Q: They have the only non invasive basal cell carcinoma treatment at the moment that is effective as a cure. They found this out after the phase 1 safety and tolerabiliy study. No side effects. Does this look like a good opportunity for investment even though it is very early in clinical trials. This kind of investment is usually high risk but it seems mitigated.
5i Research Answer:
It can be 10 years to go from Phase I to a drug producing revenue. The company is tiny at $38M, but insiders own 52% so the share float is even tinier. Phase I looked good, but we would note the planned Phase II trial is quite small at 60 patients. The company went public via reverse takeover last year. It has little cash, no revenue, losses and negative cash flow. It is going to need a LOT more capital as it moves through trials. We do not want to discount its early results, but we think there will be plenty of time to buy this over the next few years, as it progresses (less risk with more results) or as it raises equity for its R&D program. One to watch but not to buy.