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Midatech Pharma Plc: THE INVESTMENT CASE

Midatech Pharma to raise up to £8mln to accelerate progress of three main drug candidates

A total of £6mln is expected to come via a share placing and up to a further £2mln through an open offer of stock to existing investors
researcher using microscope
INVESTMENT OVERVIEW: MTPH The Big Picture
After doing the rounds of the City it will be back to the lab

Midatech Pharma PLC (LON:MTPH, NASDAQ:MTP) has unveiled plans to raise up to £8mln to fund the development of three key projects with “value inflexion points” in the next 18 months.

It will receive £6mln via a stock placing at 50p a share. Small-cap guru Neil Woodford will follow his money, maintaining his 20% stake, while Legal & General's holding will rise to 16.67% from 12.88% following the fundraiser. Midatech could bring in a further £2mln through an open offer of equity to existing investors.

READ: Midatech Pharma submits application for first human clinical trial study of rare cancers treatment

The cash will be used to accelerate the progress of MTD201, also known as Q-Octreotide, a long-acting treatment for a hormone disorder acromegaly and metastatic carcinoid tumours. Specifically, it will fund a study that compares the drug’s performance with Sandostatin, the current standard of care.

Also receiving financial backing will be MTX110, being developed for use in a rare brain tumour disease suffered by children called diffuse pontine glioma. It is ready to go into its first in-human study.

Golden opportunity?

And funds will be set aside for MTD119, a targeted therapy using gold nanoparticle technology for a form of liver cancer called hepatocellular carcinoma. An investigational new drug programme is currently underway with a first-in-human study set for the second-half of 2018.

“These programmes all have key value inflection points over the next 18 months and the potential to deliver high value returns through the Midatech US commercial arm in the next few years, leveraging our established sales infrastructure,” said Dr Jim Phillips, Midatech chief executive.

“Today's placing also assists the company in pursuing our goal of retaining the rights to our key development programmes through to commercialisation thereby pursuing the creation of maximum value for shareholders."

Interim results

In a separate announcement, the company unveiled its results for the six months to June 30.

The release charts significant progress with all three main drug candidates.

It also reveals the company’s revenues grew 42% year-on-year to £5.39mln, while the loss from operations was just over £10mln following a £10.18mln cash outflow. At June 30, the company’s cash balance was £6.19mln.  

The company

Midatech is an international specialty pharmaceutical company focused on the research and development of a pipeline of medicines for oncology and other therapeutic areas, and marketing these through its established US commercial operation.

This includes four cancer care supportive products and two further co-promoted products.

Midatech says its strategy is to “internally develop oncology products, and to drive growth both organically and through strategic acquisitions”.

The company has three-high value, lead programmes progressing through pre-clinical and clinical development (the three referred to above).

Management believes they are poised to “drive value” over the next nine to 18 months.

The technology

The key to each of those programmes is Midatech’s technology which allows it to precisely deploy drugs into the body.

Its two platforms – carbohydrate-coated gold nano-particles and its sustained release system – are about getting medicines to the right place in the right quantities at the right time.

The company's gold nano-particles, or GNPs for short, promise a revolution in targeted therapies for cancer.

To radically simplify, the process deploys these GNPs to act as guided missiles.

In treating cancer with traditional chemo-therapy, for instance, they are programmed to hit only a specific tumour type with their payload.

This highly targeted approach allows physicians to potentially administer lower doses and it also means there is little collateral damage.

Sustained release system

Its Q-Sphera technology works in a different way to deliver the drug at the right time.

It is a sustained release platform and has adopted 3D and ink jet printing techniques to create particles that dissolve in a certain way over a certain time-scale.

Q-Sphera allows drug compounds to be released into the body in a “highly controlled manner” over a prolonged period of time; potentially from a few days to up to six months.

---adds result of placing---



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