An interview with Dr Jim Phillips, CEO of Midatech plc
James Faulkner: Hi Jim and thanks for taking the time to speak to Master Investor. Midatech describes itself as an “international specialty pharmaceutical company focused on the development and commercialisation of multiple, high-value, targeted therapies for major diseases with unmet medical need.” For the benefit of the humble layman such as myself, could you add a bit of colour to that description?
Jim Phillips: Of course. Midatech Pharma listed on AIM in 2014, raising £32 million. Since then we have successfully completed three acquisitions, including that of a US oncology supportive care pharmaceutical company. Midatech Group currently comprises a fast growing R&D outfit based in the UK and a strong commercial arm in the US. We have four marketed products in the US, all treating cancer patients, and these will fuel our revenue growth in the next few years, further developing our identity as a specialty pharmaceutical company. Our main future value opportunity, however, comes from the exciting potential treatments that we (together with our partners) are developing for rare diseases, using our twin technologies to target medicines to the specific site in the body where they are needed, and releasing them in a timely manner. We have 13 programmes at present – each one of which could drive our revenues as they reach the market in the coming years.
JF: What’s the current state of the pipeline and which products, candidates and drug conjugates are you most excited about?
JP: Well, we have a number of exciting programmes in the company, and from a corporate perspective the first to market has to be the most valuable as it proves that we can develop and commercialise, which will lead to greater investor confidence in our capabilities and revenue growth forecasts. This first programme is Q-Octreo, using our printing technology, which we are aiming to launch in 2018-2019. From the perspective of changing lives, however, our cancer targeting therapies (or conjugates) are most exciting. We already have MTX110 as a treatment for a very rare children’s brain tumour called DIPG (Diffuse Intrinsic Pontine Glioma), which has recently started being used to treat patients under a compassionate use programme in collaboration with the leading neuro-surgery and paediatric oncology practitioners in Bristol. This demonstrates our capability to develop unique treatments that may help in currently incurable conditions.
JF: Are there any rival firms currently targeting the same areas as Midatech – and if so, how advanced are their development programmes?
JP: No one else has our technologies, but different firms have different approaches to treat in a similar fashion. These vary by programme. So, without making an over-simplification, we have a unique set of tools for the development of effective treatments, but competitor activity in most of our programmes is inevitable, and that is why, with so many programmes, we are confident that some will prove successful and become major revenue earners in the future.
What differentiates Midatech from other pharmaceuticals companies is not only our proprietary technologies but also our business strategy. We are focussed on building a business that can be profitable soon and has a market for commercialising our products. This provides an attractive catalyst for news flow, an attractive proposition for investors and offers us a solid base for our R&D division.
JF: Apart from its drugs pipeline, what is unique about Midatech’s proprietary technology that gives it an advantage over rival pharmaceutical companies?
JP: We have two technologies, both of which give existing drugs (meaning the development is lower risk) potentially significant advantages. Our nanoparticles target in a size-driven way – they can be directed to all parts of the body through precise chemical programming. Our second technology represents a significant advancement in precision manufacturing of sustained-release drugs, and is exquisitely controlled by computer aided design & printing technology.
JF: Midatech is listed on NASDAQ in the US as well as AIM in the UK. What are the advantages of the dual listing?
JP: Being dual listed means that, as the company grows, it will have access to greater capital.
JF: Midatech is currently targeting breakeven by 2018, which is a year earlier than its previous target of 2019. What needs to fall into place for that target to become a reality and what were the factors behind bringing it forward by a year?
JP: We are progressing as a company very rapidly and the breakeven target is being driven forward by the acquisition of DARA BioSciences & the Product Zuplenz® at the end of 2015. These give us the potential to break even much earlier than originally forecast. The products on sale today need to reach their potential and this assumes we do no further development programmes that would increase R&D expenditure.
JF: Are there any milestones that investors should be looking out for in the near to medium term?
JP: Yes, we are starting our first immunotherapy programme clinical trial with a type 1 diabetes vaccine in the coming weeks. MTX110 will continue its compassionate use in children so it is likely that we will have news on that programme. Further news on all our other programmes is due this year, and on the 13th of April we will announce full year results for 2015.
JF: What’s the significance of the recent sell-off in biotech and pharmaceuticals stocks for Midatech?
JP: We have been affected, as have nearly all companies in the sector, and clearly it makes it more difficult for us to do further transactions, as raising equity becomes less attractive. Luckily, we have other alternative forms of finance available to us, so we are confident that we can keep moving despite market conditions.
JF: Midatech acquired DARA BioSciences of the US last year in order to strengthen its oncology pipeline. Do you expect M&A activity to continue to play a role in Midatech’s development in future?
JP: We are an aggressive company and are always looking for value-accretive transactions. At the moment, we have nothing to report – but I would think that over the next two years something else is as likely to happen as not.
JF: What’s your long-term vision for the company?
JP: We are building the UK’s next big specialty pharmaceutical company, with the ability to launch our own products going forward. As such, we seek to become profitable, grow rapidly and reach revenues in the hundreds of millions of pounds per annum by the mid-2020s.
Midatech will be exhibiting at the Master Investor show in Islington on 23rd April. To find out more click HERE.