4D Pharma Plc (LON:DDDD) is pioneering the development of Live Biotherapeutic Products (LBPs) as medicines based on the function of the microbiome in health and disease. This morning 4D reported its results for 2016, a year in which both the technology and pipeline of the company progressed significantly. 4D generated positive phase I clinical results for Blautix in irritable bowel syndrome (IBS) and entered clinical trials in paediatric Crohn’s disease (pCD) with Thetanix. In addition, 4D further developed its operations in the field of diagnostics and manufacturing through strategic acquisitions in Cork (Ireland) and León (Spain), respectively. Despite these acquisitions and increased investments in R&D (£10.2m), 4D ended the year with cash and equivalents of £68.8m. We believe that with its scientific leadership in the field of microbiome research and LBP development, 4D provides an excellent opportunity for investors to gain exposure to this innovative new class of medicines.
2016 Financials: As a business focused on developing its product candidates through discovery and clinical research, 4D Pharma is a pre-revenue company whose main financial activities related to the costs associated with its technology and product developments. In the 12 months to Dec 31, the company reported an R&D spend of £10.2m, up from the prior year spend of £8.4m reflecting the increase in clinical trials and new candidate discovery. The pre-tax loss for the year reached £11.7m but this was offset by R&D tax credits of £1.8m. The company ended the period with cash and equivalents totalling £68.8m as at December 31st (2015: £85.4m).
Technology and Products: 4D Pharma plc selects LBPs using its MicroRx platform with an overriding emphasis on defining functionality and mechanisms of action relevant to target diseases. This emphasis on function and mechanism differentiates 4D and its products from other companies with interests in the microbiome. 4D’s platforms, MicroRx and MicroDx, have been built on robust science and have the potential to generate many novel products for the treatment of a wide variety of diseases (not just diseases of the gut). Two of 4D’s candidates, Blautix and Thetanix, have entered clinical development with Blautix already demonstrating safety and early signs of efficacy in IBS.
Outlook: As clinical phase development activities continue and build further this year with Blautix entering a larger, multi-centre phase 2 trial and 2 new products likely to enter phase 1 clinical trials (potentially in immune-oncology and severe neutrophilic asthma), we believe R&D spending in the current year could grow to a level above that reported in 2016. Importantly, with over £68m in cash at the beginning of 2017 the company is well-funded to execute its product development plans.
