ProMIS Neurosciences (PMN.TO/ARFXF)
Current Price: $.05
Shares Outstanding: 153.7M
Market Cap: $7.68M
The Company: ProMIS Neurosciences is developing a portfolio of patented Precision Therapeutics to diagnosis and treat what it believes is the likely source of Alzheimer’s Disease and other Neurological diseases, mis-folded proteins of the prion in the brain. Alzheimer’s Disease is extremely tough to diagnose, thus very difficult to treat. ProMIS is doing very unique and highly intelligent things to mitigate their risk of failure and to increase the likelihood of a successful outcome when trials commence in the future.
New Management Team and Milestones: In mid-2015 a new management team took over the company and quickly has made significant strides. The company is led by Eugene Williams (Executive Chairman), Dr. Elliot Goldstein (CEO), Dr. Neil Cashman (Chief Scientific Officer), and Steven Plotkin (Chief Physics Officer).
The easiest way to show the progress of the company is by looking at the following key milestones since the new team took over in 2015 (from the latest MD&A):
- On July 6 and July 31, 2015, the Company completed a CDN $2,500,000 non-brokered private placement offering that was announced May 22nd and approved at the Company’s Annual and Special Shareholder Meeting of June 29th. A total of 83,333,333 common shares of ProMIS (Shares) at $0.03 per share were issued for gross proceeds of CDN $2,500,000.The proceeds from the private placement are being used to pay off outstanding debt and to further the Company’s decision to re-launch with a clear focus on neurodegenerative diseases, in particular Alzheimer’s disease (AD). With respect to the latter, proceeds are used to add to working capital for generation of new intellectual property allowing future development of specific therapeutics and companion diagnostics for AD, continue support and maintenance of existing intellectual property, engage an experienced senior management team and for general corporate purposes.
- On September 23, 2015, the Company announced that Professor Steven S. Plotkin Ph.D., an international authority on protein folding and currently in the faculties of Physics, Genome Sciences, and Bioinformatics at the University of British Columbia (UBC), joined the company in the new role of Chief Physics Officer. Dr. Plotkin is working in partnership with Dr. Cashman to continue to enhance the original ProMIS technology, as well as develop new, complementary tools to identify specific epitopes (binding sites) on misfolded, toxic strains of Amyloid beta and tau in Alzheimer’s. Subsequent to identification of such epitope(s), ProMIS’ plan is to initiate development and validation of antibodies binding to the newly identified epitope, allowing creation of a monoclonal antibody- based therapeutic and companion diagnostic that are specific for each misfolded strain of Amyloid beta or tau.
- On October 8, 2015, the Company announced that it had entered into an exclusive license agreement to develop and commercialize intellectual property rights belonging to The University of British Columbia. This agreement significantly expands upon the original agreement from February 2009, and affords exclusive worldwide rights to intellectual property based on use of the ProMISTM technology, modifications and enhancements to ProMISTM, as well as eventual new technologies under development.
- On November 11, 2015 the Company announced that it had acquired a worldwide license to Collective Coordinates, a method to predict novel therapeutic targets in Alzheimer's and other neurodegenerative diseases for which a provisional patent application for the Collective Coordinates method was submitted to the United States Patent Office on Monday, November 9, 2015.
- On November 12, 2015, the Company announced that it had acquired from UBC an exclusive, worldwide license to a novel Alzheimer's disease target. A provisional patent application for this target was submitted to the United States Patent Office on November 9, 2015.
- On February 3, 2016, the Company announced the identification of a second, distinct epitope on misfolded strains of Amyloid beta. Pursuant to its expanded license agreement with the University of British Columbia, ProMIS has acquired an exclusive, worldwide license to this additional novel Alzheimer's disease target. A provisional patent application for this target was submitted to the United States Patent Office on February 1, 2016.
- On February 23, 2016 the Company announced that it is offering on a private placement basis up to 16,666,667 shares at a price of $0.06 per share for gross proceeds of up to CDN $1,000,000. The primary use of proceeds will be to validate and optimize the several lead programs (up to six) ProMIS is developing against different strains of Amyloid beta (Aβ) in Alzheimer's disease and Down's syndrome. The program will seek to validate that the lead products selectively bind to the neurotoxic prion, or oligomeric form of Aβ, which the Company believes is the target product profile for successful precision therapies in these deadly diseases. The validation, done in part with cadaveric brain tissue of patients who died with diagnosed Alzheimer's, will also be used to support and enhance ProMIS's patent estate.
- (Not from MD&A given the recent release) On March 18, 2016 the Company announced the identification of a third novel therapeutic target for Alzheimer’s Disease. Pursuant to its expanded license agreement with the University of British Columbia, ProMIS has acquired an exclusive, worldwide license to this additional novel Alzheimer's disease target. A provisional patent application for this target was submitted to the United States Patent Office on March 17, 2016.
The Opportunity: It’s very easy to get lost in medical terminology when researching an opportunity in the medical field, so I want to keep my analysis of this opportunity as simple as possible. Here are the reasons why I feel the investment opportunity in ProMIS could yield significant returns, and how they have been able to move forward in a way that has mitigated the company’s overall risk:
- The battle between big pharma in trying to find effective diagnosis and treatments against neurological diseases, such as Alzheimer’s, has been incredibly competitive given that the market size for Alzheimer’s alone, for example, is estimated at over $20B per year. It wasn't until the very recent success of Biogen’s latest trial (see "Slide A" below) that there was any material progress by any of the big pharma companies in finding an effective treatment against Alzheimers. However, Biogen’s success was somewhat muted due to the severe side effects of their treatment. ProMIS has been able to utilize the hundreds of millions of dollars spent by big pharma and leverage the data of their trials in furthering their own medical and research developments in building a high level of confidence in knowing the exact type of prion to target for an effective diagnosis/treatment.
- Due to the potential market for Alzheimer’s detection and treatment, significant valuations are given to companies who show progress in developments. For example ,when the Biogen results were announced in December of 2014, the company saw its market cap increase by $20B on the back of the 166 subject trial. Additionally, Axovant went public at a valuation of $1.3B with only one, individual early clinical candidate for Alzheimer’s.
- To further mitigate risk, ProMIS will ensure that the subjects enrolled in their clinical trials down the road will have the exact prion that the company’s treatment are seeking to block. This is important because large pharma did not do this in their large trials (because they really had no idea which prion was needing to be blocked), therefore the success rate was very low and/or the side effects were very severe.
- The company has a 3-5 year blueprint, seen below in "Slide B", that suggests the company expects to be acquired by 2020, if not prior to. If the company continues to be successful with its roadmap, it certainly is likely that they will get acquired well before the 2019/2020 planned sale…and acquired at a very significant multiple.
Biggest Risk: This is, no doubt, a risky investment. There is no margin of safety, only risks that have been significantly mitigated by the company. Either the company successfully seizes the opportunity, or its diagnostics and treatments do not produce the results that the company is expecting them to produce. If they don’t, the stock could very well become worthless. In continuing this journey the company will continue to need to raise money, which it hasn’t had a problem doing to-date.
Conclusion: As long as the company hits the milestones it has outlined in the above chart (it’s off to a near flawless start) its market cap should increase significantly with the success. If the success continues, I have no doubt that big pharma will pay a significant premium to acquire the company in order to take the products to commercialization. Biogen, by presenting progress but in no sense a solution, rose by $20B in market cap in a single day. If ProMIS continues down the road its on and is able to prove that its diagnostics and treatments are capable of effectively treating Alzheimer’s Disease, the stock will quickly trade in the double digits. To me, it’s worth the risk.
Disclosure: Long shares of PMN.TO