4D Pharma : anyone know much ? £600m mkt cap, zero revs.....

7th Aug '15 by VegPatch

13 comments 13245 reads

I saw an RNS today detailing a small collaboration between 4D pharma and an Irish University to further understanding into the role bacteria may have on autism. I also read 4D Pharma is developing a treatments for paediatric Crohn's disease, irritable bowel syndrome, multiple screlosis and others.

In trying to find out what this £600m AIM listed company does, I went to the website. This is possibly the least informative website I have visited from a company in a while. For instance under "company information" http://www.4dpharmaplc.com/company-information/ all you get is a holding statement :

"4d pharma plc is a pharmaceutical company focussing on developing a number of projects targeting important new therapeutic areas."

No in depth data into how the platform works or areas of therapeutic excellence. More space is devoted to the directors profiles. Nothing wrong I guess with low levels of info from this company, that was founded in 2014, but these days I feel its either lazy or there just isn't that much to tell....except that I read it is developing "live bio therapeutics" in all the areas mentioned above, so surely the website should be jam packed with data?

Anyway it appears that what 4D does is to develop therapeutic treatments using bacteria harvested from healthy people to develop treatments for less healthy people. It describes the mechanism as its MicroRx

Interesting to note the Chairman is David Norwood, serial entrepreneur in the tech / biotech space. The CEO is Duncan Peyton, who has a background in corporate finance and biotech investing.

So the potential applications are clearly massive.

But I must admit the cynic in me is piqued by

1. Big market cap, which has doubled this year. Biotech companies are on fire at the moment - NASDAQ biotech index has quadrupled since 2011 and trades on over 50x PE. BUT remember 1999-2005, as what goes up without valuation support, can fall a long way afterwards.
2. Serial entrepreneur type founders (can always just move on to the next hot thing if this fails)
3. Real lack of info on the website
4. For a company tackling so many therapeutic areas I wonder how well resourced it is?
5. Cash burn is likely to increase as trials…

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VegPatch

8th Sep '15

Totally low quality I admit but after a period of stability from May through to September where it has defied the market sell off, this is one company that looks to be rolling over.

But I admit this is totally low quality analysis !

no valuation support though

Zoiberg

10th Sep '15

Vegpatch. I have found reports of research that shows that autistic children have unusual bacterial composition in their gut and that this leads to unusual brain chemistry. It is early days but it is hoped that this may lead to treatments for the condition. The whole area is known as the human biome (i.e. the thousands of different bacteria that live in the human gut and on the skin) and appears to be a promising new frontier in medical research. I am a layman so only have a simple understanding.
4D seem to have cash equivalent to £1.50 per share which is a long way below the share price which I feel is far too high for a company which is years away from commercial success. Success however, would be extremely rewarding.
I too, think the web site is the worst I've ever seen - perhaps 4D are trying to discourage investor speculation?

Robert Barton

Have to agree about the website but I bought the shares a while ago purely
on the basis that Neil Woodford has them in his fund.

Mark Simpson

Despite the very large market cap and reasonable 65% free float it has a riduculous spread of 6%+ and is unborrowable on IG. It's in the 'probably massively overvalued but not worth the bother to short' camp for me.

Note Woodford holding Allied Minds (LON:ALM) didn't stop that falling from £7 -> £4 when the momentum reversed.

11th Sep '15

My take on Neil Woodford for what it's worth (I've been wrong many times before!) is that he has a lot of very early stage investments which are going to take time to mature. Some may burn and crash while others will return multiples of the original investment. Overall, you are probably onto a long term winner invested in his fund. Any individual share on the other hand, is not a guaranteed winner because he is a shareholder.

Here are some links you may find interesting (found by googling "autism" and "microbiome")
autismspeaks.org "autism and the microbiome"
nature.com 12 Nov 2014 "Gut-brain link grabs neuroscientists"
www.sciencedaily.com may 7 2015 "Possible role of gut bacteria in autism"

The thing that strikes me from these articles is how very early stage all of this is with years of research to go.

underscored

This is a very interesting looking company, and completely impossible to value. The potential value here has very little to do with the specific drugs under investigation per se. This company has a novel platform, for developing a completely novel type of therapeutic, so if their technology works in humans, there could be many, many applications in all sorts of disease areas. Obviously on the converse the entire basic premise is as yet unproven and there could well be 0 value here.

I will write up in a little detail for you when I get some time.

18th Jan '16

I think this could be a very profitable short in the next couple of months. No real company newsflow expected from pivotal trials. NASDAQ biotech index down 25% from July highs, Hillary Clinton going rabid on biotechs and pharma. Allied Minds, another Woodford / Invesco biotech favourite starting to crack, down 11% today. These small / mid caps are offered only at the moment. Could be a good buying opportunity in quality names but 4D pharma hasn't really budged. Only a matter of time before one of the major shareholders tries to exit stage left and the shares are friendless. Remember the valuation is still £514m mkt cap, and no revenues or profits until 2018 at the earliest.

It may be worth billions like Amazon, but also like Amazon it can go down over 50% in the 1999-2002 tech crash before recovering.

donald pond

29th Aug '20

I feel we need to start talking about £DDDD. It has become one of my core holdings over the summer, as it is the world leader in the growing area of biotherapeutics: in other words, using live gut bacteria to treat disease. There is little doubt that this area of medicine is the biggest breakthrough since the discovery of antibiotics, so the upside is absolutely staggering

This week they announced some pretty astonishing results for late stage cancer patients where all other treatments have failed. During September there will be results for Blautix, their IBS treatment, coming through. I see in his latest podcast that Peter Higgins, aka conkers3, has bought a stake.

Woodford bought heavily into DDDD and pushed the share price up to £10. By March you could buy shares for 30p (I started buying at 32). But, with over 950 patents in place, there is in my view a significant chance that DDDD has several biotherapeutics that will become blockbusters. There is a lot of research out there, but having seen the share price triple since March, I believe there is a huge amount more to come and the Stockopedia community should be aware if the potential here.

It is, imo, possibly the most exciting investment opportunity I have seen in years. Not without risk, but look at how Seres pharma has done in the US, and then consider that on most measures DDDD has a much bigger portfolio of assets.

Looks to be building into a Weinstein/Minervini stage 2 which could last years. Cautious investors may wish to wait until the IBS results come out, but this should be on every PIs radar. I honestly believe that although it has a £130m market cap at present, this is about the only company on the LSE that has the potential to become a true global leader in an exponentially growing tech area.

Johnm_aim

DDDD the potential is absolutely huge. There is a need to look beyond the Stockopedia score for Pharmas such as DDDD.

Key for me is the partnership with Merck.
Dddd has a huge clinical pipeline of innovative, patent-protected therapies with results due on 2 of them (#COVID19 included) before year-end. 5 Phase-2 candidates. An R&D and licensing deal with @Merck $MRK (5.83% owners) worth up to $1bn. Market cap - £110m.

There is RNS-stated potential for a US listing, where a similar live bio-therapeutics stock Seres $MCRB did 6x on a successful gastroenterology Phase 3 read-out. They now command a $2bn mcap, versus #DDDD at £100m.

The news announced this week is truly exceptional. See quote below from RNS.

Dr Alex Stevenson, Chief Scientific Officer, 4D pharma, commented, "The disease control rate observed in part A of the study, at 42%, far exceeds the 10% threshold for success agreed with our partner MSD for the cohort expansion phase, boding well for the outcome of the ongoing Part B of the study. This is ground-breaking for the microbiome in immuno-oncology. Considering the advanced stage of disease of the patients in the study, end of line patients who have previously failed on a checkpoint inhibitor and have little to no remaining treatment options, these results are very promising."

He added, "We believe that, while this is a small study, these efficacy and safety results in such a difficult-to-treat population are notable. To achieve these results while maintaining a very clean safety profile is to our knowledge unparalleled, and particularly significant in oncology where there is all too often the unfortunate trade-off between treatment and quality of life, and patients often elect to interrupt or stop treatment completely due to adverse side effects."

1st Sep '20

Well, up another 20% today and with results on the IBS treatment due this month, and feedback from patients in the trial suggesting it is potentially very effective, this could easily be at the start of a very long runway. It is amazing how few private investors are onto this: if we were in America I suspect the market cap would be tens of times higher (as Seres - which has far fewer patents and prospect- is!)

19th Sep '20

Well John, looks like its just you and me and a few lurkers here. What more does a stock need to do to get onto the Stockopedia subscribers radar? A major step to addressing otherwise untreatable cancer, 5 bag in a month, lots of news to come, and still no comments!

Luthrin

“What more does a stock need to do to get onto the Stockopedia subscribers radar?”

I imagine most Stocko subscribers bring up 4D’s StockReport, wince at the sea of red in the historical numbers columns, note the words ‘Highly Speculative Small Cap Momentum Trap’ and the pitiful QV metrics, and after examining the uninspiring 5-yr chart they simply move on. And you can’t really blame them when you consider how the corporate graveyard is overflowing with the rotting corpses of failed pre-approval stage pharma companies.

To fully appreciate the enormous potential of 4D (which could be realised in just a matter of months, not years) I think an investor needs to do a fair amount of research – to at least gain some familiarity with basic human biology and published research on the gut microbiome; to have some appreciation of Live Biotherapeutic products and 4D’s MicroRx discovery platform (the company’s latest presentation gave an extremely valuable insight); and to also understand how the acquisition strategy of major pharma has shifted over the past decade, with smaller players increasingly being bought out after successful phase I or phase II trials rather than post-approval.

The recent share price surge has resulted in 4D unexpectedly becoming the third largest holding in my portfolio, but I’m not remotely tempted to sell any shares. The asymmetric risk/reward profile is far too compelling.

Snowbum

20th Sep '20

It has made it on to the traders radar after the recent break out! Check out JC’s springs and breakout thread for details.

4D Pharma : anyone know much ? £600m mkt cap, zero revs.....

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VegPatch

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