You’ve got to respect a company that tells you what they’re going to do, then goes out and does it. So, kudos to Multicell Technologies (OTCBB: MCET), as they just confirmed progress in the development of an MS-related fatigue treatment. The drug is now entering latter phases of testing in the United States on the heels of promising Phase IIb testing in the United Kingdom. Where is it all going? If the drug treatment progresses satisfactorily through phase II and then phase III clinical trials, Multicell will be the only treatment provider for the MS-related fatigue market…estimated to be worth a total of $3 billion during the period that Multicell would be protected by its patent.
The crux of the news release (below, as always) was the announcement of the team members selected to head up the final testing phases. As you would expect from a company of Multicell’s caliber, the names mentioned came with plenty of credentials; we have little doubt there couldn’t be a more qualified group of individuals selected to finish up the drug’s development. But to be honest, as investors, it wasn’t really our concern. We’re far more curious about what the opportunity is, and the risk - whatever it may be. In that light, we found the tedious details of the press release to actually be far more interesting.
As usual, our ‘take’ on what it all means is immediately below…written from an investor’s point of view.
Straight to the Heart of the Matter
From where we sit, there are really only two questions to ask, at least as far as today’s new goes.
First question - what’s the opportunity here? Well, as we said above, there’s an estimated $3 billion up for grabs during the lifespan of the patent, which is good for another 15 years. With just a little math, it’s pretty easy to figure out that could mean up to an extra $200 million or so per year for Multicell.
In the grand scheme of things it may not seem like much, say in comparison to the annual cancer market which totals somewhere between $10 and $20 billion. But, perspective is everything. In fiscal 2005, Multicell did $209,156 in revenue. So yeah, the potential improvement here for this company’s bottom line is enormous.
Of course the follow-up concern should be whether or not Multicell will actually be able to tap into all of that potential market. As we said already, though, nobody else has an MS-related fatigue drug in the works…at least not yet. With essentially no competition in sight, we don’t see many reasons why Multicell couldn’t earn a very big chunk of that business; even a fraction of it would be a big (relatively) victory.
Second question - what’s the risk? The drug is still in the middle phases of clinical testing, so it hasn’t yet gotten a ‘final approval’ from the appropriate government agencies. The risk is simply the possibility that the FDA - or the UK equivalent - could send MCT-125 (the name of the drug) back to the drawing board. That means more time and money would need to be poured into the project to bring it back into the testing loop. It may seem like a big potential problem, but frankly, that’s just the nature of the game. That being said, this may help ease at least some worry…
First of all, we’re not doctors…we don’t even play one on TV. We are, however, able to read about drug testing results. We mentioned above that the clinical trials so far in the UK test look promising. Why? This quote is ripped straight from the press release:
“In a 138 patient, multi-center, double-blind placebo controlled Phase IIb clinical trial conducted in the UK by Amarin, MCT-125 (then known as LAX-202) demonstrated efficacy in significantly reducing the levels of fatigue in all MS patient populations enrolled in the study including relapse-remitting, secondary progressive and primary progressive. Patients enrolled in the Phase IIb trial conducted by Amarin reported few if any side effects following daily oral dosing of LAX-202.”
No, it’s technically not a ’sure thing’ - there’s no such thing though. You know the potential risks, and you also know the potential reward. And, as attractive as the possible revenue increase is, we still know it’s going to take a lot of time to get the drug to the market. On the other hand, experienced biotech investors know how these stocks can be ‘rewarded’ for their progress well before any final approval is in place. So, waiting for a ’sure thing’ could leave you behind the eight-ball, so to speak. Your job now is to evaluate all of these things, and figure out if, or how, it matters to you as an investor.
Interest in Owning the Stock May Go Deep
While we’ve honed in on only one of Multicell’s drugs, keep in mind investing in MCET shares is not the same as a direct investment in the MS fatigue treatment…which is a good thing. As much as MCT-125 could boost sales, shares of Multicell represent ownership in a much wider variety of cutting-edge therapies related to diabetes, macular degeneration, and other common medical problems.
So, don’t forget the other key points we’ve shared regarding Multicell since our coverage began on September 28th. They are, so far:
In the meantime, it doesn’t look like the SmallCap Digest is the only interested observer here. MCET shares surged on September 29th, on very high volume. While we initially feared a pullback as the stock settled in again, we can see how traders have been willing to keep shares aloft. In fact, we’re actually seeing a short-term support line being formed. If the October 2nd high of 46 cents can be surpassed, it could go far in assuring tentative players the buying interest in MCET actually goes pretty deep.
Click here for the full press release.
