| What's Going On At Proximagen?

2nd Dec '08 by promethean

6 comments 1853 reads

Another of only 3 AIM stocks showing new highs at the moment... Proximagen seems to have signed a licensing deal with Upsher-Smith Labs, an American firm... the terms of the deal aren't fully disclosed, but it seems that PRX could receive up to £112m on achieving certain development and sales milestones for their PRX1 programme for the symptomatic treatment of Parkinson's disease (PD) - the timeframe being undisclosed.

The are clearly very keen, as they've agreed to pump in £3m+ in capital already at a price of £2 per share... which at the time of the agreement was double the share price... clearly PRX are on to something here, and those in the know have been buying up stock... Lansdowne Partners Ltd have just bought up another huge slug of shares this week... taking their stake to about 15% and PRX is breaking out to new highs...

What are the terms of the deal ? Well the premium paid reflects what the two parties agree to be the net present value of the PRX1
programme at its current stage of development. So by that marker, PRX is significantly undervalued...and PRX has to hit certain milestones to receive future funds... they are ahead of schedule already.

They have other Parkinsons programmes, together addressing the market that seems to be worth $2.7bn annually and clinical trials have shown that their products could be best of breed.

With a cashburn approaching £3m annually, they will need the cash received from deals like this, but if they keep hitting their milestones on target then they won't lack for funding. This is certainly one to watch and if the relative price continues to outperform, then traders may want to take a position.

I have no holding in PRX at present.

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MrT

2nd Dec '08

Apparently, they are on the acquisition trail too. According to this Growth Company Investor article (http://tinyurl.com/6d68lh), CEO Ken Mulvany is keen to use his cash pile to acquire "companies with good technology – we’re not looking to bail out cheap cash-strapped companies." He says he has a shortlist, all of which are listed and all of which are based in the UK, and is ‘speaking to some already’...

promethean

5th Dec '08

The latest surge above 140p has coincided with some unified director buying. Admittedly the size of the trades is pretty small... e.g. the Chairman only bought a few grands worth... although non-exec RD Ashton bought about 30k's worth from scratch. And the FD bought his first 5k worth.

5 directors bought together... I wonder whether 4 of them decided to pick up some more while Ashton built an initial stake... I always find these titchy directors purchases rather peculiar, but in spite of that it has to be taken as a good sign. Ashton is by all accounts the former CEO of SkyePharma and hardly lacking a bob or tow.

Things are going well for Proximagen at present though, so I guess we should take these dealings as positive. It certainly is in stark contrast to the huge offloading of shares going on at Abcam which has a similarly buoyant share price.

MrT - he also said ...

He says he has a shortlist, all of which are listed and all of which are based in the UK, and is ‘speaking to some already’. So, expecting some action before long, we think it could be worth adding to your holding.

I wonder which companies they have in mind?

17th Dec '08

Another breakout to new highs today...

StrollingMolby

4th Nov '09

Just to resurrect this thread, one of Prom's old favourite stocks. :o)

On 5 June PRX completed a £50m fundraising priced at 140p with the proceeds providing the capital to acquire and in-licence drug development programmes and to further develop those programmes through to commercialisation, with savings made through economies of scale.

Then last Friday, PRX announced a small acquisition of Cambridge Biotechnology Ltd. Exact details of the transaction are not being disclosed (why?), the only info provided being that Proximagen will pay a percentage of future revenues generated from the acquired drug development programmes.

Now, firstly I am surprised they managed to raise £50m without a definite target though this does show the respect that PRX has earnt from the market over recent years since their float in 2005.

Secondly, what will PRX do with the £50m or so they have in the bank? This equates to 87p per share cash. (they announced £8.5 cash in the 31-May interims prior to the placing too).

Prior to having all this cash sloshing around, PRX was loss-making, losing 11.4p in 2008, and another 5.3p in the interims. So all eyes on the next deal for revenue and profits.

Growth Company Investor put out this short note following the fundraising, giving more detail as to the delpoyment of the cash over the next two to three years.

Any further thoughts?

SM

I think we all need to see some action from Proximagen. I have to admit that my initial interest was due to some exceptional Relative Strength against a very weak market before March of this year. Randgold Resources cropped up in a similar screen, and they have gone on to great peaks since, but PRX showed signs of life before quietening down.

The £50m is impressive, but they'll have to do a lot of bootstrapping before the market gets excited. I can't say that I really understand the B-plan at the mo, and I'm sure my view is reflected across the market.

What's going on at proximagen?

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Promethean

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