Yesterday, Motif Bio plc (LSE: MTFB), the clinical stage biopharmaceutical company specialising in developing novel antibiotics, announced the appointment of U.S. healthcare investment bank MTS Health Partners (MTS) to advise on its future financing options within the U.S. market. A NASDAQ listing continues to be an option for Motif in order to be aligned with several peer companies. The Company has also appointed as its auditor PricewaterhouseCoopers LLP (PwC), one of the top four multinational professional services firms in the world. Motif’s management went on to detail the fact that considerable progress has been made with plans to identify strategic partners who are interested in licensing its Phase III asset, iclaprim, outside the U.S. Graham Lumsden, CEO of Motif, noted: “The accomplishments in 2015 – listing on AIM in April, raising £25 million including the follow-on in July, being granted QIDP designation for iclaprim by the FDA, and completing the manufacture of clinical trial supplies, have strengthened the Company and positioned us for continued success in 2016.”
Beaufort Securities view: This news effectively confirms Motif’s management intention to seek a NASDAQ quotation in the near term. This is very important – indeed, it should herald quite a considerable re-rating of Motif shares – given that US biotech investors appear to much better comprehend the risks and rewards of early stage pharma and biotech investments than their counterparts in Europe. The US, in particular, appears to recognise the looming crisis in the antibiotic world and there, at least, commercial interest in antibiotics has recently taken off. Valuating such clinical stage opportunities, of course, remains far from an exact science. While discounted cashflow and other such financial methodology could create a valuation for iclaprim, the size of the prospective opportunity (which potentially runs into billions of dollars in revenues) more often than not is seen to befuddle such an approach. In which case, peer group comparisons possibly provides a more realistic assessment. Paratek Pharmaceuticals, Inc. (NASDAQ: PRTK), appears to be the closest peer to Motif, having a similarly advanced antibiotic development product in Phase III trials and comes with a similar history. Right now, Paratek, is valued at around US$291m, or almost five times the current market capitalisation of Motif Bio. Beaufort retains its Speculative buy recommendation on Motif Bio with a price target of 110p/share.
