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Do Motif Bio's US rivals provide a value benchmark for the UK drug developer?

Published: 14:57 15 Nov 2017 GMT

nasdaq sign on times square
The company's NASDAQ listing could be key to driving up the company's value
Motif Bio Plc (LON:MTFB, NASDAQ:MTFB) has come a long way since it took its AIM bow back in April 2015.
 
It has manufactured clinical trial supplies of its lead drug, iclaprim, completed two successful phase III clinical trial on the next-generation antibiotic and, crucially, raised US$110mln.The last piece of the financing jigsaw was put in place on Wednesday when it unveiled US$20mln of debt funding.
 

This should see the drug developer through that tricky period in which iclaprim undergoes regulatory scrutiny by the US Food & Drug Administration (FDA).
 

How Motif stacks up

Yet Motif, market capitalisation US$130mln, probably isn’t receiving the market recognition its progress deserves.
 
Benchmarking the firm brings this point into sharp relief. 
 
Take Paratek Pharmaceuticals (NASDAQ:PRTK). It has an antibiotic at a similar stage of development to Motif’s iclaprim targeting the same patient group – those with acute bacterial skin and skin structure infection (ABSSSI).
 
More to the point, it is valued at more than US$562mln. In that comparator group are also Achaogen (market cap US$503mln), Tetraphase (US$308mln) and Nabriva (US$205mln).
 
All are listed on the NASDAQ, which has a far greater understanding of the life sciences sector, along with a deeper pool of capital to back up and coming businesses of Motif’s ilk.
 

Shackles coming off

Now, followers of the UK firm will correctly point out that Motif also has a quote of the US tech market; however, the company has been subject to “certain restrictions” in the 11 months it has been a NASDAQ constituent, chief executive Graham Lumsden said.
 
The shackles come off next month, he added. “We will get much better access to the US and an investor and analyst base that understands and values the space,” he told Proactive.
 
This coincides with what is expected to be a pivotal period in the company’s history as it formally makes its new drug application (NDA) to the FDA in the first quarter of next year. 
 
While certainly not a slam dunk, given the US regulator’s sometimes ruthless approach to giving sign-off, Lumsden is confident.

“I think it is in the public domain: if you are submitting an NDA you go through some pre-NDA processes. It is looking great,” he said.

Orphan designation

iclaprim has orphan designation for use in cystic fibrosis patients with lung infections and is undergoing phase II trials as a treatment for hospital-acquire pneumonia with results from the study said to be “imminent”.

There may be an opportunity to deploy the drug for other serious bacterial ailments outside the scope of an eventual sign off ABSSSI, particularly with the advent of the 21st Cures Act in the US.

Lumsden says the Act is “important to us as for the first time it allows off-label promotion”.

So what else might put a bottle rocket under the Motif share price?

M&A activity in this very specialised field of drug development has been noticeable by its absence in recent years, although industry watchers said they are starting to see faint stirrings.

Team up?

More likely, the companies developing the next batch of antibiotics will team up.

Analysts point out most of these businesses are single-product operations heading into an expensive commercial phase of development.

By pooling their efforts the cost of R&D and, crucially expenses incurred selling products to hospitals in the US, fall dramatically.

It will be interesting to see how activity in the sector plays out, where Motif sits when the tectonic plates start moving and how its significant potential might be valued.

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