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Shares in Midatech Pharma up 50% after drug developer ties up non-dilutive funding deal

Investors have been cheered by the method used to raise fresh investment, which avoids the need to issue more shares for cash
Shares in Midatech Pharma up 50% after drug developer ties up non-dilutive funding deal
The company plans to carry out three clinical trials

Shares in Midatech Pharma Plc (LON:MTPH, NASDAQ:MTP) have advanced more than 50% in the day and a half since it said it had raised US$15mln in senior debt to bankroll three separate clinical trials.

The funding has come via MidCap Financial, a middle market finance house, and Midatech has drawn down an initial US$7mln of the facility.

It will be used to bankroll the development of three drugs – one already on the market and two just entering the clinic.

WATCH: CEO on funding move

READ: The announcement in full

Investors will have been cheered by the method used to raise fresh investment, which avoids the need to issue more shares for cash.

Certainly, that appears to be the case judging by the share price, which has advanced 17.55p to 52.55p since the open on Tuesday.

“This is a non-dilutive way of financing the company going forward,” chief executive Jim Phillips told Proactive Investors.

“We are able to borrow money against our increasing revenues in the US commercial part of our business and repay that financial loan over the next four years as we move from being a low-revenue, not quite profitable business into being a profitable and high revenue generating company through the launch of new products.”

Phase IV trial

The money is being deployed to carry out a phase IV clinical trial of an existing cancer care product, Gelclair, that could expand its addressable market. The study will assess its use in stem cell patients suffering oral mucositis, a side effect of the treatment.

On the cards also are phase I investigations of MTD201 and MTX110. The former, also known as Q-Octreotide, is a long-acting treatment for a hormone disorder acromegaly and metastatic carcinoid tumours, while the latter is being developed to treat a type of brain tumour found in children called diffuse intrinsic pontine glioma.

Work on Gelclair and MTD201 should be complete this year, while the MTX110 trial may take up to two years to finish, Phillips said.

"This agreement allows us to continue the clinical development of key products,” the Midatech CEO said.

“With the extensive due diligence that was required, it also indicates significant support in Midatech's future.

“With our lead programmes heading towards potentially significant, value-driving inflection points in 2018, and the continued progress of our R&D pipeline and US commercial activities, this is an exciting time for the business."

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.

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