Saturday, September 23rd 2023

Poolbeg Pharma PLC

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With a focus on infectious diseases, is it time to look at Poolbeg Pharma ?


“…The company’s management team has a proven track record in identifying, acquiring and accelerating biotech through development to commercialisation…”


For all the billions the world invests in biotech, innovative treatments for infectious diseases had been somewhat neglected before Covid. AIM newcomer Poolbeg Pharma (AIM:POLB), which listed in July, is seeking to take advantage of an urgent refocusing of resources by governments and the pharma industry on a market expected to be worth £250bn within the next five years.

Poolbeg, the third life sciences small cap to go public from the Raglan Capital stable run by health care entrepreneur Cathal Friel, following in the footsteps of Open Orphan (AIM:ORPH) and Amryt Pharma (AIM:AMYT), aspires ‘to become a “one-stop shop” for big pharma to find Phase II ready products for development and commercialisation’.

Unlocking Open Orphan


The company has been spun out from Open Orphan, one of the small caps covered in our July roundup of Covid stocks. Open Orphan hit the headlines last year when it worked with the government’s vaccines task force to organise the first ‘human trial challenge’, in which volunteers were deliberately inoculated with a version of the coronavirus. Poolbeg aims to commercialise the clinical data repository Open Orphan has built up through 20 years of challenge trials testing how the body’s immune system can be boosted to overcome influenza, RSV, HRV, and now SARS-CoV-2.

The repository seeded Poolbeg’s flagship asset, POLB 001, a ‘Phase II-ready p38 MAP Kinase inhibitor’ that promises an efficient treatment for inflammation in patients with severe influenza. Despite robust vaccines influenza is still a serious disease, infecting 12pc of the global population each year, causing 5 to 10 million hospitalisations and 500,000 deaths. Severe influenza triggers ‘cytokine storms’, violent whole-body responses to the infection that can generate serious complications such as sudden, serious cardiac events, tissue damage, pneumonia and sepsis. Current treatments disrupt viral replication but do not directly address these hyperinflammatory episodes. Tamiflu, for example, the world’s best-known influenza drug, becomes less effective within a couple of days, after which severe symptoms can lead to hospitalisation.

POLB 001, which has passed Phase I trials that confirmed its safety for human use, promises to bring a new option to the $800m influenza market. And it offers the potential for applications beyond influenza, including certain coronavirus cases. Poolbeg is working towards Phase II trials, at which point it intends to license the treatment to a large pharmaceutical firm, a process it expects to take some 18 months. European patents have already been secured, and an update earlier this week reported that US patent assessments are ‘going to plan’, the US Patent and Trademarks Office examiner reviewing the patent application indicating that the majority of the claims, including the main claim are allowable. Assessment of applications filed in other territories is ‘ongoing’.

Poolbeg is developing two other innovations that draw on OpenOrphan data and expertise. The PredictVital Biomarker Platform is designed identify the risk of severe disease before the onset of symptoms, like POLB 001 reducing the need for antiviral treatments and their possible side-effects. And the Vaccine Discovery Platform will allow users to search the Open Orphan repository for new treatments based on reengineering of the immune system. Poolbeg itself continues to analyse the repository for new candidates for clinical development. The company ‘is in productive negotiations with Artificial Intelligence platform providers to unlock the full discovery potential of the data’, and ‘expects multiple strategic acquisitions in the near future’.

A June update announcing the company’s IPO plans set out the company’s ‘capital light clinical model’, designed to allow it to bring products to market quickly and cheaply ‘where they can potentially be monetised through licensing to or partnering with Big Pharma companies’. CEO Jeremy Skillington regards the model as ‘an important differentiator’, allowing the company to ‘reposition existing drug candidates and develop assets to Phase II stage quickly with relatively modest investment where they can then potentially be acquired/licensed to big pharmaceutical companies.’ Poolbeg went public on 19 July, raising £25m, to which Mr Friel contributed £500,000, to fund Phase II trial of POLB 001 and the development of the company’s other initiatives.

A mega-trend to ride – with care


Poolbeg is aiming to carve out a significant space in an infectious disease market that has received renewed attention in the wake of the Covid-19 pandemic, which is estimated to have cost the global economy $16tn in terms of lost output and health reduction. Biotech is an investment mega-trend, new technologies opening up a vast array of new treatments for addressing health issues generated by demographic shifts such as ageing populations in the West, and mass urbanisation in developing economies.

Advances in fields such as genomics, biotechnology, diagnostics, radiotherapy and robotic surgery make it possible to identify and treat an ever wider range of conditions, using technologies accessible to nimble smaller companies as well as the giants. Small caps have, for example, pioneered groundbreaking gene sequencing treatments, and are revolutionising the treatment of cancer through ingenious manipulation of the immune system, employing techniques not unlike those employed by Poolbeg. 

But despite its enormous promise, the fast moving and highly technical biotech sector is notoriously hard for investors to read. Some new entrants strike gold, but the majority of treatments researched and developed by budding companies never make it to market. This is one sector that investors might consider approaching through investment funds and trusts managed by biotech specialists.

Over the past 18 months health sector investors may also have been burned by one of the stock market’s more frustrating phenomenons: the tendency of sectors that are performing strongly in economic terms to yield indifferent returns. The MSCI World Healthcare index has trailed the MSCI All Country World index badly through the pandemic, up only 18pc against 41pc for the broader index. AstraZeneca is only up 3pc over the past year, compared with the FTSE All-Share up over 18pc, and Pfizer is up 22.5pc against almost 38pc for the S&P 500.

Poolbeg’s prospects


So, as we have noted in our Covid stocks article, and in our features on several biotech small caps this year, prospective investors should be cautious. That said, Poolbeg is one that investors wishing to allocate at least part of their biotech investment to single stocks should look at closely. The company’s management team has a proven track record in identifying, acquiring and accelerating biotech through development to commercialisation. Chairman Cathal Friel has guided Amryt Pharma and Open Orphan to market, and respective values of £550m and £140m. And CEO Jeremy Skillington was instrumental in the £325m acquisition of biotech company Inflazome by pharma giant Roche.

Poolbeg’s share price has gradually gathered momentum since the company went public, up from an IPO price of 10p to just under 13p at the time of writing. We feel Poolbeg Pharma is one of AIM’s more promising biotech arrivals, but like Oxford Cannabinoid Technologises (AIM:OCT), covered in several recent articles and podcasts, perhaps one to hold for the long term.

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