Feedbacks on MuGard from Prescribers are Positive - Analyst Blog

Grant Zeng, CFA

Feedbacks on MuGard from Prescribers are Positive

On February 9, 2011, Access Pharma (ACCP) updated the status of MuGard application in cancer patients. The Company has been receiving positive clinical feedbacks from doctors and nurse practitioners prescribing MuGard for patients undergoing radiation and chemotherapy for various cancers.  

For example, Access received feedback from a prescribing nurse practitioner at a leading southwest oncology practice. MuGard was introduced to the practice over three months ago and since then has been incorporated into the supportive care regimens of approximately 80 cancer patients, comprised of head and neck, lung, colon and breast cancer patients. Throughout the prescriber's feedback, provided to Access in a Q&A format, the nurse practitioner detailed many of the distinct benefits MuGard provided her patients. According to the nurse, MuGard has worked on all but one patient. MuGard is the first product for oral mucositis in the center. Patients are excited about the product which has made a difference for their lives. The feedback also covers prior unsuccessful treatments used by the prescriber for oral mucositis before learning about MuGard.

Although the feedbacks are still early and anecdotal, we are encouraged by the positive impacts MuGard has given to cancer patients. The integration of MuGard into patent care regimes coupled with the clear clinical benefits observed so far further validate the important role MuGard plays in the prevention and management of oral mucositis in patients under radiation and chemotherapy for many different cancers including head and neck, lung, colon and breast cancer.

We believe the ongoing clinical success and the positive feedbacks from some prescribers will further convince more physicians to use MuGard as part of their cancer treatment regimes. As a result, we believe this will boost sales of MuGard in the coming quarters.

Access Pharmaceuticals Raised $6.0 Million In Registered Direct Offering

On December 10, 2010, Access Pharma entered into definitive agreements with existing and new accredited investors to sell, in a registered direct offering, an aggregate of approximately 2.3 million shares of its common stock at a price of$2.55 per share for aggregate gross proceeds of $6.0 million.  Additionally, at the closing, Access will issue to the investors warrants to purchase, in the aggregate, approximately 0.7 million shares of common stock at a price of $3.06 per share, which warrants are exercisable immediately for a term of 5 years from the closing date. The offering was closed on December 14, 2010.

Although the equity financing will dilute existing shareholder base, it's positive for the Company as well as for investors in the long run in our view. As we mentioned before, one of our chief concern is the Company's cash position. At the end of September 2010, Access had only $1.5 million in cash and cash equivalents. At the same time, the Company had one convertible note outstanding in the principal amount of $5.5 million which is due September 13, 2011. Net cash burn rate for the nine months ended September 30, 2010, was approximately $0.5 million per month. At September 30, 2010, working capital deficit was $12.9 million.

Excluding the $6 million newly raised capital, current level of cash may only last for a few quarters. This financing not only provides Access capital to support the commercial launch of MuGard, but also helps beef up the Company's balance sheet. This will help the Company in partnering discussions in its various programs. With an improved balance sheet, Access can continue executing on its multifaceted strategy for moving valuable assets within the company forward including advancing its clinical and preclinical programs.

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