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Independent Reviews for Venture Investors

QPT.V - Upside.


Quest Pharma Tech Inc. (QPT.V) specializes in cancer and pharmaceutical therapies.


QPT.V has a 45% ownership interest in OncoQuest Inc. which it sold its immunotherapy assets on April 20, 2020.


QPT.V also has a 24% ownership interest in OncoVent, a Chinese joint venture developing antibody-based immunotherapeutic products for cancer for the Greater China territory.


QPT.V further has a 20% ownership interest in Bioceltran which is focused on SP Technology™ for transdermal delivery of drugs and photosensitizers for pharmaceutical and cosmetic purposes.


In addition, QPT.V is developing a mutant EGF technology licensed from Stanford University for chronic wound healing applications, and an antibody (AR 9.6) against truncated O-glycans on MUC16, licensed from University of Nebraska, for targeted solid tumour therapy applications.


Coverage was initiated May 2017, with subsequent notes issued on April 2018, September 2018, April 2019,

October 2019, July 2020, March 2021.and December 2021.


News Releases


Apr. 19 - Provides Corporate Update: Announces that it has borrowed $1M of working capital funding from one of its investee companies, OncoQuest Inc. The funding, in the form of 2% interest bearing working capital loans provided by OncoQuest, will be used to support the Company's drug development programs.


The Company plans to repay the loans once the Company's investments in its investee companies are monetized.


On a corporate matter, Quest announces the granting of 300,000 stock options to an Officer, at an exercise price of $0.10 per common share, expiring 10 years from the date of grant, subject to TSX Venture Exchange approval, and the exercise of 690,000 stock options by Officers and a consultant all at an exercise price of $0.10 cents.


July 21 - Announces Results from Annual General Meeting: On a corporate matter, Quest announces the granting of 1,300,000 stock options to Directors and Officers, all at a volume weighted average exercise price of $0.09 per common share, expiring 10 years from the date of grant, subject to TSX Venture Exchange approval.


Summary

Only two releases in the last nine months. One related to financing; a $1M loan from Oncoquest Inc. at a 2% interest rate. The other regarding the Annual General Meeting Results. Both releases had options grant: 300,000; $0.10 cents (April, 2022) and 1.300,000; $0.09 cents (July 2022). Perhaps most notable is the expiry period: 10 years.


Most recent filings (MD&A as of June 27 2022): OQP Korea continues with site development and patient enrollment for its multi-national Phase 3 registration clinical trial for oregovomab in advanced ovarian cancer patients.


Otherwise, the company continues to report large losses mostly due to writing down the value of the OQP Bio Bonds.


Investment in OncoQuest Inc.:OncoQuest recorded a net loss for the year ended January 31, 2022 of $135,828,030 (USD108,421,728). This loss resulted from 8 OncoQuest writing down the value of the OQP Bio bonds by $133,277,067 (USD106,384,787) due to the lack of liquidity and marketability of the bonds.


The understanding is that OQP Bio bonds are available to be monetized through CanariaBio but the liquidity and buyers required for these assets are not currently present.


In short

Quest PharmaTech (QPT.V) has provided no detailed timeline to monetize the proceed of the sales of its immunotherapy assets. Thus far, it only explains its inability to monetize based on the lack of liquidity and marketability of the bonds. The expiry period (10 years) on the recent options granted suggests it might take a while.


In essence, QPT.V might want to maximize shareholder value by monetizing at the end of the Phase 3 clinical trials. Assuming the trials are successful, the value of the OQP Bio bonds could be higher. However, the downside is that unsuccessful trials might impact the value of those bonds negatively. Thus far QPT.V has not provided info on intent.


In addition, the absence of communications from QPT.V on the developments of the trials conducted by OQP Bio (CanariaBio) is questionable. For instance, a positive milestone was achieved in June 2022. Similarly a presentation was conducted on September 14th 2022 (i.e. Phase 3 Trial Schedule and Oregovomab sales forecast). Assuming the valuation of Canariabio is dependent on the successful implementation of the Phase 3 trials, which is directly linked to the ability of QPT.V to monetize the sales proceeds, would this information not be material to QPT.V's shareholders?


The timeline provided by CanariaBio suggests that an interim review of phase 3 clinical trials could be in Q3 2023.


Otherwise, sales forecast for Oregovomab from the QPT.V's purchase price ($300M) suggests potential upside.



DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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