N4 Pharma (LON:N4P) is a consumer-driven pharmaceutical company developing reformulations of a number of key drugs. These have the potential to produce very attractive returns for shareholders in the form of an estimated £300 million of sales if they achieve full commerciality.
As it stands, the Midlands-based pharmaceutical company is working on drugs for the treatment of erectile dysfunction, hypertension, Hepatitis B and cancer.
However, the inclusion in our selection of AIM shares for 2018 comes not so much from the diseases and disorders their drugs target, but more N4 Pharma’s lean patent-backed business model and a cash pile to support the next phases of key trials.
N4 Pharma has two divisions in generics and vaccines, with the generic division at the forefront of plans for 2018 in their Viagra alternative, Sildenafil MR. The Sildenafil reformulation has a potential market of up to 100 million people in the USA and Europe suffering a degree of erectile dysfunction (ED).
Game-changing Trials
With Sildenafil, the company is aiming to provide a much-improved treatment for ED and in the process, provide a gaming changing revenue source for N4 Pharma.
Viagra is currently the market leader with an estimated $1.6bn in annual sales. Despite dominating the market, Viagra has a number of draw backs which are targeted for improvement in N4 Pharma’s clinical trials of Sildenafil.
The improvements are based on the onset of plasma concentration and the time this concentration lasts. Viagra’s weakness comes in the one-hour onset time which then peaks very quickly before wearing off in 4-6 hours.
Sildenafil is targeting outperformance of Viagra with action onset of just 15-30 mins and a steady plateau of concentration ranging from 12-20 hours. In addition, Sildenafil MR is also unaffected by food whereas food intake Viagra can prolong the onset of action.
Well Funded
N4 Pharma is set to conduct small-scale human trials in Q1 2018, with a view of seeking pre-IND guidance from the FDA which will pave the way for approval.
N4 Pharma conducted a placing in 2017 and ensured the funds to conduct the necessary trails of Sildenafil. The firm is confident that if the first round do not produce the desired results, they will not need to go back to the markets for a second set of trials.
If the trials prove successful, it opens the door for the first ‘milestone payment’ in the form of a licensing fee from a partner.
Milestone Payments
We touched on N4 Pharma’s lean business model and the process of bringing in a partner with a licensing fee is integral to this. N4 Pharma will not conduct any manufacturing or even marketing of any drugs.
Distribution will be outsourced with N4 receiving a milestone payment, enabling the firm to progress with the development of further intellectual property in the vaccines division.
The vaccines division is working on the development of DNA based vaccines to challenge current widely used applications of cancer vaccines. Patent for Nuvec have already been filed along with filings for anti-depressant drug Duloxetine and Sartans, used in the treatment of hypertension.
While these patents are not a priority for N4 Pharma in 2018, the pipeline provides opportunity to push the business forward in the wake of Sildenafil licensing agreements.
This article was originally published in the free UK Investor Magazine print edition, register your address for a subscription here.
