Grang Zeng, CFA

Early in the morning today (Dec. 10, 2010), Access Pharma (OTC Bulletin: ACCP) announced that it has 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 initial closing of the offering is expected to take place subject to the satisfaction of customary closing conditions.

We view this financing a positive to Access. The fund will provide Access with much needed financial resources to support the commercial launch of its lead product MuGard. At the same time, this financing will also provide funds for Access to advance its pipeline and its three proprietary drug delivery platform technologies, especially the Company’s CobOral oral delivery and CobaCyte targeted drug delivery technologies. The financing agreements with institutional investors also indicate that these institutional investor are confident in the potential of MuGard and the Company’s pipeline.

In our recently issued report, we reminded investors that cash position is our chief concern for Access. The financing helps to boost the Company’s balance sheet and relieves some of our concerns. We understand that new shares will certainly dilute existing shareholder base, but in the long run, Access should benefit from this financing when the Company continues to make progress in the launch of MuGard and in the advancement of its pipeline and drug delivery technologies.

Access is Making Progress in Reimbursements for MuGard

Access also announced Thursday (Dec 9, 2010) that it has made significant progress in obtaining MuGard reimbursements from various third-party payer networks.  Some of the national insurance reimbursements included several state plans from Blue Cross Blue Shield, Health Net, Caremark, Well Point Next Rx, Harvard Pilgrim and Medicaid.

These reimbursements further validate the benefits of MuGard for the management of mucositis in cancer patients. Access is continuing to make efforts to land additional reimbursements as it provides an incentive for clinics and hospitals to more quickly integrate the MuGard into their treatment protocols for cancer patients.

Oral Insulin Program Agreement Signed

On December 8, 2010, Access announced it has entered into an agreement with a major global pharmaceutical company to test Access' oral insulin formulation based upon its proprietary vitamin B-12-based CobOral Drug Delivery Technology.  Access will provide CobOral insulin to the pharmaceutical company. Access anticipates completion and delivery of its CobOral insulin formulation to the pharmaceutical company by the end of the month.

The agreement is another sign that Access is making great progress to monetize its drug delivery technologies. The Company recently announced an agreement with a biopharmaceutical company to develop an oral formulation of its widely-marketed injectable for prostate cancer.  In addition, Access has filed supplementary patents covering the application of both platforms, CobOral (oral delivery) and CobaCyte (disease targeting), with most of the top 100 currently-marketed, injectable drugs.  Access continues seeking additional collaborations for oral versions of the various injectable drugs. 

The Bottom Line……..

We believe Access is headed in the right direction. The Company has made great progress in the commercial launch of its lead drug MuGard and in the advancement of its pipeline as well as in the monetization of its proprietary drug delivery technologies. We have high confidence in management’s ability to execute its growth plan.

With the boost of its balance sheet, it seems that Access is well poised to deliver shareholder value in the near future. We have an Outperform rating for the Company with a 12-month price target of $8 per share.  

For a copy of the full resarch report, please email with the ticker ACCP as the title.


ACCESS PHARMA (ACCP): Free Stock Analysis Report