It’s ‘full steam ahead’ at Midatech Pharma (LON:MTPH, NASDAQ:MTP), the drug developer that last month raised £16mln from investors to fund its expansion plans.
Those at least were the words of Dr Mike Mitchell, the analyst at Panmure Gordon, the company’s corporate broker. And with such a close relationship with Midatech, he knows the business better than most.
“With the balance sheet now significantly strengthened, we anticipate the company is well-positioned to capture value in areas where its technology platforms offer material improvements for patient care,” he said in a recent note to clients.
Midatech is all about delivery. What do I mean by that? Well, its two platforms – carbohydrate-coated gold nano-particles and its sustained release system – are about getting medicines to the right place in the right quantities at the right time.
The company’s gold nano-particles, or GNPs for short, promise a revolution in targeted therapies for cancer.
To radically simplify, the process deploys these GNPs to act as guided missiles.
In treating cancer with traditional chemo-therapy, for instance, they are programmed to hit only a specific tumour type with their payload.
This highly targeted approach allows physicians to potentially administer lower doses and it also means there is little collateral damage.
Its Q-Sphera technology works in a different way to deliver the drug at the right time.
It is a sustained release platform and has adopted 3D and ink jet printing techniques to create particles that dissolve in a certain way over a certain time-scale.
Midatech has an in-house nano-particle manufacturing facility, which is believed to be the first of its kind in Europe. This state-of-the-art facility, based in Bilbao, Spain, allows the company to rapidly develop and execute projects. It also avoids the reliance on external partners.
Using the proceeds
The recently raised cash will be invested in expanding and advancing the company’s development pipeline.
According to Panmure, the focus will be on MTD201 for the treatment of carcinoid syndrome, which results from excess growth hormones, and OpsiSporin, for a condition called uveitis, which is an inflammation of part of the eye.
Midatech will also direct funds towards MTX110/MTX111, designed to tackle a hard-to-treat brain tumour called diffuse intrinsic pontine glioma.
“Not only do these products offer significant value creation opportunities, they could also further effectively leverage the US commercial infrastructure to potentially generate additional revenue streams,” said analyst Mitchell.
The successful placing and open offer also provide resources for investing in Midatech’s manufacturing and commercial platform and providing additional working capital to the group.
“Investment in internal manufacturing capabilities for its sustained release products will allow the group to manufacture most of its own products to commercial scale in-house, and investment in the product sales and marketing team has the potential to accelerate organic revenue growth from existing US marketed products,” Mitchell added.
As well as tapping investors, Midatech is also mulling whether to debt-finance its growth.
In fact, according to Panmure, it is in advanced negotiations with a provider, and these discussion should be complete by the year-end.
“On this basis, we envisage further funding offers the potential for wider strategic considerations, depending of course on their size and scope,” said analyst Mitchell.
The Panmure number-cruncher has used a sum-of-the-parts calculation to come up with a 297p a share price target.
That’s more than double the current price of 122p. The stock has drifted along with the wider healthcare sector, but as Mitchell pointed out: “The additional resources provide a strong foundation for Midatech’s development plans, underpinning key opportunities within its pipeline in addition to investing in its manufacturing and commercial platform.”
Story by ProactiveInvestors