Biodexa Pharmaceuticals Plc Q2 FY2020 earnings call

• The company went through a strategic review triggered by capital market collapse in mid-February and withdrawal of a licensee for MTD201. This led to termination of further in-house work on MTD201, closure of Bilbao operations (redundant 47 out of 66 employees), and a monthly cash outflow reduction of £0.5 million.
• Appointed Noble investment bank to explore options including sale of assets/company. Formal sale process ended due to COVID and lack of credible offers.
• Realigned strategy focused on Q-Sphera technology, signed two collaborations in 3.5 months: with Dr. Reddy's and a global pharma EU affiliate. Midatech won't undertake human clinical studies unless paid in full. Q-Sphera pipeline has 7 programs, with 3 partnered. MTD201 remains available for licensing but no further in-house investment. MTX110 program for DIPG with preclinical work in other brain cancers, but facing issues with Secura Bio's panobinostat license.

In the first half of 2020, there were no material revenues booked from Q-Sphera collaborations. The first half results were heavily impacted by a strategic review, including a non-cash impairment charge of £11.59 million due to the cessation of MTD201. One-time costs in the first half included redundancy costs of £0.88 million, write down of Spanish assets (£0.55 million), offset by a credit from lapsed stock options (£0.35 million), and administrative one-time items like £350,000 for Spanish government loan repayments, etc. Stripping out one-time items, the operating loss was not too dissimilar from the first half of the previous year, and the second half would be lower due to the closure of Bilbao operations. At the half year, net cash was £3.59 million, but after considering proceeds from the July placing and warrant exercises, the pro forma net cash position was £9.7 million, with cash runway into Q4 2021.

• Target to land first license fee in the first quarter of next year.
• Cash runway from pro forma net cash position takes the company well into Q4 2021.

• Issues with Secura Bio regarding panobinostat license; options include court action (costly) or negotiated settlement, with potential delays to launch until patents expire.
• Unsuccessful formal sale process due to COVID and inability to due diligence, hindering asset sales and fundraising.
• Challenges in licensing MTD201 and uncertainties with MTX110 program due to unfavorable license agreement.

Q: Regarding the timetables for collaborations and when the first license fee might be landed A: Target is to land first license fee in the first quarter of next year. Partners need to complete pre-IND enabling studies and achieve proof of concept first.

Q: Update on situation with Secura Bio A: Company considers court action (costly) or negotiated settlement, but Secura Bio hasn't reconsidered. Options are limited, but can proceed with MTX110 program for research purposes.

Q: Future of MTD201, whether the company would consider selling it A: Absolutely, MTD201 is an asset that could be sold if right offer available, but currently better focusing on newer opportunities.

Q: Confirming long-term strategy and why collaboration strategy wasn't pursued earlier A: Current strategy is long-term. Earlier forays may have been different; current strategy is feasible given company size and resources, focusing on partnering early to avoid high clinical costs.

Q: How the company plans to manufacture Q-Sphera products going forward A: Lining up partnership agreements with CMOs, using salvaged equipment from Bilbao and adding pieces to install in CMOs with GMP capability for clinical trial scale manufacturing.

Q: Intention to keep AIM and Nasdaq listings A: Yes, the company intends to keep both listings.

Q: Implications of Emergex's progress with T-cell vaccine development on MidaCore platform A: Emergex is a private company with a license to some gold-nanoparticle patents, and they are best people to take the technology forward, with milestone and royalty agreements in place.

Q: Update on EU SME status A: Submission made on 1 July, but still waiting for EU response as CMS ownership affects Midatech's SME status unfairly.

Q: Assessment of company value post-strategic review A: Brokers have put together a valuation model valuing the company in three parts: Q-Sphera platform, MTX110, and adjusting for overheads, coming out with a valuation of about £65 million.