Oasmia - Huge upside, with limited downside - at a rock bottom valuation

2016-02-03 14:22, Edited at: 2016-02-03 14:49

Oasmia Pharmaceuticals (OASM), is probably the Biotech stock of the year in 2016. Market approval in Russia for Paclical (paclitaxel), enables further market approvals for other cytostatics, bound to their XR-17 platform, based on pharmacokinetics data only. Probably a M&A target shortly - in the range of $3bn or higher

Oasmia, has a vitamin-A based, nanotoech platform, named XR-17. The name XR-17, sounds like the name of a rocket or a missile - which is about to be launched!

XR-17 platform, is defined as an excipient, which means it´s a mean to enhance administration and or distribution of a pharmaceutical compound - eg making established treatments better from a patient or clinical point of view.

Paclitaxel, was the first compound to be re-developed within this technology - both as a treatment for canine cancer as well as for ovarian cancer in humans.

Paccal-vet, received a conditional approval in 2014, and was supposed to be marketed by Abbott Labs Inc. The launch was postponed since Abbott made a de-merger, resulting in divesting the animal helath business to Zoetis. It seems like Zoetis, as the owner of Palladia (also for the treatment of cancer in dogs), haven´t been to eager to put Paccal-vet into the market - probably due to risk of canibalization of own business for Palladia? Oasmia have now withdrawn the product from Zoetis. IMPORTANT: The vet-business is a small business compared to the human market - but with a $500M sales potental, yearly, it might be a target for acquisition. To Oasmia, it has been a proof of concept - regarding reduced side effects, since paclitaxel haven´t been possible to use in companion animals in previous formulations.

Late summer of 2014, Oasmia announced complete phase 3 data for Paclical for the treatment of ovarian cancer, showing Paclical to be at least as effective as Taxol (original paclitaxel) along with a definitely lower incidence of severe side effects. The lower incidence of side effects, enables higher dosing, along with shorter infusion time.

In Apil 2015, Oasmia received market approval for Paclical in the Russian Federation, where the marketing of the product is made by the Russian partner Pharmasyntez. Pharmasyntez started the launch of the product in november 2015. Oasmia anounced initial orders from Pharmasyntez at a value of $9M - probably corresponding to an inital quarterly need.

During the summer/fall of 2015, Oasmia aimed to be listed at the Nasdaq in NY. Unfortunately, from August the US stock market has been somewhat shaky - which probably caused a lack of interest from institutional investors. Some say, Julian Aleksov´s lack of confidence from the Swedish stock market, along with his Russian-sounding last name - contributed to the prolonged IPO. The Nasdaq-IPO was carried out at a much larger discount than anyone had expected, followed by large and continous sell-out from takers in the IPO.

As this document, takes a stand in the history and look forward - we now have a unique opportunity to earn loads of money, by investing into Oasmia.

In January, Oasmia announced that they are about to start clinical trials for Docecal (docetaxel). Rapidly subsequent followed by an announcement of an application for market approval in the Russian Federation for Doxophos (doxorubicine). As Doxophos haven´t undergone any phase 2-3 clinical trials - this calls for the fact that Oasmia may receive an approval on Pharmacokinetic data alone.

This means, that we might see numerous of applications for various cytostatics from Oasmia - in Russia, as well in the EU and the US, after receiving the first approval for Paclical

The question is not if a major pharmaceutical company like, Teva/Mylan, Celgene or other companies, will try to acquire this future multi-billion-dollar-cash-cow. The question is just when, and how much they can afford to pay. As a comparison - the acquisition of Abraxis BIO by Celgene in 2010. That transaction was vaued at $2.9bn and is comparable to an aquisition of Paclical only!

At the time being, the enterprize value of Oasmia is approximately $117M - from our point of view this value corresponds to a present value of Paclical in the EU alone.

A HUGE UPSIDE - but a very limited downside!