10-16-2007 ALTU - Altus Pharmaceuticals
CURRENT PRICE: $12.10
TYPE OF PLAY: TECHNICAL ANALYSIS/FUTURE PROSPECTS/VALUE
During their last conference call (on August 8th) , Altus speaks about being in discussion with several interested partners for non-North American rights for their phase 3 Cystic Fibrosis drug ATU-135. With a bit of time gone by,
it stands to reason that this partner will be announced sometime soon. They are also into discussion with Genentech (NYSE:DNA) about expanding their partnership for the rest-of-world rights for their phase 2 drug ATU-238, which is to treat growth hormone deficiency. It is
important to note that under the current partnership, Genentech is paying for the clinical trails of ATU-238.
On August 14th, Altus also entered into phase 1 for ATU-237 which is a , an orally-delivered crystalline formulation of an oxalate-degrading enzyme that is being developed for the treatment of hyperoxalurias and the possible prevention of recurrent kidney stones.
Aside from the exciting pipeline the key is their proprietary novel protein crystallization technology which can be used to make other compounds and future drugs that could also make them attractive to potential suitors looking to expand their own line of drugs.
The company has recently stated that their extremely large cash position (171 million or $5.80 per share) would fund operations until the second half 2009 if need be. This SHOULD rule out the need for any
secondary offerings that biotech stocks are so famous for. When you subtract the cash, this stock is trading for around $6.00 per share which we feel is way to cheap considering the potential market for their in trial drugs and their novel protein crystallization technology.
From a technical analysis standpoint, this stock has begun to breakout of of its range on increasing volume which we take to be a bullish signal. There is also ~2.4 million shares short (8.39% of the float) which gives it an ability to push higher on short covering.
With the pending buyout of Biogen Idec (NASDAQ: BIIB) we feel that other smaller biotech stocks will come into focus. It is also a business that is nearly recession proof, as sick people will always pay to get better.
It is important to note that when dealing with these companies there is a special type of risk/reward situation. A failure of an important drug trial can be very damaging to a small company, and that should be taken into consideration as you further research this company.
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Links for further reading:
ALTU homepage
SEC filings for ALTU
General ALTU statistics
