ASX Release No. 734 16 September 2014 Page 1 of 1 ACN 090 987 250 ASX Release SUDA LTD PUBLISHES SHAREHOLDER NEWSLETTER PERTH, AUSTRALIA – 16 September 2014: SUDA LTD (ASX: SUD), a leader in oromucosal drug delivery, today published a shareholder newsletter, which has been mailed to shareholders who have requested hard copies. Mr Stephen Carter, Chief Executive Officer of SUDA said: “The newsletter is a valuable forum to put recent news in context, to highlight upcoming events, and to set out in more detail some of the exciting assets and activities at SUDA.” “In this edition, the theme is Building Competitive Interest. We describe the steps we are taking towards our business development goals, and we set out a road map to understand the process of partnering with pharmaceutical companies.” Mr Carter continued: “The newsletter also includes an ‘under the microscope’ chat with Dr. Carol Worth, SUDA’s Technical Manager, and an independently produced, sumoftheparts share price valuation. We hope you find it insightful and interesting.” Further information: STEPHEN CARTER CHIEF EXECUTIVE OFFICER / MANAGING DIRECTOR SUDA LTD Tel: +61 8 6142 5555 [email protected]NOTES TO EDITORS: About SUDA LTD SUDA LTD (ASX: SUD) is a drug delivery company focused on oromucosal administration, headquartered in Perth, Western Australia. The Company is developing lowrisk oral sprays using novel formulations of existing offpatent pharmaceuticals. The many potential benefits of administering drugs through the oral mucosa (ie: cheeks, tongue, gums and palate) include ease of use, lower dosage, reduced side effects and faster response time. SUDA’s most advanced product is a novel sublingual treatment, ArTiMist™, for severe malaria in children. In a Phase III trial, ArTiMist™ was shown to be superior to intravenous quinine. Other development stage products include oral sprays for the treatment of migraine headache, chemotherapy induced nausea and vomiting and erectile dysfunction. For more information, visit www.sudaltd.com.au For personal use only
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ASX Release No. 734 16 September 2014 Page 1 of 1
ACN 090 987 250
ASX Release
SUDA LTD PUBLISHES SHAREHOLDER NEWSLETTER
PERTH, AUSTRALIA – 16 September 2014: SUDA LTD (ASX: SUD), a leader in oro-‐mucosal drug delivery, today published a shareholder newsletter, which has been mailed to shareholders who have requested hard copies.
Mr Stephen Carter, Chief Executive Officer of SUDA said: “The newsletter is a valuable forum to put recent news in context, to highlight upcoming events, and to set out in more detail some of the exciting assets and activities at SUDA.”
“In this edition, the theme is Building Competitive Interest. We describe the steps we are taking towards our business development goals, and we set out a road map to understand the process of partnering with pharmaceutical companies.” Mr Carter continued: “The newsletter also includes an ‘under the microscope’ chat with Dr. Carol Worth, SUDA’s Technical Manager, and an independently produced, sum-‐of-‐the-‐parts share price valuation. We hope you find it insightful and interesting.”
Further information: STEPHEN CARTER CHIEF EXECUTIVE OFFICER / MANAGING DIRECTOR SUDA LTD Tel: +61 8 6142 5555 [email protected]
NOTES TO EDITORS: About SUDA LTD SUDA LTD (ASX: SUD) is a drug delivery company focused on oro-‐mucosal administration, headquartered in Perth, Western Australia. The Company is developing low-‐risk oral sprays using novel formulations of existing off-‐patent pharmaceuticals. The many potential benefits of administering drugs through the oral mucosa (ie: cheeks, tongue, gums and palate) include ease of use, lower dosage, reduced side effects and faster response time. SUDA’s most advanced product is a novel sublingual treatment, ArTiMist™, for severe malaria in children. In a Phase III trial, ArTiMist™ was shown to be superior to intravenous quinine. Other development stage products include oral sprays for the treatment of migraine headache, chemotherapy-‐induced nausea and vomiting and erectile dysfunction. For more information, visit www.sudaltd.com.au
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Drug delivery through the oral mucosa
Fast tracking pharmaceutical development Our business model is to develop low-risk pharmaceuticals
using novel formulations of existing drugs that are off patent. We re-formulate these drugs to provide patentable products
or line extensions for existing franchises.
Diary Events
Our proprietary and patented drug delivery platform has broad potential to enhance many
classes of existing drugs and we have established a rich pipeline of product candidates
Building competitive interest in our key assets
following successful outreach initiative
The second stage of our business development outreach was centred on the BIO International Convention in the USA in June 2014. The convention is the largest, most influential global industry conference, which attracts the biggest names in the pharmaceutical and biotech sector. We met with more than 40 international pharmaceutical companies at this event.
Our discussions with prospective partners span ArTiMist™, our other clinical-stage oral sprays, as well as the application of SUDA’s OroMist drug delivery technology to new drugs. Discussions are at various stages with some companies having completed due diligence and initiated deal negotiations.
By creating competitive interest in our assets, we can drive the deal process to a successful outcome. Furthermore, it enhances our negotiating position such that we can optimise the financial terms of any licensing agreements and trade sales.
The team is working hard to achieve our business development goals. We look forward to updating shareholders in due course.
25 September 2014 - Adelaide Broker Meets Biotech This event, organised by AusBiotech, will feature presentations from SUDA and three other biotech companies 29-31 October 2014 – Gold Coast AusBiotech National Conference This is the largest partnering event in Australia, bringing togetherindustry leaders from the Asia-Pacific region 3-5 November 2014 – Frankfurt, Germany BIO-Europe 2014 This pre-eminent international partnering event in Europe attracts over 3,000 attendees 2-6 November 2014 – New Orleans, USA ASTMH Annual Meeting The American Society of Tropical Medicine and Hygiene Meeting is attended by key opinion leaders, corporates and philanthropic funds involved in the field of malaria
IIR updates coverage of SUD with base-case value of $0.17 per share Independent Investment Research (IIR) initiated coverage of SUD in February 2014 with a base-case risk-adjusted valuation of $0.17 per share. In their update from July 2014, IIR reiterated their valuation, based on a sum-of-the parts principal for each of the clinical assets as well as an NPV for the Westcoast subsidiary (see table).
ASX ticker symbol: SUD
Level 1, Unit 12, 55 Howe Street, Osborne Park, Western Australia 6017
“There is plenty of upside potential for the valuation of SUD as key milestones are achieved, reducing commercialisation risk. There are a number of other drugs, which the company is assessing that would open up new revenue streams. There is also an opportunity for the company to work with companies to improve the profile of new drugs with oro-mucosal delivery.”
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SUDA LTD newsletter September 2014
Making life easier for patients with chemotherapy-induced
nausea and vomiting Our SUD-002 product is a first-in-class oral spray formulation of ondansetron (marketed in tablet form by GlaxoSmithKline under thebrand name Zofran®), the most commonly prescribed antiemetic totreat nausea and vomiting induced by chemotherapy or radiotherapyand also other post-operative settings.
SUD-002 achieves therapeutic druglevels by delivering a mint-flavouredmicro-mist of concentrated ondansetronover the oral mucosa.
The product has been successfullyevaluated in over 300 patients inmultiple trials. It was well tolerated,convenient to administer, and was absorbed faster than the tablet.
SUD-002 addresses a significant patientneed. Our primary market researchsuggests that SUD-002 offers a desirablealternative for patients, particularlythose who have difficulty in swallowing.
ArTiMist™ clinical data to be presented at
high-profile ASTMH Annual Meeting in
New Orleans SUDA has had an abstract, outliningthe Phase III results of ArTiMist™,accepted for a poster presentation atthe upcoming 63rd Annual Meetingof the American Society of Tropical Medicine and Hygiene (ASTMH), being held 2-6 November 2014 in New Orleans, Louisiana.
This high-profile event draws together tropical medicine andglobal health professionals fromgovernment, NGOs, philanthropy,industry and academia.
The programme includes talks byBill Gates, the Co-chair, and Dr. AlanMagill, the Director of Malaria, fromthe Bill & Melinda Gates Foundation.
Westcoast boosts FY2014 revenue by115% We are delighted by the financial performance of the Group in FY2014. Westcoast generated revenue of $8.8 million in FY2014 compared to $4.1 million in FY2013, an increase of 115%.
Westcoast has also established new revenue drivers for the current year. These include a new warehouse and distribution operations on the East coast, which could increase annual revenue by $3 – 4 million. Furthermore, the roll out of Westcoast’s novel wound healing gauze, HemoStyp®, is progressing with the prospect of new revenue streams from the Defence Forces; the State and Federal Police; the ambulance services; hospitals and other national groups.
The Group ended the fourth quarter with net cash of $4.0 million. In July 2014, SUDA received gross proceeds of $1.4 million from the placement of Options, exercisable at $0.05, which expired on 30 June 2014. In addition, SUDA announced the termination, by mutual consent, of a funding agreement with Bergen Global Opportunity Fund, LP (Bergen). As part of the termination, Bergen advanced SUDA a final tranche amount of $100,000. As a result of these transactions, the Group’s pro-forma FY2014 year-end cash position was approximately $5.4 million.
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Understanding the path to pharmaceutical
partnerships
A general rule in the biotech-pharmaceutical industry is that deals can take 9-18 months from initial contact to a signed agreement. We aim to deliver at the shorter end of this range and we are making good progress towards that goal.
Pharmaceutical companies are increasinglyusing in-licensing and partnering to build andde-risk their development pipelines. For the out-licensing party (ie: SUDA), it is important tounderstand the needs of the pharmaceuticalcompany and identify the relevant championwithin the organisation who will drive theprocess.
In our outreach initiative, which commenced inMarch 2014, we have targeted pharmaceuticalcompanies that are strategically focused in thetherapeutic areas of our pipeline products.
The initial dialogue and information provided toprospective partners are non confidential. Thesuccess of our outreach initiative can bemeasured by the high conversion rate of thesediscussions to signed confidentiality agreementsand full due diligence.
The due diligence process is interactive withiterations of detailed Q&A that can take severalmonths before a commitment is made tonegotiate a term sheet.
How to negotiate financial deal terms
We are initiating term sheet negotiationswith our lead prospective partners. Thereare three ways to reach agreement on thefinancial deal terms:
(i) Jointly agree financial forecasts, riskadjustments and discount factors in order todetermine a Net Present Value (NPV) for theproject; and then negotiate a division of theNPV with the partner;
(ii) Identify deals that have been announcedfor comparable products in the same orsimilar-sized therapeutic areas; and then usethe disclosed financials as benchmarks fornegotiating the terms in relation to our oralsprays; and/or
(iii) Create competitive tension throughmultiple term sheet negotiations; and thenconduct an auction or sealed-bid process. Thebenefit of this approach is that we can drivethe timetable.
“We are talking to key decision makers at some of the major pharmaceutical companies.”
Outreach to
Pharma industry
Sign CDA & access
Data Room
Due diligence
& Q&A
Negotiate term sheet
Draft & sign
agree-ment
“We are seeking deal terms for our lead clinical products that maximise our return to shareholders and minimise our risk.”
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Market potential of SUD-001 for
treatment of adult migraine
SUDA is developing SUD-001 as a first-in-class oral spray treatment ofmigraine headache. We sought to understand better the product’s revenue opportunity in the USA by
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New strategy to accelerate adoption of ArTiMist™ into WHO
treatment guidelines We have engaged with the
World Health Organisation(WHO) to optimise ourregulatory strategy toaccelerate the inclusion ofArTiMist™ in the WHOGuidelines for the Treatment of
Malaria.
The WHO Guidelines aregenerally adopted by national healthcare agencies in malaria-endemic countries and are used as the basis for large-scaleprocurement of medicines for public health use.
The WHO has recommended that SUDA firstly seek registrationof ArTiMist™ with the US Food and Drug Administration (FDA) orthe European Medicines Agency (EMA) under Article 58.
In parallel, we will pursue the WHO Prequalification of MedicinesProgramme (PQP) for ArTiMist™. PQP helps to ensure thatmedicines supplied by procurement agencies – such as UNICEF,the Global Fund to Fight AIDS, Tuberculosis and Malaria, andUNITAID - meet acceptable standards of quality, safety andefficacy.
In following this strategy, we have a clearly defined path foradding value to the programme by working with the WHO toaccelerate the adoption of ArTiMist™ into their treatmentguidelines for malaria.
engaging Navigant, a leading primary market research firm.
Navigant conducted in-depth interviews and undertook an extensive survey with physicians and payers to assess the market need and opportunity for SUD-001.
Prescribers see SUD-001 as filling an important need for patients with nausea and vomiting associated with their migraine; and also in patients with sudden onset migraine, who require the faster therapeutic effect offered by SUD-001.
Payers similarly see the importance of SUD-001 and anticipate reimbursement without restrictions at up to a 15% premium to the leading branded intranasal therapy, equating to approx. US$455 per prescription.
Our mission is to improve the health and lifestyle of the global community by providing new, high-quality, innovative, pharmaceutical products to assist in the treatment of various conditions whilst maintaining consistent growth and investment value for shareholders.
“The results suggest there is clear market need for an oral spray migraine treatment with rapid onset of action.”
SUDA LTD newsletter September 2014
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Understanding the path to pharmaceutical
partnerships
A general rule in the biotech-pharmaceutical industry is that deals can take 9-18 months from initial contact to a signed agreement. We aim to deliver at the shorter end of this range and we are making good progress towards that goal.
Pharmaceutical companies are increasinglyusing in-licensing and partnering to build andde-risk their development pipelines. For the out-licensing party (ie: SUDA), it is important tounderstand the needs of the pharmaceuticalcompany and identify the relevant championwithin the organisation who will drive theprocess.
In our outreach initiative, which commenced inMarch 2014, we have targeted pharmaceuticalcompanies that are strategically focused in thetherapeutic areas of our pipeline products.
The initial dialogue and information provided toprospective partners are non confidential. Thesuccess of our outreach initiative can bemeasured by the high conversion rate of thesediscussions to signed confidentiality agreementsand full due diligence.
The due diligence process is interactive withiterations of detailed Q&A that can take severalmonths before a commitment is made tonegotiate a term sheet.
How to negotiate financial deal terms
We are initiating term sheet negotiationswith our lead prospective partners. Thereare three ways to reach agreement on thefinancial deal terms:
(i) Jointly agree financial forecasts, riskadjustments and discount factors in order todetermine a Net Present Value (NPV) for theproject; and then negotiate a division of theNPV with the partner;
(ii) Identify deals that have been announcedfor comparable products in the same orsimilar-sized therapeutic areas; and then usethe disclosed financials as benchmarks fornegotiating the terms in relation to our oralsprays; and/or
(iii) Create competitive tension throughmultiple term sheet negotiations; and thenconduct an auction or sealed-bid process. Thebenefit of this approach is that we can drivethe timetable.
“We are talking to key decision makers at some of the major pharmaceutical companies.”
Outreach to
Pharma industry
Sign CDA & access
Data Room
Due diligence
& Q&A
Negotiate term sheet
Draft & sign
agree-ment
“We are seeking deal terms for our lead clinical products that maximise our return to shareholders and minimise our risk.”
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The threesenior scientists inour laboratory, ledby Dr. Carol Worth,
SUDA’s TechnicalManager, bring over
75 years of chemistryexperience to SUDA
Q: Tell us about the laboratory?
A: “Our laboratory features an array of modernequipment and advanced scientific instruments;a dynamic team of experienced scientists; andan outstanding quality system meeting rigorousquality standards of documentation demandedby the pharmaceutical industry.”
Q: What is the purpose of the laboratory?
A: “We are the engine room of the Company,providing in-house formulation and analyticalcapabilities to support our existing pipeline ofOroMist oral sprays, but also to expand thepipeline with new reformulations, and to workwith pharmaceutical partners to reformulatedrugs of interest to them.”
Q: Can you elaborate on your formulationexperience?
A: “Our formulation experience is second tonone. We have patents covering over 300 activedrugs in oral spray formulations. Depending onthe drug and dosage, we use different solventsand excipients to solubilise the active agent andto stabilise the solution. We have expertise witha range of flavoring and taste modifying agents -peppermint, spearmint, citrus oils, fruit flavoursand honey. We can also add penetrationenhancers to increase permeability via themucosa.”
Q: How do you test your formulations?
A: “The three essential tests that we undertake are Taste, Stability and Permeability. Naturally patients want a pleasant taste so we engage a panel of volunteers to test and rank the formulations. Our stability testing is conducted under accelerated conditions and we use porcine and synthetic mucosal models to evaluate permeation efficiency.”
Q: Who decides on what device to use?
A: “We do. There is a lot of science required to match a formulation with the optimal components for the container, pump and closure system. We use different containers depending on the product - multi-dose or single-unit, glass or plastic. Our experience spans both air-activated pumps and propellant-driven aerosol sprays, as well as nozzles for delivering directly under the tongue or onto the cheek.”
Q: What are you working on currently?
A: “We have several ongoing projects. These include optimising our sildenafil oral spray (SUD-003) for erectile dysfunction. We are adding vanilla and peppermint flavouring, together with absorption enhancers to quicken the onset of action. This is apparently important for men. Separately, we are taste testing our two sumatriptan formulations – one is honey, the other is mint – to decide which product to take to the FDA.”
Q: Are you working on any new products?
A: “Yes, but we cannot disclose specifics until patents are filed. We are also conducting several feasibility assessments with prospective pharmaceutical partners in relation to new product opportunities. These could be the subject of collaborative agreements in which SUDA receives fee-for-service income for formulation work, plus milestones and royalties if the products are successful.”
IIR updates coverage of SUD with base-case value of $0.17 per share Independent Investment Research (IIR) initiated coverage of SUD in February 2014 with a base-case risk-adjusted valuation of $0.17 per share. In their update from July 2014, IIR reiterated their valuation, based on a sum-of-the parts principal for each of the clinical assets as well as an NPV for the Westcoast subsidiary (see table).
ASX ticker symbol: SUD
Level 1, Unit 12, 55 Howe Street, Osborne Park, Western Australia 6017
“There is plenty of upside potential for the valuation of SUD as key milestones are achieved, reducing commercialisation risk. There are a number of other drugs, which the company is assessing that would open up new revenue streams. There is also an opportunity for the company to work with companies to improve the profile of new drugs with oro-mucosal delivery.”
