Sales Focus for Oasmia
Last week, Oasmia Pharmaceuticals reported a slight increase in losses in the fourth quarter of 2015. Looking ahead, product sales will be a key issue while the company finds itself in the midst of partnership discussions over its XR17 platform.
“The platform provides a solution to an immense difficulty in the industry.”, says Chairman Julian Aleksov, a statement supported by Executive Vice President Anders Blom.
Upon receiving the good news about the approval of Paclical in Russia, investors expected a rapid inflow of cash for Oasmia Pharmaceuticals. But expectations were not met. The pharmaceutical, which is used for the treatment of ovarian cancer, is sold to Russia’s hospital districts. These districts are comparable to Swedish county councils and conduct annual or semiannual purchases for their inventories. When Paclical entered the Russian insurance market in February this year many buyers had completed their procurements for the current year. Therefore further inventory purchases will not be undertaken until the hospital districts run out of stock. Compared to its antecedent, Oasmia’s product may be supplied with a higher dosage of up to 40 percent, which will offer a greater patient benefit.
“In the biotech industry, companies lacking an alternative source of income will report losses prior to an acquisition or a successful product launch. This is why it is of utmost importance to consider the potential and viability when undertaking a project,” says Julian Aleksov.
The market potential for Russia and the Commonwealth of Independent States is large enough for the company to become cash positive thanks to Paclical. There is no immediate competitor and the Russian market is growing, more than in many other continents as emerging markets grow at a quicker pace.
Anders Blom is somewhat self-critical concerning market expectations and future prospects.
“Maybe we should have been more forthright in our communication regarding the time-frame and the procurement process, but it can be difficult to go into detail when relating to market investors.”
Bid on Similar Company
Another potential source of income is the company’s drug delivery platform XR17, which was validated earlier this year. In the last week of May, Oasmia presented information about ongoing discussions on declarations of intent concerning the licensing of XR17 to pharmaceutical companies active outside the sphere of chemotherapy. Problems regarding the development of water-soluble formulas in the industry are well-established and widespread, which XR17 may remedy.
“It has taken many years to develop, but considering the human data collection we have interfaced, we are now closer than ever before in our move to offer XR17 to other parties in the pharmaceutical industry. Hopefully we may be given the green light to out-license our product within the year. We have been working actively on it.”, says Anders Blom. “We have deepened our dialogue with potential partners regarding an out-licensing. This also includes Oasmia’s product candidates, with a focus on Paclical®/Apealea®. In line with previous agreements, we are looking forward to an agreement which includes larger partial payments, both as a part of the contract conclusion and as a result of certain occurrences relating to future royalties.”
Interest in operations similar to Oasmia’s was recently confirmed as Ireland-based Jazz Pharmaceuticals offered to buy American company Celator. Receiving a bid in the amount of 1.5 billion dollars, or 12 billion Swedish krona, Celator was valued at 20 times its March 2016 market value. Like Oasmia, Celator is a small biotech company which has developed an innovative drug delivery platform, Vyxeos, with the aim of improving the treatment of leuchemia. Vyxeos is planned to be launched in the second half of 2017.
For now, Oasmia will focus on acquisitions and product sales in Russia as it awaits access to the European market. In February, Oasmia filed market access applications for Apealea (Paclical) in Europe. As mentioned above, authorities are expected to deliver an answer by the end of the year.
“The response time varies depending on what kind of questions we receive. It is therefore difficult to assess when a final decision will be reached, but it is estimated to arrive at the end of the year,” says Julian Aleksov.
The Quarter in Numbers
Due to a production increase and clinical costs, Oasmias reported loss increased from −30 million Swedish krona to −33 million Swedish krona in the fourth quarter of the split financial year of 2015. After having seen its pharmaceutical Paclical earlier in the year “enter the Russian market,” as Chief Executive Officer Mikael Asp puts it, the company needs to stock up on the product. Paclical is a water-soluble nanotechnological formula consisting of paclitaxel, one of the most well-known anticancer substances and a component in the standard treatment of ovarian cancer.
“The cost increase in the fourth quarter is marginal compared to the last three to four years.”, says Executive Vice President Anders Blom.
“And considering the average mass of costs in the industry,” Julian Aleksov adds, “we belong to the top tier. We are expanding operations, while utilizing only 80 employees, and are simultaneously developing several candidate products and clinical studies.”
Key Figures Fourth Quarter of 2015 (Feb-April)
Net sales 59,000 Swedish krona (36,000)
Operating profit -30 million (-28)
Profit after tax -33 million (-30)
Profit per share -0.31 (-0.31)