Cash drains at Alizyme
Article Date: Jul 26 2002Obesity and irritable bowel disease drug developer Alizyme has turned in an increased loss of £4.95 million for the six months to June and analysts say it has only enough cash to last it a year. William Davidson reports.
First half losses at techMARK-listed Alizyme hit £4.95 million, compared to £3.3 million a year earlier. Research and development expenditure came to £4.6 million, with management and administrative expenses being kept at £567,000.
Cash in the bank stood at £11.3 million compared to £15.3 million six months earlier and £18.5 million a year ago. Analysts reckon this leaves Alizyme (AZM) with around 12 months' cash.
The key point, says WestLB's Nick Staples, will be the results of the Phase II trials of Renzapride, the company's irritable bowel syndrome treatment. Good results may allow it to raise further funds in the market, although current market conditions would reduce the chances of being successful.
Alternatively, a licensing partner could come in and provide funds to Alizyme in return for marketing rights. A third option, which is being increasingly mooted, stems from consolidation in the industry.
'There are lots of cash rich companies with no products.' says Staples. 'Alizyme is one of the few British biotech companies which has not had a product failure, so it would be an attractive target' – although mergers in the biotech industry are notoriously difficult to achieve.
'In terms of valuation', he continues, 'I think it is undervalued. But it will probably trade at a discount until the first quarter of 2003, when results from the Renzapride Phase II trials will be released.'
Alizyme shares picked up 1p on the news, lifting them off their 12-month low of 45.5p.
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