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10:35 pm
November 19, 2009
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Jae Jun
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Not really sure myself. Getting approvals is never certain and it could backfire at the last minute.
While the price has dropped considerably, this is outside of my circle of competence.
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4:25 am
November 19, 2009
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Zefiro50
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Hi,
I see now that TSPT got denied on the catalyst date for drug approval. It's pretty grim looking just by looking at the graph only. I didn't do any research on this company at all and only commenting on everyone's response.
Any hope in this company?
Cheers~
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8:09 am
October 1, 2009
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advalorem
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Here is the bioworld info that comes out each day…the format, and the pdf at the bottom. Todd
Attached is your new PDF issue of BioWorld Today for Oct 1, 2009.
Your User ID for online access is: xxxxxxxxxx
You have received this email automatically based on your subscription profile.
If you would like to change your subscription options, please point your browser
to: http://www.bioworld.com. Then just login to your account and click the
Subscribe button in the upper-navigation area.
Please note that the attached issue is protected under federal copyright law.
It is against the law to reproduce this publication in any form without written
consent from the publisher. That includes making copies to distribute in your office,
forwarding issues by e-mail, or posting on websites or intranets. Site licenses
are available, which would allow for legal distribution and copies of this
publication. If you are interested in sharing this publication with others, please
call 1-800-688-2421 or 1-404-262-5476 and ask to speak to an account representative
about site licenses.
If you have any questions regarding this or any other publication from
BioWorld, please send an email message to customerservice@bioworld.com.
Or you may call us 1-800-688-2421 (1-404-262-5476 outside the U.S.) or
fax us at 1-800-688-2421
(1-404-262-5525 outside the U.S.)
bwt10012009.pdf
649K View Download
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8:08 am
October 1, 2009
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advalorem
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http://www.financialchat.com/s…..cash_0.pdf
Although this is dated, the above pdf biotech-list is put together with biotech high cash levels. TSPT has always showed up as having high-cash levels but with a burn rate. He is working on the 3rd quarter which will be out in the next few weeks.
High cash means nothing unless they are breaking even or profitable – so as on greenbackd site, I'll pay if the discount isn't worth it or a catalyst isn't in the works (eg lawsuit, judgement, product).
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7:59 am
October 1, 2009
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advalorem
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Hi rjstc, I take 10 mg Ambien to help with sleep. I would prefer to only take an as-needed sleep product.
The biotech cash level screen did show TSPT as having a high level of cash per share – prior to Purdue announcement. So I was aware of it with the high cash level and due to the Intermezzo product in development (it was supposed to approved on June 30th).
It was the BioWorld Daily newspaper that I am sure where I initiallly saw the TSPT name. I wasn't sure about how they would sell the product. Purdue sells oxycontin very effectively.
Do you read BioWorld Daily? Great industry pub in pdf every day.
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12:45 am
October 1, 2009
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rjstc
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Advolorem; I had forgotten to mention. Zacks was very bullish about this one. How did you come up with this idea? Industry knowledge, screen, or from following the biotech websites?
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8:45 pm
September 30, 2009
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advalorem
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Hi rjstc,
1) I believe I read about the terms in http://www.bioworld.com/ e-daily newspaper or one of the biotech websites.
2) The $25 m has been paid and is unconditional. Another $30 m will be paid upon Intermezzo approval. The $30 m is paid if Intermezzo is approved by July 2010.
The $90 m royalty payout terms are not disclosed on behalf of Purdue's request. Purdue is a private company and does not want the contractual language provided, other than TSPT managment on the August 3rd conference call (apprx date) stated in the double digits to mid 20 percentage range.
3) Yes, TSPT begins receiving royalties upon first sale. Purdue is gearing up to begin sales immediately. When asked on the Aug 3rd cc if Intermezzo were approved on Oct 30th, is Purdue ready to start selling on Nov 1st – TSPT management stated there may be a few minor issues to work out, but for all intents and purposes, Purdue sales staff is prepping now and will begin selling asap.
4) A Zachs 08.19.09 report "estimated $95 million on hand". If you take $95m + $30m upon 10.30.09 Intermezzo approval. There are 13.1 million shares outstanding. The other 2.2 are in options and warrants with a strike price of approxmiately mid $6/share. The balance sheet shows 13.1 m shares currently outstanding, and a present day cash balance of approx $95 million as of August 19th and $125 m as of 10.30.09. This is presumptuous to say there is $10-$12 cash if I don't count the warrants/options. I was also including the royalty sales form Purdue which have zero costs to be expensed.
You are correct. Assuming Intermezzo is approved 10.30.09, and Purdue pays the $30 m on 10.30.09 – then TSPT will have $125 m in cash.
If you listen to the conference call, read the transcripts you can put a valuation on the other variables that Purdue has not identified.
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7:33 pm
September 30, 2009
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rjstc
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Advalorem; Good post. A few questions if you don't mind.
1. How did you come up with this one?
2.Purdue will pay $30 million upon Intermezzo approval, and $90 million based upon sales and related IP
milestones. Transcept owns the right to co-promote Intermezzo to to the psychiatry market post 1-year anniversary of
Intermezzo commercial launch. Transcrept mgmt stated they will need 110-120 sales reps to serve
the US psychiatric market in 1-year. This seems like a significant amount of psychiatric Intermezzo prescriptions.
TPST was paid $25Mil? & will be paid $30Mil upon approval? Where does the $90Mil come from and in what time frame?
3. Upon Intermezzo approval, Purdue Pharma is planning to immediately be up and running to sell Intermezzo in the US. TSPT, after the 1-year anniversary of Intermezzo commercial launch, retains co-promotion rights to psychiatric & sleep disorders.
Do they not get a % in the first year?
4." TSPT entered the quarter with $6.40 in cash – minus ongoing expenses which have dramatically reduced at this point."
"I am looking at TSPT with close to $10-$11 per share in cash, trading at $13, and Purdue is ready to sell November 1st.They will be profitable. This is the catalyst. Management has stated their business model going forward. TSPT owns the rigthts to Intermezzo for quite some time"
Could you help me out here, I'm a little confused. $6.40 in cash, a payment upon approval of $30Mil / 15.3Mil Shs = roughly $2. Where will the other $2-3 in cash come from?
Thank you for your post and any info to help me learn. This does look like a good deal if the cash is about what it is selling for & expenses are low & Purdue is doing the bulk of the selling. Nice toll booth. Ron
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7:34 pm
September 29, 2009
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Jae Jun
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Post edited 11:35 pm – September 29, 2009 by Jae Jun
You've done some excellent research advalorem. Our opinions and approach may differ but value is in the eye of the beholder.
I will probably be the one needing ambien if I buy TSPT with the deadline approaching 
Not my type of stock. Too much uncertainty for me. I prefer the cigar butt which is so ugly that the slightest good news sends it through the roof.
Curious whether there are any other value investors out there who know or have TSPT.
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11:09 am
September 29, 2009
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advalorem
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You make excellent posts, but I whole heartedly disagree. You mentioned you would have like to have heard about TSPT @ $2. The story is better now than it is at $2.
1) Management has for all intents and purposes (I can quote the language), the produce will be approved.
2) I have a research report on July 27th and the stock was near $6.
3) On August 2nd, one of the premier drug distributors to primary care physicians – Purdue Pharma with $2 b in revenues – agreed to sell Intermezzo in the US. Purdue gave $25 million unconditionally to TSPT, which equates to $1.633 dollars per share.
4) TSPT was able to cost savings by layoffs due to Purdue accepting all Intermezzo marketing and associated costs.
5) TSPT negotiated a settlement to receive $30 million (almost $2 per share) when Intermezzo is approved.
6) TSPT negotiated a contract for a fair royalty sales right from Purdue's strong sales staff in the US.
7) TSPT negotiated a first-rigths offer for Purdue to have the rigths to buy the Canada/Mexico markets.
8) TSPT entered the quarter with $6.40 in cash – minus ongoing expenses which have dramatically reduced at this point.
9) TSPT has stated they have done research in Europe with 3rd parties and regulatory commissions to identify what is needed to sell Intermezzo in Europe – a market 50-75% the size of the US.
10) I place zero valuation on Intermezzo sales in China (communist party has little respect for patents), rest pf Asia Asia, Africa.
11) TSPT took a $100 m market cap company, is about to get approval for a insomnia-related drug that 1/3 of society says that would use/need, negotiated with one of the best pharma sales staff in the world.
12) TSPT retains rights to the psychiatric market (shrinks will give Intermezzo to mentally challenged folks who are having sleep problems (divorce, stress at work) and sleep disorders.
13) TSPT and Purdue have established two commissions: 1) Joint Commercialization, 2) Joint New Product development.
I am looking at TSPT with close to $10-$11 per share in cash, trading at $13, and Purdue is ready to sell November 1st. They will be profitable. This is the catalyst. Management has stated their business model going forward. TSPT owns the rigthts to Intermezzo for quite some time.
When TSPT was $2, remember there was a 1:5 reverse split – different times – all of the above facts did not exist.
I compare this to Insmed: sure 80-cents on the dollar, not profitable and zero chance of becoming profitable unless they buy a nice business. Management has not proven the competence to do so.
It's what makes a market. Insmed is a cigar butt. TSPT has one of the best products going: or give me hair growth for men; weight loss (vvus, arna, orex); non-chemo cancer treatment.
I personally take Ambien – which TSPT is indirectly selling with 3.5 mg product.
It's what makes a market. You are looking in the rear view window. At $2, these updates didn't exist.
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12:22 am
September 29, 2009
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Jae Jun
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Everything sounds really good, but my feeling is that too many things have to go according to plan for TSPT.
Intermezzo will be approved but I feel the market feels the same thing. After all, it's gone from $4 to $13 based on all good news.
I'm assuming that should everything go perfectly the intrinsic value would be around $25 right? Or is my number a low ball target as well?
At the current price of $13, I'm not so sure whether the margin of safety is there for a cheapo like me.
The story and potential is great but I don't think the price meets it at the current point.
I do wish I heard about it at $2 range though ;)
With Intermezzo, I also don't know how good of a performer it will be outside of Intermezzo. The company history is too short to analyze and come up with a good opinion.
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1:50 pm
September 28, 2009
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advalorem
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The royalty percentages have not and will not be released by Purdue Pharma or TSPT. Purdue is a private company and wants the specific terms to remain confidential. A 10% – 25% figure is extreme low and extreme high royalty rates, so a 15-18% is probably realisitic.
It is interesting to note Purdue Pharma is ramping their sales staff to prepare sales immediately. It ma not be November 1st, but very, very soon after Intermezzo approval.
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1:45 pm
September 28, 2009
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advalorem
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Purdue will pay $30 million upon Intermezzo approval, and $90 million based upon sales and related IP
milestones. Transcept owns the right to co-promote Intermezzo to to the psychiatry market post 1-year anniversary of
Intermezzo commercial launch. Transcrept mgmt stated they will need 110-120 sales reps to serve
the US psychiatric market in 1-year. This seems like a significant amount of psychiatric Intermezzo prescriptions.
Purdue will pay 10-25% royalty on sales on the pycychiatric market and sleep disorder centers. I took away from the Q&A that Purdue will give up the psychiatric market after 1-year and Transcept will own this area exclusively. The psychiatric market, per studies indicates sleeping prescriptions are 15% of the insomnia-related market. Purdue will pay 100% of all marketing costs, pos-FDA costs upon Intermezzo approval.
Intermezzo sales, by 2013, are expected to be $250 million in the US. This is based upon analyst estimates. I personally believe the non-reoccurring market for a sleep-aid will be a major product in the insomnia-related market. The total market is expected at $500+ in 2013, with Intermezzo gaining at least 50% of this share. Purdue Pharma is a major player in the primary care market. The Europe market, pending regulatory approval, is expected to have at least 50% of the US market revenue totals. China/Mexico sale agreements have not been established.
China, India, Japan, etc have not been included in any calculations – but are owned exclusively by TSPT. China,
as everyone knows tends to not "accept" standard patent laws. I do not know what numbers can be assumed other
than Europe, US, Canada/Mexico.
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12:57 pm
September 28, 2009
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Jae Jun
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Great write up advalorem.
I know we discussed this in detail but could you go through some valuations?
I see the potential of the drug and the run it may take once it is approved but I'm not sure what numbers I should use.
I'm not sure but I dont think I can value pharma the way I do with other companies because one successful drug makes a complete difference to the company's prospects.
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7:58 am
September 28, 2009
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advalorem
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Post edited 12:07 pm – September 28, 2009 by advalorem
Transcept Pharma (TSPT) Offers an Interesting Biotech Value Play
Transcept Pharma is a small market cap company and has little public awareness. The company has experienced unique corporate changes in the past year. These changes include a 1:5 reverse split & a name change. The market cap is $190m: (15.3 m fully diluted shares x current share price of $12.44) http://bit.ly/PgmH0.
TSPT has one key product, Intermezzo. "Intermezzo ® (zolpidem tartrate sublingual tablet) is a sublingual low dose formulation of zolpidem that has been developed for use as-needed for the treatment of insomnia when a middle of the night awakening is followed by difficulty returning to sleep." http://www.transcept.com/conte…..iew/39/95/
TSPT has 15.3m shares fully diluted with warrants and options included. Cash balance currently is $98m, which is $6.40 per share, fully diluted.
On August 2nd Purdue Pharma and TSPT agreed on terms to commercialize Intermezzo within the US. http://tinyurl.com/ms7xlh. The terms include an initial, unconditional on Intermezzo approval, $25m TSPT received from Purdue Pharma.
The product, a 3.5 mg zolpidem forumlua, is to assist people who have insomnia-symptoms and occasionally wake up in the middle of the night and can not fall back to sleep. Ambien is typically given for users to take nightly in a 10 mg formula.
Intermezzo is up for FDA approval by 10.30.09. The patient takes Intermezzo and on average falls asleep within 14-minutes. The insomnia market currently does not have a market which serves this specific need. http://bit.ly/HRcPH
The Intermezzo FDA ruling was delayed from June 30 to Oct 30. The FDA requested TSPT to provide additional info on how the user should take the product. There are zero requests for additional studies, and user instructions on Intermezzo usage is the key issue in FDA dialogue.
Purdue has excellent relationships with primary physician doctor sales. The company's core sales product is the pain-killer Oxycontin. Purdue is currently working to establish their internal sales reps to prepare selling Intermezzo upon approval.
Purdue Pharma is a private company with $2b in sales. Purdue will pay TSPT a specific percentage of Intermezzo royalties for US sales. The specific terms of payout percentages of revenues ranges between 10-25% depending upon undisclosed milestones. Purdue, as a private company, has not publicly divulged what the specific terms are, and TSPT has refrained from detailing the exact contractual terms. TSPT's 8k states what is public information and is non-specific about Purdue royalties figures – other than management referring to a range of approximately (MY INTERPRETATION) 10-25% of revenues.
Upon Intermezzo approval, Purdue Pharma is planning to immediately be up and running to sell Intermezzo in the US. TSPT, after the 1-year anniversary of Intermezzo commercial launch, retains co-promotion rights to psychiatric & sleep disorders. Purdue Pharma will pay all Intermezzo marketing costs. Intermezzo is ready to be sold immediately upon NDA, with the PDUFA action date scheduled no-later-than 10.30.09.
TSPT stated on the 08.03.09 conference they expect 110-120 TSPT sales reps will be required for Intermezzo sales within the US psychiatric market, after the 1-year wait upon Intermezzo commercial release.
MY QUESTIMATE: Peak US sales are expected to run $500m with an initial yearly sales of $75m – $125m a baseline. Analysts have projected US Intermezzo sales at $250m within 3-4 years post approval. TSPT will retain psychiatric and US sleep disorder co-promotional sales after 1-year in Pharma Prod agreement. The psychiatric market is approximately 15% of all insomnia-related prescriptions.
Countries outside the US have various degrees of regulatory oversight and approval.
TSPT has Canada & Mexico Intermezzo rights up for contract negotiations as deemed timely and appropriate. Purdue Pharma – per the private negotiations – will retain right to an unspoken "1st right of refusal" for an agreement to sell in Canada and Mexico. I assume Purdue will pay an undetermined price for this right.
TSPT retains control over the remaining countries. Europe has an approximately 50-70% expected sales figure of the US sales expectations. Europe is the key focus because the area is conservative in drug approval and Ambien and Ambien generics are established within this market.
I anticipate TSPT to establish a Intermezzo deal with an established Europe distributor, similar to the Purdue Pharma contract. Management has stated that exploratory research has been conducted.
TSPT has patents pending upon Intermezzo delivery with US Patent office. The outcome of this decision, presumably but not announced, will effect Purdue's royalty payment structure to a certain degree.
I am long TSPT common.
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