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NewLink Genetics Corporation (NLNK) Message Board

  • jaerome62 jaerome62 Oct 15, 2012 3:37 PM Flag

    New to NLNK -- likelihood of dilution and intellectual property

    Hi, I'm new to NLNK -- just looked at it more closely late last week. I have couple of questions that the mb might help with

    1. Dilution -- with approx 20M in cash on hand at the end of the year and a burn rate of 6M per quarter -- it seems like dilution will occur pretty soon once the lock-out period expires. It seems risky for the management team to wait until interim results are announced (given how unpredictable the timing of the actual data compilation / analysis often is) and the fact that the lack of cash or anticipated lack of cash is a recipe for a big short on the stock -- increasing the impact of dilution along with eroding the negotiating position they have with potential partners / acquirers.

    I'd appreciate thoughts on what amount of additional capital are they likely to raise?
    My estimate would be 25-40M which would put them safely beyond end of Phase III for the post-surgical pancreatic trial. Assuming 90% of today's stock price for issuance of new capital, that would be approximately 10-15% dilution plus any warrants (which could add another 5% dilution on top).

    2. In terms of intellectual property -- does anyone have any specific knowledge of what the basis of this is? What specifically is proprietary and what is preventing other from developing a similar approach with alpha-gal? From what I can find online the company doesn't really talk much about this. I'm just trying to understand how defensible is their position (assuming success) and how likely is it that others could duplicate their approach in the future. I'm assuming their IP is largely in manufacturing process, the cell lines, know-how and the clinical data set they are generating and less in terms of proprietary alpha-gal composition.

    Thanks for your thoughts,
    Jaerome

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    • Jaerome , I have been investing in Bio for almost 30 years. I have read and posted on MB's of company's which I own stock for a long time. Generally when someone shows up as you did with very specific and very very detailed questions ( In your case regarding Dilution and probable weakness / and doubts about IP Patent protection ) are less than honest and actually already know the answers and are really shorts doing a little Trogan Horse incertion on the MB . I hope I am wrong about you and if so I apologize in advance but I've seen posts like your's before.

      • 1 Reply to kblumb
      • Kblumb -- To the extent that pumper trolls ruin useful message boards, I understand your concern. That said, I'm not interested in a board that is only cheerleader longs -- a quasi extension of the public relations people at Newlink.

        There's really no way to disprove what you've suggested other than to assert that I'm not pursuing a hidden agenda. I'm trying to fill in the gaps where I haven't been able to find the info that I'm looking for.

        I think it's fair to ask questions about potential risks -- especially short term risks, e.g., dilution / cash on hand, for those of us looking to time when to build a position. I would think this is also relevant to someone with 30 years of Bio investing experience given how common capital raises are. If this isn't fair game for discussion on this board, then I'll move on.

        I'd certainly be in favor of maintaining a useful, fact-based or logic-based discussion on this board as opposed to a pumper-driven mb (long or short) -- that's of no benefit to those trying to think through newlink as an investment opportunity.

        @acolonf -- thanks for the details on the SPA. The company press releases only go back to 2011. Was that from a company press release in 2010? I didn't find those details in the company press releases -- could you point me to the source if you have it handy?

        Thanks
        Jaerome

    • Re: Re: Re: Re: Second Phase III trial in Pancreatic Cancer
      By kblumb . Oct 14, 2012 9:30 AM . Permalink Go to topic
      Nlnk's IPO was November 2011 and they were thus precluded for one year or November 2012 from issuing new stock. I think it is likely that a 15% or 3 mil. Share offer will happen. I think it will be received positively and will allow some institutions to acquire positions in this very thinly traded stock!( I posted this yesterday and it would equate to a $40 to $50 mil raise + or - 10% . Of course just because they need more money and this is the most obvious doesn't mean it will happen exactly this way!

      • 1 Reply to kblumb
      • Great info -- tegcharlot, acolonf5 and kblumb! Thanks for your help.

        It would certainly be nice to see less dilutive capital from an existing investor such as Stine. From my modest experience in other biotech stocks, it seems like capital raises are rarely positively received (at least least in the short / med term).

        One further question -- since I don't know much about SPAs. Are these a matter of public record in the sense that investors can read the actual SPA? If so, do you know of a source of where to find them?

        Thanks again, Jaerome

    • I took this from IPOdesktop, right before their IPO last year. They have received addition IP protection since then.

      INTELLECTUAL PROPERTY

      NLNK has established and continues to build proprietary positions for its HyperAcute Technology and its IDO pathway inhibitor technology in the United States and abroad.

      As of September 30, 2010, NLNK’s patent portfolio included six patent families relating to its HyperAcute Technology and 19 patent families relating to IDO pathway inhibitor technology.

      HyperAcute product candidates

      There are two principal families of patents and patent applications:

      The first patent family is exclusively licensed from Central Iowa Health System and includes five pending patent applications and 20 registered U.S. and foreign patents related to the HyperAcute Technology. This patent family is expected to provide basic composition of matter patent protection extending until 2023 and has already resulted in a granted patent in Europe (EP 1549353 B1), in Mexico (278681) and Canada (2501744), all covering pharmaceutical compositions for inhibiting pre-established tumor growth comprising attenuated allogeneic tumor cells modified with a-Gal. Similar composition claims as well as methods of use for treating pre-established tumors are currently being pursued in the U.S., China, Japan and Canada. One patent recently issued from this family in the U.S. and contains claims to methods of making master cell banks of HyperAcute allogeneic cells (US 7,763,461) and HyperAcute Technology.

      The second principal family of patents is exclusively licensed from Drexel University and includes two U.S. patents (US 6,361,775 and US 5,879,675) relating to the use of a-Gal in viral and cancer vaccines. These patents expire in 2014 and 2016, respectively in the United States. Related patents in this family have also been granted in Canada and Europe and expire in 2015. NLNK exclusively licenses from Central Iowa Health System or owns several other patents relating to a-Gal technology, which NLNK believes provides additional barriers to entry in the space occupied by NLNK’s HyperAcute Technology. Additional coverage includes issued patents relating to gene therapy technology and the use of xenogeneic cells having a-Gal expiring in 2016; and an application issued in the United States (US Patent No. 7,998,486) and pending in Europe covering isolated tumor antigens comprising a-Gal residues and projected to expire in 2027.

      IDO Pathway Inhibitor Technology

      NLNK’s IDO pathway inhibitor technology patent portfolio contains several key U.S. patent families exclusively licensed from the Medical College of Georgia.

      The first patent family contains three issued U.S. patents and two pending applications, all expiring in 2018. This family contains patents having claims to methods of increasing T cell activation (US 6,451,840) and methods of augmenting rejection of tumor cells (US 6,482,416) by administering an IDO inhibitor. The second patent family contains four pending applications and an issued U.S. patent (US 7,598,287) to methods of using D-1MT to treat cancer and provides exclusivity for this use until 2027.

      NLNK is also actively pursuing pharmaceutical composition claims to D-1MT in the U.S. in a pending application from this family, and also claims to the use of D-1MT to activate T cells in Europe out of another Medical College of Georgia patent family that if granted, will provide exclusivity for this use in validated European countries until 2022. Related applications are allowed in Australia and are pending in Canada.

      NLNK believes additional barriers to entry in the IDO space are provided through exclusive licenses with Lankenau Institute for Medical Research and various NewLink-owned inventions, in which NLNK is pursuing patent protection for specific combination therapies targeting the IDO pathway, as well as protection for novel inhibitor compounds and potential second generation products.

    • Jaerome,

      1. This company is substantially backed by a Stine Seed company who owns approx 30% of the shares so my belief is that the company does not have to follow the standard biotech capital raising standards. Insiders own approximately 40% of float (includes Stine) ...I could see a loan from Stine with warrants rather than a dilutive equity deal.

      2.The company has broad patents around combining alpha-Gal with tumor lines for the purpose of creating a Antitumor Vaccination and also has significant patents around using D-1MT to inhibit the expression of IDO.

      NewLink Genetics announced that the Japan Patent Office has issued a notice of allowance for a patent entitled "Antitumor Vaccination Using Allogeneic Tumor Cells Expressing Alpha 1,3 -Galactosyltransferase," which contains broad pharmaceutical composition claims covering NewLink's HyperAcute products for the treatment of cancer. NewLink holds exclusive rights to the allowed application as well as to previously issued counterpart patents in the United States, Canada, Mexico, and Europe.

      NewLink Genetics Corporation (Nasdaq:NLNK) today announced that the United States Patent & Trademark Office (USPTO) has allowed broad claims to oral pharmaceutical compositions comprising 1-methyl-D-tryptophan (D-1MT) (US Serial No. 12/175,538) and also to oral pharmaceutical compositions comprising 1-methyl-DL-tryptophan (US Serial No. 11/603,291). The company holds exclusive rights to the allowed applications.

 
NLNK
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