With the Biotechnology space rotating toward a more acquisition friendly dynamic, investors may benefit from a studied focus on likely takeout candidates – particularly early-stage pipelines with recent identifiable traction targeting large end markets.
One such example is Nascent Biotech Inc. (OTCMKTS:NBIO), an emerging player in the $4 billion oncology drug development space.
NBIO is certainly early-stage: its flagship drug is just heading toward Phase 2 clinical research, right in the sweet spot for dealmaking as a potential acquisition target as deals pick up pace this cycle.
Macro Lines Up with Micro
Looking around the corner, the US Federal Reserve is beginning to hint consistently at an upcoming pause in rate hikes, which also helps to facilitate deals as both investor sentiment stands to pick up and the second derivative cost of capital curve levels off in terms of expectations for what lies ahead.
This dynamic was set in motion earlier this month with a positive Consumer Price Index surprise that was quickly followed by a positive Producer Price Index surprise – the first time this year that both have surprised in the right direction for investors and policymakers.
In this environment, as both cyclical and structural factors begin to argue in the same direction for an increased pace of deals in the biotech space, NBIO makes particular sense given the company’s tech and its stage of development: The company has something that appears viable in a big market but it hasn’t gotten to the point in the clinical research process where enough proof points have already stacked up to drive the market cap of the company to anything approaching full value in a positive case scenario.
Macro and micro, lined up.
NBIO in Focus
The R&D journey for Pritumumab began in 1982 in Japan. The company’s main asset is Pritumumab (PTB), a natural human antibody that binds to cell surface Vimentin (also referred to as ectodomain vimentin), which is a protein expressed on the surface of epithelial cancers.
PTB is used as a targeted immunotherapy that “seeks out” cancer cells while leaving normal, healthy cells unharmed.
There wasn’t much follow-up to initial research on PTB back in the day. But Nascent Biotech moved in and reengineered the compound, particularly by mapping production through the Chinese Hamster Ovary (CHO) cell line platform for monoclonal antibodies to streamline the cost side of the equation.
This was followed up by the company’s move to file an IND request with the FDA in late 2018. That was granted, but the pandemic delayed the start of active clinical research.
By March 2021, the project was fully underway and NBIO was subsequently given permission by the FDA to enter human clinical trials for Primary and Metastatic Brain cancer.
Fishing for Bargains
One of the key factors involved in understanding which names ring the bell for potential deep-pocketed buyers in the biotech/pharma space is early-stage promise.
A company with a proven platform that has already pushed multiple drugs through late-stage clinical trials isn’t going to offer the same level of potential value for acquirers because the marketplace will already have assigned that value.
But a company that has never pushed a drug candidate through a phase 2 trial process is going to potentially offer up a huge bargain, especially if it has something interesting in the works.
While you can’t know for sure, positive signs of that value include progress on the IP side and a seamless path through phase 1 research.
In both cases, NBIO lines up well.
The company most recently announced that the United States Patent and Trademark Office (the USPTO) issued patent No. 11,492,394 on November 8, 2022, for claims related to the Company’s lead candidate Pritumumab.
According to the company’s release, the allowed patent, which is titled, “KITS AND CONTAINERS FOR TREATING VIMENTIN EXPRESSING TUMORS”, provides broad protection for Pritumumab and the storage conditions related to its use in clinical applications.
“This issuance strengthens our growing IP portfolio in our brain cancer treatment using Pritumumab, a unique natural antibody that crosses the blood brain barrier,” said Sean Carrick, CEO of Nascent. “As we conclude our Phase I trial, this patent enhances our milestone achievements of moving the asset forward.”
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