Investors wait for Starpharma’s Vivagel. And wait.

Starpharma_Logo

In a previous article titled “What’s happening with Obducat“, we discussed a company that attracted a great deal of attention from nanotechnology investors during the nanotechnology hype of 2004. Another such company is Starpharma (OTCMKTS: SPHRY). Starpharma, an Australian biotech company which generated a great deal of attention during the nanotechnology hype of 2004 by developing dendrimer based drug delivery systems for HIV prevention.

Company History

Founded in 1996, Starpharma listed on the Australian Securities Exchange in 2000. The company’s technology is built around a nanoparticle called a dendrimer. The company’s lead product is Vivagel, a gel-based formulation of a proprietary dendrimer. In the past the company has announced agreements with Astrazeneca, Eli Lily, Dow Chemical, and Nufarm among others. In 2011  the company raised $32 million through a share placement to institutional investors.

Interest by US investors during the hype of nanotechnology in 2004 led to an ADR listing on the over-the-counter markets.  The interest in Starpharma was mainly around the proposed HIV prevention attributes of Vivagel and an FDA approval for human trials announced in 2003:

Starpharma_Vivagel

For the next 6 years Starpharma made many announcements regarding their progress on establishing Vivagel as an HIV prevention drug. In 2009 the company announced a new application of Vivagel to treat the condition of bacterial vaginosis. In a February 2013 shareholder update, Vivagel is discussed as a preventative for recurrent BVs and as a possible novel treatment for pink-eye but no mention is made of the HIV prevention applications for Vivagel.

Revenues

Starpharma_Financials

Royalty customer and license revenue is on a downward trend and grant income is diminishing. The company has 42 million cash on hand now from their recent institutional placement which should last them 4 years if they maintain their 2012 cash burn rate of 10 million.

Stock Performance

An investor in Starpharma who purchased shares when the company listed on the ASX would have realized a volatile 18% gain 12+ years later based on today’s closing price. US investors who purchased the ADR 8 years ago when it listed would have realized a little over 31%.

Investors can and have argued the merits and potential of dendrimers for years. Starpharma investors have to ask some questions. What opportunity costs were incurred waiting for Starpharma over the past 10 years to breakthrough with a disruptive application for dendrimer technology? How much longer should an investor tie up their capital in Starpharma waiting fora breakthrough? Is an investor’s capital not better utilized elsewhere while watching Starpharma from the sidelines until an increase in revenue demonstrates the company’s potential for success as opposed to the many optimistic press releases investors have become accustomed to over the years?

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6 thoughts on “Investors wait for Starpharma’s Vivagel. And wait.

  1. I have owned starpharma for several years. I am a patient investor, which comes from experience with the market, however I know the company is solid, but I would like to see it move. It did hit 19 and I thought it was on its way, but then it droped down to 6. It’s at 9 now, if anybody knows anything please let me know.
    Thanks,
    Frank

    1. Hi Frank,

      I’m assuming you are subscribed to their email alerts from the company. You can also lookup filings at http://www.asx.com.au that show changes in institutional holdings, new shares issued etc. Today they announced their quarterly cash flow report which stated the company had a cash balance on Jun 30 2013 of 31.3 million USD and a net cash burn of 8.34 million USD for the year.

      Cheers,

      Nanalyze Editors

      1. Hi,
        Thanks for the reply. Yes I am on their e-mail and I am aware of the internal changes as well as their cash flow and other investors increase of holdings. I know its a solid company and that they have their hands in many things. I guess I am getting a bit impatient. Like I said when it hit 19 I thought it was going to go. You wouldn’t know why it went that high and droped. Anyway thanks for getting back to me. There is a saying “when you get to the end of your rope, tie a knot and hold on”, so I will just hang on….

  2. The drop from 19 was because of disappointing results in Phase 3 trials for treatment of BV. The Phase 2 results had been very promising and were expected to be repeated in the Phase 3 trials, but weren’t. Personaly, while I would have preferred a different outcome, I was able to buy more stock at a lower price. I still think Starphama will turn out ot be a great investment. They will eventually have success with one or more of their partnerships and turn into a real business with substantial revenue.

    1. Hey Gary,
      Thanks for the info on the drop I had a feeling that it was the phase 3 results. As I said before it is a solid company and they are involved in many things so I agree there is a future for this company.
      Thanks again
      Frank

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