In a June 29 note, Echelon Capital Markets analyst Stefan Quenneville reported that Antibe Therapeutics Inc. (ATE:TSX.V; ATBPF:OTCQX) had recently disclosed its fiscal 2023 year-end (FQ423) results. The report's findings indicate that the company's performance closely aligned with Echelon's expectations.
Quenneville said, "We are maintaining our Speculative Buy rating and US$2.00 price target following FQ423 results that came largely in line with expectations despite the timeline for Antibe’s otenaproxesul Phase 2 bunionectomy study being slightly delayed relative to our previous expectations. Given the abuse potential of opioid treatments and the gastrointestinal side effects of NSAIDs, the US$13B acute pain market remains a meaningful commercial opportunity for Antibe. With the stock trading below its cash value of ~US$0.61a share (US$38.9M), Antibe remains an opportunity for investors with a high-risk tolerance."
Better Cash Burn Than Expected
As anticipated by Quenneville, the latest FQ423 report from Antibe Therapeutics revealed no revenues. Notably, the expenditures for the otenaproxesul program, as measured by EBITDA spend, amounted to US$3.1 million. This figure fell below our initial estimate of US$4.5 million and significantly trailed the consensus estimate of US$6.2 million.
Regarding earnings per share (EPS), the company recorded a value of -US$0.07, which aligned with our projections and the consensus estimate of -US$0.09. Moreover, the operating cash burn, factoring in working capital, stood at US$3.7 million. It's worth noting that [Company Name] concluded the quarter with a comfortable cash balance of US$38.9 million. This financial reserve provides ample resources to sustain the clinical development of otenaproxesul for a period exceeding two years.
In addition to the cash balance, [Company Name] is set to receive a guaranteed sum of US$2.6 million over the next three years from the sale of the Citagenix dental supplies business. Furthermore, there are potential sales-based milestone payments of US$4.0 million associated with the transaction.
Focus Maintained Despite Delays
The completion of the PK/PD study is anticipated to take place in CQ423, followed closely by the initiation of the Phase 2 bunionectomy trial in CQ124. Antibe indicated that the top-line data from this study is expected to be unveiled in CQ224.
Although both the commencement of the Phase 2 bunionectomy trial and the timeline for the release of top-line data have experienced a slight delay of approximately one-quarter compared to our previous projections, Quenneville considered these target timelines to be reasonable.
Nuance Pharma Seeking To Recind License Agreement
In January 2022, Antibe Pharmaceuticals entered into a license agreement with Nuance Pharma. As part of this agreement, Nuance made an upfront payment of USUS$20 million, forming a crucial component of the overall USUS$80 million licensing deal that granted them exclusive marketing rights for otenaproxesul in China.
However, the situation has taken an unexpected turn as Nuance now seeks to rescind the license agreement and recover the upfront payment. Their allegation revolves around Antibe's alleged failure to adequately disclose information regarding the risks associated with transaminase elevations linked to otenaproxesul. Nuance contends that this lack of information sharing constitutes a breach of the agreement.
Despite Nuance's claims, Quenneville noted, "We believe it is unlikely that the company will have to return the upfront payment as the risks of potential side-effects were well-known given this type of clinical setback is common in clinical trials. Antibe completed an in-person arbitration proceeding with Nuance in May and now expects the decision in CQ323."
Structure and Predictions
Quenneville's research shared recent rating and target price information as well as current market data on the company.
Rating: Speculative Buy
Price: US$0.26, with a 52-week range between US$0.41 - US$0.71
Price Target: US$0.75
Market Cap: US$23 million
The company carries an enterprise value of US$8 million and a net debt of US$39 million. Antibe's share structure breaks down to 53 million basic shares and 63 million fully diluted shares.
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- Katherine DeGilio wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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ANALYST CERTIFICATION Company: Antibe Therapeutics | ATE:TSX I, Stefan Quenneville, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.