The possibility of OncBioMune Pharmaceuticals (OTCQB:OBMP) acquiring the Mexican specialty pharma Vitel Laboratorios has been on the table since late last year. The two companies started talking about merging after getting to know each other better as part of a joint venture to develop OncBioMune’s novel therapeutic prostate cancer vaccine, ProscaVax, in Mexico.
Over-the-counter companies often promulgate value-building mergers that, unfortunately, never get completed, which may be why investors seemed to overlook such important news for the company. OncBioMune on Monday announced the acquisition of Vitel was completed on Friday, putting the company in a much stronger position with a copious pipeline of licensed drugs, two marketed drugs in Mexico and a greatly expanded network in addition to legacy holdings of OncBioMune.
In short, OncBioMune went from being an upstart biopharma that – no matter how promising ProscaVax is – wasn’t greatly differentiated from other young peers to a microcap anomaly with revenue-generating drugs, a first-in-class experimental prostate cancer vaccine and a pipeline of more than 20 drug candidates for Central and South American markets. It’s also certainly worth noting that OncBioMune is now rubbing shoulders with international pharmas and larger companies.
Prior news releases disclosed some of the relationships of Vitel that were built through years of experience licensing and marketing drugs in Mexico by Vitel founder Manuel Cosme Odabachian. With the merger, Odabachian is now serving as an OBMP director and General Manager of Global Operations, bringing his rolodex of connections under the OncBioMune umbrella.
The acquisition means that OncBioMune now owns license agreements with the century-old German specialty pharma Roha Arzneimittel GmbH. Late in 2016, Vitel brought two over-the-counter products, Bekunis® for constipation and Cirkused® for stress, to the Mexican markets under the license agreement with Roha. In November, OncBioMune said that the two products had generated about $100,000 in sales during the first six weeks available to the public. Follow-up comments have said that sales continue to top initial expectations.
Elsewhere, OncBioMune assumes Mexican territorial rights for the immunoglobulins KamRab® (anti-rabies), KamRho® for the suppression of Rh immunization in certain pregnant women and the AAT deficiency drug Glassia® through agreements with Kamada Ltd. (NASDAQ:KMDA). To put that opportunity into perspective, consider that Kamada has an exclusive agreement with Shire plc (NASDAQ:SHPG) making Shire the exclusive distributor of Glassia® in the U.S., Canada,
Australia and New Zealand, territories that Shire is already generating substantial revenue for the treatment and believes it can grow to about $100 million annually by 2020.
Other licensing deals are with Germany’s AqVida GmbH for the chemotherapy Imatinib, as well as other portfolio drugs of AqVida. Imatinib, also known under the brand name Gleevec, is approved across the world for treating several types of cancer, including chronic myelogenous leukemia and acute lymphocytic leukemia, and listed on the World Health Organization’s List of Essential Medicines. The male fertility supplement Androferti is now under license by OncBioMune for the Mexican markets from QPharma, Inc., a New Jersey-based life sciences industry expert. Androferti is an interesting proposition, considering it is sold on Amazon in the U.S. already, making it an ideal candidate for high-margin e-commerce sales south of the U.S. border in the future.
According to a press release on Tuesday, the transition of negotiations to the OncBioMune rubric is going well, including what could be an important relationship with EOC Pharma, the U.S. subsidiary of China-based specialty pharma Eddingpharm. Eddingpharm is a company that likes to partner on drug development and has remained active in deal making with major pharmas, which can lead to increased opportunities for OBMP.
For example, in September 2013, Eddingpharm entered a licensing agreement with Syndax Pharmaceuticals Inc. (NASDAQ: SNDX) to develop and commercialize entinostat in breast and lung cancer and other indications. Last March, it agreed to pay up to $169 million for China rights to Vascepa, a prescription omega-3 drug from Amarin Corp. (NASDAQ: AMRN). In 2013, Eddingpharm and Italy-based Chiesi Farmaceutici teamed up in a JV to establish Chiesi Edding Hong Kong Limited to commercialize some of Chiesi’s key products in China. Incidentally, this is the same Chiesi, which generates over $1.5 billion in annual sales, that previously partnered with Odabachian to set up a Mexican division.
Point here is it’s easy to see that OncBioMune now finds itself operating in the same space as some household names in the health care space, ones that are active in the licensing and partnering business. Moreover, Odabachian has been methodical in aligning the pipeline with drugs that can be staged incrementally into revenue generators, some in the near term and others requiring additional clinical studies that can have bigger paydays, including Telatinib, which is licensed through EOC/Eddingpharm.
In January 2014, Eddingpharm agreed to pay ACT Biotech up to $95 million for Telatinib, which had completed Phase 2 trials as a treatment for gastric cancer, and two other pre-clinical small molecule compounds. Now, EOC and OncBioMune are collaborating on finalizing a definitive agreement for a JV to develop and commercialize Telatinib for gastric cancer across Mexico and 33 other countries in Central and South America.
All told, OncBioMune says that seven other licensed products are either already moving through the commercialization regulatory process or expected to be commercially launched in Mexico in 2017. Even with minimal sales each, the aggregate will provide valuable cash flow to OncBioMune for drug development and marketing efforts. While there’s a long row to hoe still and OBMP will need to secure additional funding, the company is in a unique position for exponential growth going forward on the strength of the merger.
