Is the Value of a Cancer Vaccine Company Zero - Nada - Nothing ($0) -until Phase III Tests Are Complete?
Published on November 6, 2019
Tom Barnard
Tom Barnard
Contributing Writer at Seeking Alpha
9 articles
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The particular company I am writing about, Generex (GNBT), has a market cap of $65 million, but I submit that when you take out the value of the other parts of this comprehensive healthcare concern, the cancer vaccines (which have successfully run Phase I and Phase II tests) are worth zero.
So, you ask, what are these other parts?
A buccal delivery system in which the initial candidate is insulin. The thing to remember here is that Pfizer had a similar system but instead of the insulin landing inside the cheek (the buccal tissue), it went into the lung. Patients did not like it but Pfizer wrote off $2.8 billion. But it is, nevertheless, an indicator of value.
A cure for diabetes using encapsulated stem cells. A company not as far along (no human trials), Semma, was acquired by Vertex for $950 million. It should be noted this deal is not yet consummated.
A wound treatment using collagen that speeds healing and could be especially useful to diabetic patients, who have persistent wound difficulties.
Orthopedic tools and parts subsidiary.
A service organization for doctors that does everything from accounting to x-rays, called an MSO (medical service organization). The special sauce is that doctors own a part of the MSO, which is an incentive to direct business in that direction.
A treatment for ulcerative colitis that creates in essence a bandage over problem areas to allow for healing.
A proposed HMO in Arizona with 25,000 diabetic patients could serve as a unique diabetes initiative to help get the wound treatment off the ground, as a testing facility for the diabetes cure, and to complete testing of the maintenance buccal tissue system.
These parts are easily equal to the $65 million the company is currently worth. That would make the cancer vaccines worth nothing. I do not believe the cancer vaccines should be valued at zero. It has conducted Phase I and Phase II studies investigating its Ii-key technology against breast cancer and prostate cancer. This technology is beyond being a twinkle in the inventor's eye. We are also beyond the clinical phase where many companies sit.
In fact, Generex is in a combination study with Merck's Keytruda (which does use a PD-1 inhibitor). And in fact, I think Merck's purchase of Immune Design, for $300 million, another partner in a Keytruda combo test (which fell on hard times) provides the basis for a valuation for Generex's cancer vaccine subsidiary.
In addition, Shenzhen in China has paid for the right to test Ii-key in a prostate trial.
Further, I am particularly partial to the technology because it will cost much much less connect 19 or 20 amino acids in a peptide chain than it is to do the full CAR T treatments using a PD-1 inhibitor.
The company has paid share dividends in a separate entity, NGIO (NuGenerex Immuno-Oncology). Generex, which retains a 92%-95% interest in the company, plans to list those shares shortly.
I submit the value of those shares should be on the order of the $300 million of Merck's buyout of Immune Design. Generex itself should be worth on the order of $500 million, which suggests a stock price of $11-$12.
Published on November 6, 2019
Tom Barnard
Tom Barnard
Contributing Writer at Seeking Alpha
9 articles
Follow
The particular company I am writing about, Generex (GNBT), has a market cap of $65 million, but I submit that when you take out the value of the other parts of this comprehensive healthcare concern, the cancer vaccines (which have successfully run Phase I and Phase II tests) are worth zero.
So, you ask, what are these other parts?
A buccal delivery system in which the initial candidate is insulin. The thing to remember here is that Pfizer had a similar system but instead of the insulin landing inside the cheek (the buccal tissue), it went into the lung. Patients did not like it but Pfizer wrote off $2.8 billion. But it is, nevertheless, an indicator of value.
A cure for diabetes using encapsulated stem cells. A company not as far along (no human trials), Semma, was acquired by Vertex for $950 million. It should be noted this deal is not yet consummated.
A wound treatment using collagen that speeds healing and could be especially useful to diabetic patients, who have persistent wound difficulties.
Orthopedic tools and parts subsidiary.
A service organization for doctors that does everything from accounting to x-rays, called an MSO (medical service organization). The special sauce is that doctors own a part of the MSO, which is an incentive to direct business in that direction.
A treatment for ulcerative colitis that creates in essence a bandage over problem areas to allow for healing.
A proposed HMO in Arizona with 25,000 diabetic patients could serve as a unique diabetes initiative to help get the wound treatment off the ground, as a testing facility for the diabetes cure, and to complete testing of the maintenance buccal tissue system.
These parts are easily equal to the $65 million the company is currently worth. That would make the cancer vaccines worth nothing. I do not believe the cancer vaccines should be valued at zero. It has conducted Phase I and Phase II studies investigating its Ii-key technology against breast cancer and prostate cancer. This technology is beyond being a twinkle in the inventor's eye. We are also beyond the clinical phase where many companies sit.
In fact, Generex is in a combination study with Merck's Keytruda (which does use a PD-1 inhibitor). And in fact, I think Merck's purchase of Immune Design, for $300 million, another partner in a Keytruda combo test (which fell on hard times) provides the basis for a valuation for Generex's cancer vaccine subsidiary.
In addition, Shenzhen in China has paid for the right to test Ii-key in a prostate trial.
Further, I am particularly partial to the technology because it will cost much much less connect 19 or 20 amino acids in a peptide chain than it is to do the full CAR T treatments using a PD-1 inhibitor.
The company has paid share dividends in a separate entity, NGIO (NuGenerex Immuno-Oncology). Generex, which retains a 92%-95% interest in the company, plans to list those shares shortly.
I submit the value of those shares should be on the order of the $300 million of Merck's buyout of Immune Design. Generex itself should be worth on the order of $500 million, which suggests a stock price of $11-$12.
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