term side effects that have not been observed in the limited numbers of patients to date.
• ill-considered takeovers or rash use of funds to take a DEP candidate through phase 3 (high risk and high cost, and something they have said they will not do, but...)

There are probably heaps of other reasons as well, biotechs are not generally good creators of wealth unless.........

Starpharma signs DEP® ADC Research Agreement with MSD

Melbourne, Australia; 12 February 2021: Starpharma (ASX: SPL, OTCQX: SPHRY) today announced that is has signed a Research Agreement with MSD, the tradename of Merck & Co., Inc., Kenilworth NJ USA. Under the agreement, MSD will conduct a preclinical research evaluation of dendrimer based Antibody Drug Conjugates (ADCs) utilising Starpharma’s proprietary DEP® technology.

Dr Jackie Fairley, CEO of Starpharma commented: “MSD is a recognised leader in oncology, and we are delighted to have signed this new Research Agreement in such an innovative and valuable area.”

DEP® ADCs exploit the unique potential of Starpharma’s DEP® technology to provide enhanced characteristics to ADCs including greater homogeneity, site specific attachment, and higher drug antibody ratio (DAR), than conventional ADC approaches. DEP® ADCs are the subject of internal and partnered programs.

Starpharma has previously demonstrated the significant advantages conveyed by DEP® ADCs in multiple preclinical studies, including its DEP® HER-2 ADC, which showed significant tumour regression and 100% survival, outperforming Herceptin & Kadcyla in a human ovarian cancer model. Starpharma’s DEP® technology has already yielded four clinical stage oncology products, including one under development by AstraZeneca.

DISC: I hold

AZD0466 clinical DEP® program global expansion

• AZD0466 clinical development program expanded to incorporate global clinical trial

• Clinical expansion facilitates patient recruitment into a global Phase 1 study in haematological tumours

• AZD0466 is a highly optimised nanomedicine formulation of AstraZeneca’s novel dual Bcl2/xL inhibitor which utilises Starpharma’s DEP® technology

Disc: I hold in Strawman & TRW