#DDDD $LBPS $LOAC A thread on the potential near term cata…

1) NASDAQ listing. This is the most obvious.

The idea behind this is that the huge pool of capital and institutional interest in the NASDAQ will enable a higher per-share valuation for #DDDD than was achievable in the UK.

Comparators to @4dpharmaplc #DDDD (market capitalisation £150m) on the NASDAQ and their market capitalisation:

Seres Therapeutics: $2.33bn = £1.72bn (has had a successful phase 3 C. difficile trial); from my previous research (below) the chance of #DDDD achieving this at least once is at least 90%.

https://t.co/O8Fd9uuR7f

While looking at speculative pharmaceutical stocks I am reminded of why I am averse to these risky picks.#DDDD was compelling enough, though, to break this rule. The 10+ treatments under trial, industry-leading IP portfolio, and comparable undervaluation are inescapable.
— Shrey Srivastava (@BlogShrey) December 16, 2020

Kaleido Biosciences: $347m = £256m. 4 products under consideration, compared to #DDDD's potential 16. When you view @4dpharmaplc's 1000+ patents and AI-driven MicroRx platform (not to mention their end-to-end manufacturing capability), 4d's undervaluation is clear.

Evelo Biosciences: $496m = £366m. 11 potential treatments under consideration compared to #DDDD's 16. 4d's IP, platform and manufacturing are superior. Very arguable that 4d should be comparably valued. @lramseu's content is excellent for comparisons.

This does not take into account the recent frenzy for IPOs/SPAC offerings, like #DDDD. In fact, however, without DraftKings and Nikola included, SPAC returns are negative - hence the case for 4d rests firmly on fundamentals.

https://t.co/EHvA8xVbep.

2) Potential Blautix Phase 3 trial. The below graphic taken from @AimHardy's excellent research shows #DDDD's Blautix was comparable to existing IBS-C and D offerings.

It offers a far superior safety profile however, making it the potential treatment of choice, especially for the $1.1bn-$1.65bn IBS-M market (patients whose symptoms fluctuate between IBS-C and D).

The fact that c. 60% of phase 3 trials are a success notwithstanding, comparing Blautix with Seres' C.difficile trial shows how selecting for specific biomarkers/genotype can yield a highly successful final stage trial.

Just the initiation of a trial netted Seres $20m from Nestlé Health Science, excluding the revenues from developing a safe live biotherapeutic. The potential for #DDDD to rerate, just based on precedent (Seres jumped c. 500% on their P3 success) is colossal.

It is likely that the announcement of a phase 3 trial and partner would lead to some of this movement being priced in, given the favourable chance of a success. Hence it is a potential near term (3-6 month) catalyst, and if not, a potential long term catalyst.

3) Potential FDA fast track for MRx0518. Interim analysis for the #DDDD treatment on its own yielded the following (from 17 individuals under trial):

"Following MRx0518 treatment, relative increases in cytotoxic cells, CD8+ T cells and other immune subsets associated with anti-tumor activity were observed in paired tumor samples.

Upregulation of key immuno-stimulatory anti-tumor cytokines and chemokines, such as IL-12 and CXCL10, was observed in post-treatment plasma samples."

Gene expression analysis identified significant expression changes in 98 genes (p<0.05) in paired samples as a result of MRx0518 treatment, including upregulation of pathways associated with antigen presentation, costimulatory signaling, cytokine and chemokine signaling, known

…to promote anti-tumor immune activity."

This is for #DDDD's treatment group who had exhausted many previous options and had metastatic cancer.

The fact that #DDDD's treatment is clearly having an effect without significant side effects is extremely important (as patients may forgo treatment due to side effects alone), and certainly presents the opportunity for fast-track approval.

To me, it belongs in this list of 2020 fast track approvals:

https://t.co/GFsF6ZYraA

This is without taking into account #DDDD's trial of MRx0518 with Merck $MRK's Keytruda, which is likely to yield as high if not greater efficacy than MRx0518 alone.

4) Potential Merck takeover. This is more dubious so can be listed as a fringe point.

#DDDD's bacterial vaccine partnership with Merck yields a potential $347.5m in milestone payments, and if other treatments show further efficacy then, given Merck's interest in the MicroRx platform and live biotherapeutics (they own 6% of 4d) they may well consider a takeover,…

…which typically occur at a substantial premium to the current share price. Takoevers of Rebiotix and Epibiome in recent history offer validation of this theory.

The key here is if #DDDD become attractive enough to be taken over, their share price would have likely enjoyed a substantial re rate from today's levels already.

To summarise, I believe #DDDD offers substantial long-term value. However there are a number of potential near term catalysts, chiefly a NASDAQ listing, which have prompted me to increase my position in the short term from its historical average.

I believe a #DDDD rerate (and a subsequent SP multiplying of 2-3x given 4d have cash till Q4) could well happen in the coming 3-6 months, and I have positioned accordingly.

Merry Christmas and Happy Holidays!

#DDDD $LBPS $LOAC