e-Therapeutics (AIM: ETX) is an Oxford-based drug discovery company that listed on AIM back in 2007. It has an interesting technological approach to drug discovery, but like many of its peers, it has failed to deliver for shareholders. The stock price has slid from 68p to the current 12p over the last decade. During that time, the company has also issued four times its original number of shares in order to keep the show on the road.
New CEO Ray Barlow clearly believes the future will be better than the past and has instigated a fresh approach to the business model. Dr Barlow has big-pharma experience, most recently at Amgen where he worked on a number of deals and corporate transactions. He sees an opportunity for e-Therapeutics to become more commercial by developing partnerships and collaborations to unlock the value in the company’s technology platform.
e-Therapeutics has developed a drug discovery platform that takes a ‘network’ view of modelling complex diseases and develops molecules ‘in silica’ (on computers), rather than in traditional animal models. This has the advantage of shortening the time taken in the initial stages of discovery from two years to nine months. This offers a big gain in productivity and cost for pharma companies. It also increases the prospect of finding novel mechanisms of action in a world where ‘me-too’ therapies struggle to get adequate reimbursement.
Dr Barlow argues that e-Therapeutics approach might well have been ahead of its time, but that the industry is now much more interested in the network concept of disease and the use of tools like bioinformatics and computational modelling. So a key focus will be on realising the value of the technology through partnerships and deals with pharma and biotech companies working in complex diseases. This network approach was independently reviewed by an expert panel who validated the concept. So if they’re correct, this should offer a viable way forward.
Recognising commercial realities, the company has also cut four of its six internal drug discovery programmes. The two remaining are in the hot area of cancer immunotherapy and will be funded to the preclinical stage in an effort to create value and further validate the platform. There are other assets in the portfolio which are being marketed and might also realise some value.
Having been through this review and reorganisation process in the months since taking over, Dr Barlow sees a concerted effort over the next two years to conclude some partnership agreements. With costs being reduced there’s enough cash to see the company through that period.