Oasmia Pharmaceutical grossly undervalued says newly hired expertise
This is a translation of an article written by the Swedish news agency Direkt
Internationally renowned Dr. Jarl Ulf Jungnelius M.D has recently been employed as medical advisor to Oasmia Pharmaceutical. The small-sized Uppsala-based company has greatly impressed the oncology expert, since the company has brought their product from the laboratory to initial sales without partners.
“How they managed to pull this off by themselves amazes me, they deserve to be praised,” says Ulf Jungnelius.
He is the oncologist who has worked at the Cancer department at the Karolinska University Hospital for twelve years and then with development of novel cancer drugs in the USA since the 1990s. Ulf Jungnelius has worked for Eli Lilly, Pfizer and Celgene were he has developed and launched several drugs for cancer treatment. His knowledge and experience is unique by Swedish standards and exactly what Oasmia needs to further develop their business.
“There aren’t many Swedes in the world that have international experience from pharmaceutical development in cancer treatment. The area is extremely complicated and a whole science in itself, with different rules and regulations for EU and the USA. As Oasmia now needs to consider their commercial, regulatory and clinical strategy, they need to strengthen their company with skillsets I have acquired through my years of experience.”
The Uppsala-based Oasmia Pharmaceutical develops new pharmaceuticals within human and veterinary oncology, focused primarily on human health. The drug Paclical®, having already been approved in Russia, is used for the treatment of ovarian cancer and is an improved version of a current cytostatic that provides the patient with improved treatment options by way of significantly reducing acute side-effects and maintained efficacy. In Russia, the product has had its proposed price accepted and has received compensation from the insurance system. Currently, the 50 different hospital regions are making procurements that will increase this year as the regions’ contracts for last year are due. The initial orders for Paclical from Russia to Oasmia have amounted to almost $10 million for end customers.
Stock price fell after report publication
The global market for cancer drugs exceeded $100 billion in 2014, which is a 10% increase compared to the previous year, and the development has continued in the same direction in 2015. The company published this information in a press release in the summer of 2015 in connection to their announcement of listing on Nasdaq Capital Markets in New York, where they have been listed there since October 2015, in addition to the Frankfurt and Stockholm Stock Exchanges. The latest financial report published on March 3, 2016 negatively impacted the company stock, falling about 20% after disclosing an operating loss of SEK 23.2 million for the third quarter compared to SEK 25.5 million in the corresponding quarter previous year, a net loss after tax amounting to SEK 25.3 million, compared to 27.7 million in the previous year, and loss per share of SEK 0.24, compared to SEK 0.30 in the previous year.
The downward trend has affected Oasmia since its listing, the share price has dropped by 30% in three years according to share price history from Avanza. Dr. Jungnelius confirms the big challenges for a small Swedish company to receive attention and attract investors when all focus is on new immuno-oncology drugs which are very active in a minority of current cancer patients. For the majority of patients where these drugs are not viable, it is necessary to improve current treatments, says Dr Jungnelius.
”Oasmia is a Swedish company primarily for Swedish investors, but it is very hard for investors to understand how expensive clinical studies actually are. For a large pharmaceutical company, one patient in one study costs between $100,000 and $125,000. When you need 1000 patients for a study, we are talking $100 million. Which Swedish company can afford that?”
However, Oasmia has been able to cut its costs in half for clinical studies, as it has performed most of these studies on their own in 17 countries and in about 70 hospitals. Ulf Jungnelius thinks that revenues from Russia will allow the company to maintain the status quo for its business, although additional capital is needed to build a marketing organization in the USA where, according to the expert, the company has the largest potential to succeed with its product.
”Oasmia has submitted an application of market registration and approval in the EU and expects to receive confirmation in the second half of this year. In the USA, the company plans to submit an application for market authorization when the company has received overall survival data (OS data) which is the basis for the American application. I have reviewed all the data and if nothing unexpected happens, the company will receive approval. How the product will sell in the USA depends on marketing and the establishment of an American sales chain. In the EU you have a constant pressure to reduce prices, whereas in the USA the pressure is to increase price since all parties want to increase sales revenue. This benefits Oasmia, since it does not have direct competition, given that the product is and improvement of another pharmaceutical,” says Ulf Jungnelius.
”Grossly undervalued”
Ulf Jungnelius continues to speak supportively of the organization, team, and sense of purpose that permeates Oasmia. When one has worked as long as I have in cancer treatment, he says, one becomes dependent on development of new therapies and to find a solution. He believes this intense drive is present in the people active in the company.
With your experience from the business, what differentiates Oasmia from other companies?
”In the businesses I have worked with, you typically have a full crew, a lot of resources and well-developed contacts. Oasmia has been able to get from the lab bench to market approval with very small resources, almost invisibly. The Oasmia team is incredibly competent and works hard to drive the company forward. However, they are above all interested in making a difference for the patients. They don’t look at the stock price once a minute; their entire focus is on making a difference for people.”
How simple, or hard, is it to acquire capital with a small organization and an unknown name?
”It is hard! If Oasmia had developed a novel immuno-oncology drug, they would be swimming in money by now. The investors, however, hasn’t grasped the market potential for an improved version of an old and effective, but toxic drug.”
Would you say Oasmia is under- or overvalued?
”They are grossly undervalued. Swedish investors haven’t realized the incredible potential the company has in the USA. When they do and Oasmia’s product is launched in the USA, the company will quickly be bought by the big players. However, you must not forget that Oasmia also has its nanoparticle solution, its technical platform XR-17, to stand on in their pharmaceutical development. They own the technology and can use it for other drugs in the future.”
Original text by Emelie Lundgren
This is a translation of an article written by the Swedish news agency Direkt
