OMG Mid cap Oasmia (Our local Uppsala-based cancer treatment company)

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The Case:

Oasmia Pharmaceuticals  has recently been the subject of a turnaround. In March 2020 the share price was SEK11. Today it stands at under SEK4. The fall of the share has not really been justified insofar as the fundamentals are concerned. In March an American Pharmaceutical company (Elevar Pharmaceuticals) –recently merged with the International Korean Conglomerate HLB– signed a deal to distribute one of Oasmias compounds. They agreed to pay Oasmia almost 7 billion crowns for the world distribution rights(more than three times the value of the company). The payment will occur in the form of milestone payments connected to performance criteria .

The rights purchased by Elevar is to the product Apealea=: Micellar formulation of paclitaxel based on XR17. This is used in a second-line ovary cancer treatment. The platform involves the use of a nanotechnological technique that combines an API with an XR17 molecule that then forms a micelle.

Apealea has been approved by the EU for use but the FDA recently paradoxically asked for more studies to be done. The studies that had been done showed clearly that side effects were reduced with the treatment and less time was spent in Hospital. Elevar is standing for the costs of these new studies.

The decline in the value of the share according to many of its investors has not been motivated given all the positive news that has  been forthcoming over the recent months: e.g.

1. Elevar have recruited a ME and EU distributor for Apelea,
2. A very competent team of researchers with extensive business experience have been recruited,
3. The previous management has been sued for SEK 32 million,
4. An Orphan drug program has been initiated over the whole world,
5. Staff and Cost cuts have been made which give the company a very strong cash position and a runway of over 2 years,
6. M & A partners have been identified,
7. Negotiations have been initiated with other distribution partners, e.g. Asia, Latin America
8. A new micelle compound using the XR17 platform has been developed and will be announced soon,
9. Studies are on the way to test another compound Docetaxel,
10. Oasmia have received a SEK 200 million upfront payment,)
11. A decision about a veterinary arm of the business(with canine compounds) is being considered in collaboration with an external branch experts
12. A new platform XR18 has been announced
13. The possible use of a third platform XR19 is beginning to become identified
14. The world-distribution rights for a new compound(Cantrixil) in the early stages of development has been purchased. Initial studies are promising.

Here is a link to a site charting the history of the development of this share:

https://borsdata.se/oasmia/analys