Company Report
Oasmia Pharmaceutical
R&D pipeline
Focus on human and veterinary oncology
Oasmia has developed a novel delivery technology aimed at improving formulations of existing drugs with emphasis on human and veterinary oncology. The objective is to improve the safety and efficacy of the drugs as compared with their original substance.
One project in registration phase and one
Oasmia has one project in registration phase, Paccal Vet (mastocytoma in dogs), and one
Phase III project
project in Phase III, Paclical (ovarian cancer in humans). We expect Paccal Vet to reach the market in H2(11) in both the US and the EU, and Paclical is expected to reach the market in H2(12) in the EU and in H2(13) in the US.
Oasmia's project pipeline & upcoming news flow
Veterinary medicine Indication
Next event
Registration Phase Registration decision US & EU
Start of Phase I/II
Start of Phase I/II
Registration submission EU
Registration submission US
Start of Phase III
Malignant melanoma
Start of Phase III
Start of Phase I/II
Start of Phase I/II
Combination therapy Pre-clinical
Start of Phase I/II
Source: Carnegie Research
Technology platform
Novel delivery technology
Oasmia has created a technology platform aimed at developing formulations of therapeutics with improved safety and efficacy in the field of oncology. All projects are based on Oasmia's proprietary delivery technology – the unique derivate-based excipient XR-17.
Paclical formulation
Hydrophlilic head
Hydrophobic chain
Source: Oasmia Pharmaceutical
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Objective to improve side effect and
XR17 is a vitamin A based set of compounds that encapsulates the active substance and
efficacy profile of existing substances
forms nanoparticles when reconstituted. With the use of nanoparticles, a controlled release of the active substance can be achieved when it is administered into the body. It has been shown that XR-17 improves the delivery and absorption of the active cancer drug, resulting in fewer adverse events and increased efficacy.
The XR-17 nanoparticles concentrate in
The mechanism of the drug delivery technology is based on the theory of the enhanced
the tumour tissue
permeability and retention (EPR) effect of nanosized anticancer drugs administered intravenously. In order for tumour cells to grow quickly, they stimulate the production of blood vessels to transport nutrients and oxygen. Nanoparticles often cannot penetrate the tight junctions of normal blood vessels; they can however extravasate in the leaky tumour vasculature where they become trapped in the tumour vicinity due to lack of efficient lymphatic drainage in solid tumours. Hence, the nanoparticles concentrate in the tumour tissue where the active substance can exert its cytotoxic function.
Main patent expires in 2028
Oasmia has several patents protecting its key technology, XR-17. Of the three main patent groups covering XR-17 – Taxol containing the composition, the anticancer composition and the water insoluble patent – in combination with taxanes (both for human and veterinary indications), the water insoluble patent is the most crucial as it provides complete international coverage for products based on XR-17 and taxanes. The water insoluble patent is currently pending; however the first review has been successfully completed and Oasmia is very confident that it will receive approval of the patent in the various markets during H2(10) and 2011. If approved, the patent will be valid until 2028. After 2028, generic competition cannot be excluded.
Veterinary medicine
Veterinary medicine pipeline & upcoming newsflow
Next event
Registration Phase
Registration decision US & EU
Start of Phase I/II
Start of Phase I/II
Source: Carnegie Research
Paccal Vet – mastocytoma in dogs
We have estimated launch of Paccal Vet in
Paccal Vet has the potential to become the first canine cancer drug based on the well-
known chemotherapeutic agent paclitaxel. Paccal Vet is currently in the registration phase; registration applications were submitted on 31 August 2010 to the EMA and to the FDA the first package submission went in on 4 August 2010. In the EU, we expect the registration review to take about a year. If approved, we estimate the drug would reach the EU market in H2(11). In the US, the review time is expected to take 6–12 months depending on whether the FDA has any further questions. Oasmia's partner, Abbott, is preparing for a decision around YE(10); thus if the drug is approved it will reach the market in H1(11). As the trial on Paccal Vet is the first controlled head-to-head trial that has been conducted for this indication, it is hard to predict whether the FDA will require additional information. We have therefore taken a conservative approach and assume a registration decision around mid-2011 and a launch in H2(11).
Paclitaxel can be delivered to dogs using
Paclitaxel is a very efficient chemotherapy for certain cancer indications and is commonly
XR-17; this minimises allergic reactions
used in humans. In dogs, however, it has historically been very difficult to use paclitaxel
(Taxol) as it has been associated with serious allergic reactions. The allergic reactions are not caused by the active substance itself, but by the toxic solvent, Cremophor EL, used in Taxol to dissolve paclitaxel. Approximately 65% of dogs treated with Taxol suffer an acute allergic reaction despite pre-medication with anti-histamines and slow infusion times (approximately six hours). Using Oasmia's XR-17 technology, paclitaxel can be delivered to dogs without using a toxic solvent, thus almost completely eliminating allergic reactions.
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MUM status provides seven years of
In April 2009 the FDA approved MUM status for Paccal Vet as a first-line treatment for
market exclusivity
mastocytoma indication Stage II and III in dogs. MUM status provides seven years of market exclusivity after the launch. Therefore Paccal Vet is protected from direct competition from products based on the same delivery technology, including those using the same active substance as Paccal Vet, paclitaxel, for the treatment of mastocytoma in dogs.
Oasmia has completed two Phase III trials on Paccal Vet evaluating the safety and efficacy of the drug in dogs diagnosed with mastocytoma.
OAS–07MC – Phase IIIa trial
In the Phase IIIa trial 17 dogs were
The trial was an uncontrolled safety and efficacy study comprising 29 dogs, of which 17
completely evaluated
were correctly treated with three cycles of treatment (one cycle is one injection every three weeks) and completed the follow-up period of six months. The study involved 20 different breeds of dogs with an average age of eight years:
• Mixed breed – 17% • Boxer – 14% • Golden Retriever – 7% • Labrador Retriever – 7%
Data indicated a positive response
Of the dogs that completed the treatment, 6% had a complete response (CR), 33% had a partial response (PR) and 56% had stable disease (SD). Together they accounted for 95% of the dogs that completed the study. After the six-month follow-up period, 15 of the 17 dogs were still alive. Based on the positive data, Oasmia decided to take Paccal Vet to a large, pivotal trial.
OAS-07-MCT-INT – Phase III trial
The pivotal Phase III trial was a head-to-
The pivotal Phase III trial was a safety and efficacy comparative study of Paccal Vet head-
head trial of Paccal Vet vs. CeeNU
to-head with CeeNU (lomustine marketed by BMS). CeeNU is a chemotherapy registered for cancer treatment in humans (a second-line treatment in combination with other chemotherapies in brain tumours), but which has also been used, although not approved, off label to treat mastocytoma in dogs. Although no large trial has been conducted with CeeNU in dogs, some data has demonstrated a positive effect on mastocytoma. The drug is, however, associated with liver toxicity, which limits its use (liver toxicity has not been observed with Paccal Vet). CeeNU was used as the reference drug in the trial because it has the same treatment schedule as Paccal Vet, which was necessary in designing a controlled pivotal study.
The trial involved 252 dogs, of which 249 received at least one cycle of treatment – 168 dogs received Paccal Vet and 81 CeeNU. The study involved 49 different breeds with an average age of eight and a half years:
• Mixed breed –24% • Labrador Retriever – 19% • Boxer – 10% • Golden Retriever – 9%
Large drop-out in the trial
There was a high drop-out rate in the trial. Only 76 dogs completed all four treatment cycles and attended the follow-up assessment 35 days after the last treatment. Though large drop-outs are normal in veterinary studies, in this study the rate was exceptionally high as the regulatory authorities required that dogs be excluded from the trial if the size of their tumour increased more than 20%. This was unfortunate as it was observed that
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many tumours increased in size initially, as a response to the chemotherapy, before they started to progressively shrink. This occurred in both treatments, however more commonly in dogs given CeeNU. Of the 76 dogs that completed all four treatment cycles, 60 received Paccal Vet and 16 CeeNU.
Data shows significantly higher efficacy of
Of those dogs that completed the treatment, there was significantly (p=0.045) higher
efficacy in treatment with Paccal Vet vs. CeeNU. In the Paccal Vet arm, 26% of the dogs were classified as CR, PR or SD vs. 10% for CeeNU.
More severe adverse events in the CeeNU
The number of overall adverse events was similar in the Paccal Vet and CeeNU groups,
however the number of severe events was higher for the CeeNU treatment group than the Paccal Vet group. The number of severe events at VCOG grades 3, 4 and 5 in the CeeNU arm were 78%, 72% and 84% respectively, and in the Paccal Vet arm 66%, 62% and 71%. In terms of adverse events, the most remarkable difference between the groups was related to liver toxicity – in the Paccal Vet arm 19% suffered liver toxicity compared with as many as 49% in the CeeNU arm.
The main side effect in the Paccal Vet arm
The main side effects seen in the Paccal Vet arm was neutropenia (low white blood cell
was neutropenia, however this is
count increasing the risk of infections) – 82% in the Paccal Vet group vs. 93% in the
commonly seen with chemotherapeutic
CeeNU group. Yet neutropenia is always observed in association with chemotherapy – it is
actually seen as proof that the treatment is efficient. However, the bone marrow suppression (causing neutropenia) was observed earlier in the treatment cycle with Paccal Vet than CeeNU – day four vs. day seven, respectively. The earlier occurrence of bone marrow suppression was initially a concern for several veterinaries, however as it did not result in increased frequency of neutropenia or other haematological or lymphatic system issues, it is no longer viewed as a concern for Paccal Vet.
The chief concern among veterinaries
Some veterinaries have expressed concern about Paccal Vet and the frequency of vomiting
related to increased frequency of diarrhoea
and diarrhoea. In the Paccal Vet arm of the study, 79% of dogs suffered vomiting vs. 51%
in the CeeNU arm, and 65% in the Paccal Vet arm suffered diarrhoea vs. 44% in the CeeNU arm. Some veterinaries considered the increased frequency of vomiting and diarrhoea a severe problem and dropped out of the study. Tolerance of these side effects was rather low, particularly among European veterinaries. For American veterinaries, tolerance of vomiting and diarrhoea seemed to be higher; they seemed to more commonly treat the dogs with drugs to prevent diarrhoea and vomiting.
Mastocytoma and the need for new treatments
Mastocytoma is the most frequent cancer
Mastocytoma is the most frequent cancer indication in dogs. Skin cancer represents
indication in dogs
around 50% of all canine cancers. Mastocytoma Stages II–III, for which Paccal Vet is seeking approval, represents about 20% of all skin cancer cases. Mastocytoma is known amongst veterinary oncologists as ‘the great pretenders' because appearance can vary from a wart-like nodule to a soft subcutaneous lump to an ulcerated skin mass. The disease is graded according to the differentiation of the mast cells, the mitotic activity, location within the skin, invasiveness, and the presence of inflammation and necrosis.
• Grade I: well-differentiated, mature cells with low potential for metastasis
• Grade II: intermediately differentiated cells with potential for local invasion and
moderate metastatic behaviour
• Grade III: undifferentiated, immature cells with high potential for metastasis
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Tumours of Grades II–IV have a poor
Mast cell tumours that are Grades I or II and can be completely removed have a good
prognosis. A study showed that about 23% of incompletely removed Grade II tumours recurred locally. Any mastocytoma found in the gastrointestinal tract, paw, or on the muzzle has a guarded prognosis. Tumours that have spread to the lymph nodes or other parts of the body have a poor prognosis. Any dog showing symptoms of mastocytosis or with a Grade III tumour has a poor prognosis.
The disease is also staged. It is estimated that approximately 60% of cases develop into an advanced stage with high risk of metastasis (spread of the tumour).
• Stage I: a single skin tumour with no spread to lymph nodes
• Stage II: a single skin tumour with spread to lymph nodes in the surrounding area
• Stage III: multiple skin tumours or a large tumour invading deep into the skin with or
without lymph node involvement
• Stage IV: a tumour with metastasis to the spleen, liver, bone marrow, or with the
presence of mast cells in the blood
Surgery if possible is the treatment of
There are no general clinical guidelines of how to manage the disease, however there are a
choice. Often a combination of various
few different treatment alternatives that may be used as monotherapy or in various
treatments is required
combinations. Removal of the mast cell tumour through surgery is the treatment of choice. Antihistamines (such as diphenhydramine) are given prior to surgery to protect against the effects of histamine released from the tumour. If complete removal is not possible due to the size or location of the tumour, additional treatment such as chemotherapy or radiotherapy may be necessary. Moreover, prednisone is often used to shrink the remaining tumour portion. The most commonly used chemotherapy agents are: 1) Vinblastine; 2) CeeNU (lomustine); and 3) TK inhibitors.
Masivet and Palladia are the only approved
There are currently two chemotherapy agents approved for treatment of mastocytoma in
chemotherapy agents for mastocytoma.
dogs – Masivet (AB Science), which was approved in the EU in November 2008, and
However, they are only efficient in TK-
Palladia (Pfizer Animal Health), which was approved in the US in June 2009. The main
mutated tumours – 33% of all
disadvantage with Masivet and Palladia is that they are tyrosine kinase inhibitors (TKI) and thus primarily work on tumours that have upregulated tyrosine kinase (TK). Clinical trials have shown that TKI-based drugs have significantly lower efficacy on tumours that do not carry the mutation – Masivet and Palladia are therefore recommended only in cases where the TK mutation is carried. Only approximately 30% of dogs with mastocytoma carry this mutation.
Neither Masivet nor Palladia has shown
Furthermore, data from the clinical trials on Masivet and Palladia is not strikingly
improved efficacy compared with standard
convincing; both trials were conducted against a placebo, hence neither Palladia nor
Masivet has shown improved efficacy over standard treatment of dogs with mastocytoma. In the trial on Masivet, no response improvement was detected compared with a placebo, but a beneficial time-to-tumour progression (TTP) was observed – a median of 241 days with Masivet vs. 83 days with a placebo. Phase III data on Palladia showed a positive response against the placebo; the ORR (overall response rate) in dogs treated with Palladia (n=86) was 37.2% (seven complete responses, 25 partial responses) vs. 7.9% (five partial responses) in dogs given the placebo (n=63; p=0.0004).
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Paccal Vet can be used in all cases of
Paccal Vet, which is based on the chemotherapeutic drug paclitaxel, has the advantage of
mastocytoma and has shown efficacy over
being efficient in all mastocytoma cases and can therefore be used on all dogs suffering
from mastocytoma. If Paccal Vet is approved it will be the first drug for this indication,
reaching the market based on substantial clinical trials. The Paccal Vet trial is the largest controlled head-to-head trial (Paccal Vet vs. CeeNU) on mastocytoma that has ever been conducted. The trials on both Masivet and Palladia compared the drugs against a placebo; compared with this, the results from Paccal Vet's pivotal head-to-head trial will provide more reliable clinical information.
There is 85% probability that the drug will
We have assumed an 85% probability that Paccal Vet reaches the market in H2(11). We
reach the market. The main concern
believe the main risk is associated to the uptake of the drug and we wish to highlight our
relates to the side effect profile that may
concern related to the increased frequency of vomiting and diarrhoea; this may hamper the
hamper market uptake
uptake of the drug particularly in the European market. We have pencilled in peak revenues for Paccal Vet of SEK900m in 2023 for Oasmia.
We expect Phase III to start around YE(10)
Doxophos Vet is a novel formulation of the well-known chemotherapeutic substance doxorubicin. Oasmia has completed a pre-clinical evaluation and a small safety/pharmacokinetic study of the drug; the aim is to start a Phase I/II trial in November 2010. If positive, we expect the project to enter Phase III clinical trials around YE(10). As much clinical information on the XR-17 substance can be used from the large Paccal Vet Phase III trial, Oasmia plans to conduct a rather limited, placebo-controlled trial on Doxophos comprising 150 dogs, to be completed around YE(11). If successfully developed, the drug could reach the EU and US markets in H1(13). As the project is still at a very early stage, we have not included any sales estimates for it.
A small Phase I trial indicated a positive
On 30 August, Oasmia presented data from a small study investigating the safety and
safety and pharmacokinetic profile
pharmacokinetics of Doxophos Vet. Data showed that the suggested doses were very well tolerated and the pharmacokinetic data demonstrated a rapid distribution and no accumulation of the active substance. The dogs in the study were treated with Doxophos Vet in four different doses, ranging from 25mg/m2 to 40mg/m2. The treatment was repeated with a three week gap until a maximum of five treatments per dog had been performed. Clinical observations and chemical blood analyses were made continuously throughout the study. The maximum tolerated dose was established as 35mg/m2 every three weeks for five cycles and the kinetic data showed a rapid distribution with no accumulation of the active substance. This dose is higher than that normally used for doxorubicin treatment in dogs. The side effects observed were expected and temporary. Above all, no injuries to the heart related to Doxophos Vet were observed, and these were the most serious side effects in treatment with conventional doxorubicin.
Lymphoma accounts for 10–20% of all
Lymphoma is one of the most common cancers seen in dogs, accounting for 10–20% of
cancer cases in canines
all cancers in canines. Lymphoma (lymphosarcoma or non-Hodgkin's lymphoma) is a malignant cancer that involves the lymphoid system. In a healthy animal, the lymphoid system is an important part of the body's immune system defence against infectious agents such as viruses and bacteria. Lymphoid tissue normally is found in many different parts of the body including the lymph nodes, liver, spleen, gastrointestinal tract and skin.
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Chemotherapy is the main treatment for
Chemotherapy is the most commonly used therapy against lymphoma, however the
treatment protocol will vary depending on the veterinarian and financial resources of the dog's owners. The most commonly used treatments are:
• Multi-drug protocol: Treatment consists of the use of several chemotherapy drugs –
prednisone, L-asparaginase (Elspar), vincristine, cyclophosphamide (Cytoxan) and doxorubicin (Adriamycin). Weekly chemotherapy treatments are given for approximately eight weeks. The treatments are then spaced every two weeks to complete a total of six months of treatment. The average survival time for patients with advanced staged (IIIa or IVa) lymphoma treated with this protocol is one and a half years.
• Doxorubicin alone: The patient has a total of five treatments of doxorubicin at three-
week intervals. The average survival time with this approach is 10–11 months.
• COP: This protocol involves a combination of cyclophosphamide in tablet form,
vincristine and prednisone. Four intravenous injections of vincristine are given weekly, followed by injections at three-week intervals to complete six months of treatment. Cyclophosphamide is given over four days every three weeks (four days on; 17 days off). Prednisone is given daily for six months. The average survival time with this protocol is reported as 8–10 months.
• Prednisone alone: This medication is a steroid and can be given in pill form daily at
home. The average survival time for patients with lymphoma treated with prednisone only is 60 days.
Doxorubicin is associated with severe
Doxorubicin is known to be highly efficient and is therefore commonly used for treatment
cardiovascular side effects that limit its use
of a number of various cancer indications including lymphoma, but also for sarcoma (connective tissue cell cancer) and carcinoma (epithelial cell cancer) within veterinary medicine. The therapeutic window of the drug is relatively narrow however, and the drug is associated with severe side effects that limit its use. The most serious side effect is the increased risk of lethal cardiovascular adverse events.
Preclinical trials have shown higher
The cytotoxic effect of doxorubicin is dose proportional, i.e. the higher the dose
tolerance for Doxophos Vet than
administered, the higher the risk of cardiovascular side effects. Preclinical trials have
shown higher tolerance for Doxophos Vet than doxorubicin, thus Doxophos Vet can potentially be given in higher doses without causing side effects and therefore can provide better efficacy against the tumour. The improved tolerance is associated with Oasmia's delivery substance XR-17, which encapsulates the active substance enabling controlled release of the drug and concentration of the substance in the tumour tissue.
We expect clinical trials to start in 2011/12
Carbomexx Vet is a formulation consisting of a novel, active pharmaceutical ingredient (API) combined with the XR-17 technology. We expect Phase I/II clinical trials on the drug in a small patient population to start in 2011/12. If the outcome of the trials is positive, the aim is to conduct a larger clinical trial on dogs diagnosed with osteosarcoma in both the EU and the US. As the project is still at a very early stage, we have not factored in any sales for it.
Carbomexx Vet is a formulation consisting
The novel API is closely related to the alkylating agents carboplatin, cisplatin and
of a novel, active pharmaceutocla
oxaliplatin, which are all well used chemotherapeutic agents. Carboplatin and cisplatin are
ingredient combined with the XR-17
used to treat osteosarcoma (skeletal cancer); carboplatin is also used in severe cases of other cancer indications, including bladder cancer and invasive adenocarcinoma (cancer growing in a gland that has started to invade the surrounding, healthy tissue or has the tendency to do so).
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Carbomexx Vet aims at a therapeutic
The main drawback with Cisplatin is that it can potentially cause fatal liver toxicity and
alternative with high potency and a good
must be administered in conjunction with diuresis (fluid treatment of the kidneys).
Carboplatin is associated with fewer side effects than cisplatin, however it has a lower efficacy. The aim of Carbomexx Vet is to develop a therapeutic alternative with high potency and a good safety profile.
Osteosarcoma is by far the most common
Osteosarcoma is by far the most common bone tumour in dogs. Tumorous bone is not as
bone tumour in dogs
strong as normal bone and can break with minor injury. This type of broken bone is called a pathologic fracture and may be the finding that confirms the diagnosis of a bone tumour. Pathologic fractures will not heal and neither casts nor surgical stabilisation are effective treatments.
The median survival time without
Dogs with osteosarcoma often suffer sever pain; treating the pain successfully will
chemotherapy is four to five months
therefore enable the dog to live comfortably. However, as osteosarcomas are fast spreading tumours, the median survival time for dogs who do not receive chemotherapeutic treatment is only four to five months. By the time the tumour is found in the limb, it is considered to have already spread. Osteosarcoma often spreads to the lungs.
Chemotherapy is the only meaningful way to alter the course of this cancer. Several various chemotherapy agents are used:
Cisplatin (given every three to four weeks for three treatments)
• The median survival time with this therapy is 400 days. • Survival at one year: 30% to 60% • Survival at two years: 7% to 21% • Less than three doses does not increase survival time (i.e. if only one or two treatments
can be afforded, it is not worth the expense of therapy)
• Cisplatin can be toxic to the kidneys and should not be used in animals with pre-
existing kidney disease
Carboplatin (given every three to four weeks for four treatments)
• Similar statistics to cisplatin, but carboplatin is not toxic to the kidneys and can be used
if the patient has pre-existing kidney disease
• Carboplatin is substantially more expensive than cisplatin
Doxorubicin (given every two weeks for five treatments)
• The median survival time is 365 days. • 10% still alive at two years. • Toxic to the heart. An ultrasound examination is needed prior to using this
doxorubicin as it should not be given to patients with reduced heart contracting ability
Doxorubicin and Cisplatin in Combination (both given together every three weeks for
four treatments)
• 48% survival at one year • 30% survival at two years • 16% survival at three years.
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Human medicine pipeline & upcoming newsflow
Next event
Registration submission EU
Registration submission US
Start of Phase III
Malignant melanoma
Start of Phase III
Start of Phase I/II
Start of Phase I/II
Combination therapy
Start of Phase I/II
Source: Carnegie Research
We estimate registration submission to the
Paclical is a novel formulation of the well-known chemotherapeutic substance paclitaxel.
EMA in H2(11) and FDA in H2(12)
Paclical is currently in a global Phase III clinical trial on its safety and efficacy in patients with ovarian cancer. We expect submission of the registration application to the EMA in H2(11) and to the FDA in H2(12). The estimated registration submission to the FDA is later than for the EMA because it is possible to file with the EMA as soon as the interim analysis is completed, whereas the whole study report must be completed for filing with the FDA. We have estimate a 60% probability that the drug will reach the market and have included peak sales for Paclical of USD150m in 2020.
Expected news flow - Paclical
Event
Patient enrolment completed
Last patient treated
Registration submission to EMA*
Registration submission to FDA
* Submission will be based on an interim study
Source: Carnegie Research
Orphan Drug Designation granted for
Paclical has been granted Orphan Drug Designation for ovarian cancer indication in both
ovarian cancer in both the EU and US
the EU and the US. Orphan drug status can be obtained for therapeutic products for rare diseases intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions. The status qualifies regulatory and financial incentives such as protocol assistance and marketing exclusivity (seven years in the US and 10 years in the EU).
Paclitaxel is a widely used human
Paclitaxel is a widely used human anticancer therapy – present in formulations such as
anticancer therapy
Taxol – and approved for a number of indications such as ovarian, breast and lung cancer. Paclitaxel is, however, highly lipophilic (insoluble in water), which is why Cremophor EL (polyxyethylated castor oil present in Taxol) is used to solubilise it. One of the main adverse reactions to Taxol is hypersensitivity reactions to Cremophor EL. In order to avoid such reactions, patient must receive pre-medication with a corticosteroid a day prior to the Taxol treatment.
Paclical may have an improved safety and
In Oasmia's formulation, paclitaxel has been made water soluble from the properties of
efficacy profile vs. paclitaxel
XR-17, which is (based on vitamin A) much less toxic than Cremophor EL. Hypersensitivity reactions are therefore expected to be much fewer and the drug can be administered during shorter infusion times – three hours with Taxol vs. one hour with Paclical. The larger therapeutic window may also enable use of a higher dose of Paclical, which would promote higher efficacy.
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Characteristics of Paclical and Taxol
Approved indications
Evaluated for ovarian cancer
Approved for lung, ovarian, breast, head&neck cancer and advanced cases of Kaposi's sarcoma
Source: Oasmia & Carnegie Research
Phase I/II study (Oas-0401-CA)
Data from the Phase I/II showed…
This Phase I/II trial was completed in May 2007. The trial was an open, one-armed, dose-escalating Phase I/II study aiming to define maximum tolerability and the pharmacokinetics of Paclical. A total of 34 patients with recurrent malignant solid tumours for whom previous treatments had failed were involved. The patients received a one hour infusion of Paclical – without pre-treatment – in three treatment cycles every 21 days. Patients were treated with escalating doses of 90–275mg/m2 of Paclical.
…no adverse events, no hypersensitivity
No adverse events were reported and the pharmacokinetic evaluation showed that Paclical
reactions and that the substance rapidly
rapidly disperses into the tissue. The elimination half-life, which to a large extent is
dependent on the clearance of the substance, varied from 4.8 to 23.1 hours. The clearance corresponds to the results of Taxol. The most striking results from the Phase I/II trial was the improved safety profile – no hypersensitivity reactions related to the treatment were observed in the trial.
Pivotal head-to-head Phase III trial on Paclical versus Taxol (OAS-07-OVA)
The ongoing Phase III study is a head-to-
This is an open, randomised, multicenter study in patients with recurrent epithelial ovarian
head trial between Paclical and Taxol
cancer, primary peritoneal cancer or fallopian tube cancer. The study will be conducted for at least 12 months, or until 80% of the patients included have experienced a relapse. Hence, better efficacy, the longer the trial. The aim of the trial is to evaluate the safety and efficacy of Paclical vs. Taxol.
The estimated primary completion date is
The study will involve 650 patients at approximately 80 European sites from 16 different
countries. The first patient started in the trial in February 2009; the last patient is expected to be included in December 2010. The estimated primary completion date is March 2011 (interim analysis).The study completion date will be May 2011. The study design is very similar to that used for Abraxane – a novel formulation of paclitaxel approved for breast cancer.
The patients included in the Paclical trial are randomised in the two following arms.
Arm A: Paclical (250mg/m2) followed by carboplatin with a dose of AUC=5–6 for six cycles with a three week interval between cycles.
Arm B: Taxol (175mg/m2) followed by carboplatin as administered in Arm A.
Patients in the Taxol arm will receive pre-medication as specified by the national SPC. No pre-medication is needed for patients receiving Paclical.
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Primary outcome measures:
• Progression-free survival (PFS); time frame: end of the study • Incidence and severity of hypersensitivity reactions
Secondary outcome measures:
• Nadir and time to nadir of CA 125 during and after treatment • T½ of CA 125 • Safety and tolerability • Response rate using CA 125
Need for improved paclitaxel formulations
Paclitaxel formulations such as Taxol have
Paclitaxel is a highly effective chemotherapeutic agent and one of the most commonly
several drawbacks due to the presence of
used treatments for several cancer indications including ovarian, breast and non-small cell
the toxic solvent agent Cremophor EL
lung cancer (NSCLC). However, paclitaxel formulations such as Taxol have several drawbacks due to the presence of the toxic solvent agent Cremophor EL; pre-medication is needed in order to avoid hypersensitivity reactions and long (three hour) infusions are required.
Paclical may be a treatment option where
Paclical may be a treatment option where the toxic solvent can be avoided, thus
the toxic solvent can be avoided
eliminating the need for pre-medication and significantly shortening administration time from three hours to one hour. This is beneficial in terms of compliance and cost efficiency. Moreover and most importantly, Paclical may offer a therapeutic option where hypersensitivity reactions are almost completely avoided.
The main treatments for ovarian cancer
Oasmia aims to develop Paclical primarily as a treatment for ovarian cancer. Ovarian
are surgery and chemotherapy
cancer is managed with surgery, which may be sufficient if the tumour is well-defined and confined to the ovary, and chemotherapy. The addition of chemotherapy may be required for more aggressive tumours that are confined to the ovary. For patients with advanced stages of the disease, a combination of surgical reduction with a chemotherapy regimen is standard. The following chemotherapy agents are the most commonly used first-line treatments for ovarian cancer:
• Platinol (cisplatin) • Paraplatin (carboplatin) • Taxol (paclitaxel) • Alkeran (melphalan) • Adriamycin, Rubex (doxorubicin)
For second-line treatment, the following chemotherapy agents are approved:
• Adriamycin, Rubex (doxorubicin) • Doxil (doxorubicin HCl liposome injection) • Hexalen (altretamine) • Hycamtin (topotecan hydrochloride) • Iflex (Ifosfamide) • VePesid (etoposide) • 5-FU (5-fluorouracil)
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Abraxane is the first and currently the only
Paclical, if approved, will not be the first nanoparticle formulation of paclitaxel to reach
nanoparticle formulation of paclitaxel.
the market. In 2005, Abraxane (Abraxis Bioscience) was approved by the FDA as a treatment for breast cancer in relapse cases or in patients not responding to other chemotherapies. In the EU, the product was approved in 2008. Abraxane uses albumin, a human protein, to deliver the chemotherapy. Like Paclical, it does not contain chemical solvents such as Cremophor; hence pre-medication is not required and hypersensitivity reactions to the solvent are avoided. The infusion time is also significantly shortened to 30 minutes.
Abraxane has shown beneficial efficacy
The approval of Abraxane was based on Phase III data showing a superior efficacy profile
against Taxol for breast cancer
of Abraxane versus Taxol on the indication second-line breast cancer. The median time to progression using Abraxane was 23 months vs. 16.9 months for Taxol. The median survival time using Abraxane was 65 months vs. 55.7 months for Taxol. Grade 4 neutropenia occurred in only 9% of patients treated with Abraxane, compared with 22% treated with Taxol. Grade 3 sensory neuropathy was higher in the Abraxane arm (10%), than in the Taxol arm (2%), with no episodes of Grade 4 neuropathy. However, the neuropathy was reversible, resolving in a median of 22 days in the group treated with Abraxane.
In 2009 Abraxane reached global sales of
Abraxane has been a tremendous success; the product has taken a substantial part of the
USD315m, of which 30–40% is estimated
paclitaxel market and in 2009 it reached global sales of USD315m. As the positive
to be related to off-label use
characteristics of Abraxane as compared with other paclitaxel substances has been well recognised by physicians, the product is being used for several different cancer indications – except for second-line treatment for breast cancer, for which paclitaxel treatment is being used. It is estimated that approximately 20–30% of Abraxane's total sales are due to off-label use.
Abraxane is also being evaluated for other
To support the use of Abraxane in cancer indications other than breast cancer, Abraxis
cancer indications, which would support
Bioscience has initiated several clinical trials for indications such as NSCLC (non-small cell
use of the drug if approved
lung cancer), head and neck cancer, metastatic melanoma and treatment-refractory bladder cancer. It reported the Phase III data from the NSCLC trial at the ASCO meeting in June 2010. In the trial Abraxane was evaluated as a first-line treatment for NSCLC vs. Taxol. Patients in the Abraxane arm demonstrated an ORR (overall response rate) of 33% compared with an ORR of 25%.for those receiving Taxol. This difference has statistical significance. If approved for these additional indications, it would not only support the use of the drug but also permit Celgene to promote the drug for these indications (as of the time of writing the company is only allowed to promote the drug for breast cancer, as this is the only indication Abraxane is approved for).
Oasmia aims to start Phase III trials in
In addition to the ovarian cancer indication, Oasmia aims to start Phase III trials on
2011/12 for lung cancer and malignant
malignant melanoma and NSCLC – we expect these trials to start in 2011/12. As this
process is still at an early stage, we have not factored in any sales related to these indications at this point. However, we do believe that if Paclical receives a marketing authorisation for ovarian cancer, it is most likely that the product will also be used off label for other cancer indications for which paclitaxel is approved – thus competing with Abraxane. Obviously additional clinical studies will not be in vain. They will strengthen the case and the clinical credibility of the drug and permit marketing of the drug for other cancer indications.
We assume a 60% probability that Paclical
We assume a 60% probability that Paclical reaches the market. We believe the drug will be
reaches the market and peak sales of
approved as a treatment for ovarian cancer if an improved safety and efficacy profile vs.
USD150m in 2020.
Taxol can be monitored in the ongoing, pivotal Phase III trials. Most likely, non-inferiority in combination with a favourable safety profile to Taxol could be enough for the regulatory authorities to grant Paclical marketing authorisation (as communicated by the EMA). However, for a successful launch and for Paclical to become a strong competitor
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to Abraxane, we think it is crucial that Paclical shows a superior efficacy profile. One of the major risks to the project is that that Oasmia is a small company with limited resources and experience in setting up human clinical trials. As the Paclical project is one of the two crucial projects for Oasmia, success of the project is important to the future of the company. We have included a 60% probability that the drug reaches the market in H2(12) in the EU and in H2(13) in the US and have pencilled in peak sales of USD150m in 2020.
We expect Phase I/II trials to start in
Doxophos is a novel formulation of doxorubicin (trade name Adriamycin or Rubex) – one
2011/12 for treatment of breast cancer
of the most effective and commonly used active substances in the treatment of cancer. Oasmia aims to conduct clinical trials on Doxophos, and we expect the company to start Phase I/II trials on patients diagnosed with breast cancer in 2011 or in 2012. As the project is at a very early stage and has not yet entered clinical development, we have not included it in our estimates.
The main drawback of doxorubicin is that
Doxorubicin is used as a treatment in a wide range of cancer indications including breast,
it has a relatively narrow therapeutic
thyroid, bladder cancer and acute leukaemia. Its main drawback is, however, that it has a
window that limits its use
relatively narrow therapeutic window that limits its use. Exceeding the therapeutic threshold may cause life threatening side effects of which chronic heart failure is the most severe. In Doxophos, doxorubicin has been encapsulated in nanoparticles resulting in a slow release and concentration of the active substance in tumour tissue. The goal is to optimise the therapeutic potential and broaden the use of doxorubicin within cancer treatment.
There are two liposomal formulations available on the market, Doxil and Myocet.
Doxil is a pegylated liposome-capsulated
Doxil is a pegylated liposome-capsulated form of doxorubicin (made by Ben Venue
form of doxorubicin; it is associated with
Laboratories for Johnson & Johnson in the US. Outside the US Doxil is known as Caelyx
severe skin side effects
and is marketed by Schering-Plough). Doxil has been approved in the US and EU for the treatment of ovarian cancer. Although the pegylated coating results in preferential concentration in the skin, it also results in a side effect called palmar plantar erythrodysesthesia (PPE), more commonly known as hand-foot syndrome. Following administration of Doxil, small amounts of the drug can leak from capillaries in the palms of the hands and soles of the feet. The result of this leakage is redness, tenderness, and peeling of the skin that can be uncomfortable and even painful. Approximately 50% of patients treated with Doxil developed hand-foot syndrome. The prevalence of this side effect limits the Doxil dose that can be given compared with doxorubicin in the same treatment regimen, thereby limiting potential substitution.
Despite significant side effects, the drug has gained tremendous success with annual sales of more than USD100m, of which a substantial part is most likely related to off-label use for cancer indications other than ovarian cancer. Doxil's orphan drug status in the US expired in 2007 (Johnson & Johnson stopped marketing it in the US in mid-2009) and it will expire in early 2011 in the EU.
Myocet is a non-pegylated liposomal
Myocet is a non-pegylated liposomal doxorubicin (made by Enzon Pharmaceuticals for
Cephalon in Europe and for Sopherion Therapeutics in the United States and Canada). Myocet has been approved in the EU and Canada for the treatment of metastatic breast cancer in combination with cyclophosphamide. The drug is, however, yet to be approved by the FDA for use in the US. It is currently being studied in a Phase III global trial in combination with Herceptin (trastuzumab) and Taxol (paclitaxel) for treatment of HER2-positive metastatic breast cancer.
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…for which Phase III data is expected in
Unlike Doxil, the Myocet liposome does not have a polyethylene glycol coating and
therefore does not result in the same prevalence of hand-foot syndrome. The minimisation of this side effect may allow for one to one substitution with doxorubicin in the same treatment regimen, thereby improving safety with no loss of efficacy. Like Doxil, the liposomal encapsulation of the doxorubicin limits cardiotoxicity. In theory, by limiting the cardiotoxicity of doxorubicin through liposomal encapsulation, it can be used safely in concurrent combination with other cardiotoxic chemotherapy drugs, such as Herceptin. There is an FDA black box warning that Herceptin cannot be used in concurrent combination with doxorubicin, only in sequential combination. Though concurrent combination of Herceptin and doxorubicin in clinical studies found superior tumour response, the combination resulted in unacceptable cardiotoxicity, including risk of cardiac failure. Published Phase II study results have shown that Myocet, Herceptin, and Taxol can safely be used concurrently without the cardiac risk. Patient enrolment was completed in March 2009 and data is expected to become available during H2(10).
Doxophos may have a beneficial delivery
Oasmia aims to develop a novel formulation of doxorubicin that has a beneficial delivery and
and an optimal concentration resulting in
an optimal concentration resulting in minimised adverse events. A higher dose of the drug
minimised adverse events
could therefore be administered, hence improving efficacy of the treatment. It is still too soon to compare Myocet to Doxophos as we do not have any clinical data on latter. However, this market is huge and there is great unmet need for improved chemotherapeutic agents that can be combined with Herceptin and other commonly used breast cancer drugs.
We expect Phase I/II trials to start in
Docecal is a new formulation of the taxane docetaxel (trade name Taxotere). Docetaxel is
2011/12 in patients with prostate cancer
a commonly used chemotherapeutic treatment approved for a number of cancer indications, though mainly used for breast, ovarian and non-small cell lung cancer. Oasmia aims to conduct clinical trials evaluating its novel formulation of docetaxel on patients diagnosed with prostate cancer; we expect Phase I/II trials to start in 2011 or 2012. As the project is at a very early stage and has not yet entered clinical development, we have not included it in our estimates.
Docetaxel is marketed under the name
Docetaxel is marketed worldwide under the name Taxotere by Sanofi-Aventis. It has
Taxotere and has annual sales of USD2bn.
annual sales of approximately USD2bn. Its patent expires in November 2010 where after
It is associated with hypersensitivity
we expect generic copies to enter the market. Docetaxel belongs to the chemotherapy
drug class of taxanes, and is a semi-synthetic analogue of paclitaxel (Taxol). Due to the scarcity of paclitaxel, extensive research was carried out leading to the formulation of docetaxel. Although Taxotere has an improved solubility and bioavailability than Taxol, Taxotere has still been associated with hypersensitivity reactions (which is included in the black box warning) – which is why patients must receive pre-medication with a corticosteroid a day prior to the Taxotere infusion.
The objective is to develop a substance
The objective with Docecal is to develop a docetaxol version with improved delivery
with improved delivery and therefore
characteristics over docetaxel, minimising hypersensitivity reactions so that pre-medication
minimise hypersensitivity reactions
can be avoided. This medication would be both more cost-efficient and have an improved compliance profile than docetaxel.
Carbomexx is a formulation based on the
Carbomexx is a formulation based on the novel active pharmaceutical ingredient (API) in
novel active pharmaceutical ingredient
combination with XR-17. This novel API is closely related to the alkylating agents,
(API) in combination with XR-17
carboplatin, cisplatin and oxaliplatin, which are very important cytotoxic compounds. With Carbomexx, the goal is to explore the advantages of XR-17 further and provide new therapeutic options to patients. Oasmia aims to conduct clinical trials on its novel formulation of docetaxel in various combination therapies. The exact strategy has not yet been outlined, though we expect the first clinical trial to start in 2011 or 2012. As the project is at a very early stage and has not yet entered clinical development, we have not included it in our estimates.
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Partners
Three partner agreements signed for
Oasmia has signed three partner agreements for Paccal Vet in the US, Europe and Japan.
Paccal Vet, but Oasmia waiting to sign for
For Paclical it has signed one agreement for the Nordic region and we expect it to enter
agreements for the US and Europe within the next 12 months. Interest in the Paclical project should have increased after Celgene acquired Abraxis Bioscience, which markets Abraxane, a similar product to Paclical, this summer.
Paccal Vet North America
Abbott Laboratories' animal division will
In July 2009 Oasmia signed an agreement with Abbott Laboratories for exclusive
sell Paccal Vet in North America
marketing rights in the North American market. The agreement covers an initial contract term of 15 years from the date on which Oasmia obtains marketing licences or until the expiry of all of the company's patent rights, whichever occurs later. Under the agreement, Abbott will buy the product from Oasmia for delivery at a predefined price. We estimate that Oasmia's COGS will be 12% of partner revenues. We estimate the royalty rate at 40%. The agreement contains provisions on five milestone payments of up to USD19m in total, of which Oasmia received USD5m when the deal was signed. Abbott has also undertaken to pay:
• Up to USD5m when final marketing approvals have been received in the US.
• Three payments of USD3m each, for a total of up to USD9m when annual net sales
reach certain levels
The second milestone payment is dependent on the data at which such marketing approval is received. If the product is approved after 1 November 2011, the payment will be reduced in stages and forfeited entirely after 1 November 2013. Abbott also has a right to repayment of USD2m if Oasmia fails to obtain marketing approval in accordance with the agreement by 1 May 2014. In that case, Abbott also has the right to terminate the agreement and automatically receive an exclusive and royalty-free licence and right to Oasmia's patents, attributable to Paccal Vet in the US and Canada.
Orion Corporation will sell Paccal Vet in
In 2008 an agreement was signed with the Finnish company Orion for the marketing
rights in Europe. The agreement contains a provision stating that the selling price may not be less than Oasmia's COGS (we estimate 12% of partner revenues) plus a certain percentage as well as undertakings from Orion to purchase certain minimum quantities of the product. We estimate the royalty rate at 40%. The agreement also contains provisions on milestone payments, of which Oasmia received EUR4m when the deal was signed. Orion has also undertaken to pay milestone payments of up to EUR6.25m in accordance with the following:
• EUR0.5m to Oasmia when marketing licences have been received in certain countries
defined as Region 1
• EUR1.5m when marketing licences have been received in certain countries defined as
• Up to EUR4.25m when Orion achieves certain levels of net sales
Oasmia may be forced to repay EUR0.5m and EUR1.5 million to Orion if it does not receive the marketing licences by 30 June 2011, and if Orion chooses to terminate the agreement on this basis.
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Marketing agreement with Nippon Zanyaky
In April 2010 a distribution agreement was signed with Nippon Zanyaku Kogyo Co. in
Kogyo signed earlier this year for Japan
Japan, which also gives Nippon Zenyaku Kogyo a right of first refusal for distribution of all future veterinary products introduced by Oasmia in Japan. The agreement covers an initial contract term of 10 years from the conclusion of the agreement or until the expiry of all of the company's patent rights, whichever occurs later. After that, the agreement will be extended by one year at a time unless terminated by either party.
Nippon Zenyaku Kogyo has also assumed responsibility for all necessary clinical development aimed at obtaining marketing approval. Under the agreement, Nippon Zenyaku Kogyo will purchase the product from Oasmia for delivery at a predefined price that may be adjusted annually subject to certain limitations. The agreement contains provisions on four milestone payments of up to EUR3.2m in total, of which Oasmia has already received EUR0.55 million when the deal was signed. Nippon Zenyaku Kogyo has also undertaken to pay:
• EUR0.7m to Oasmia upon receipt of marketing approval in Japan • Two payments of EUR1.0m each, in total up to EUR2m, when annual net sales
through Nippon Zenyaku Kogyo reaches certain levels
The only marketing agreement signed so
The only agreement Oasmia has signed so far on Paclical is with Orion for Nordic
far for Paclical is with Orion for the Nordic
marketing rights. The agreement was signed already in 2007 and includes milestone
payments of up to EUR4m, of which Oasmia has received EUR2m in downpayment. The remaining milestones will be paid as following:
• EUR1.5m upon submission of an application • EUR0.1m per country in the agreement upon approval of the application in each
country (for a total of EUR0.5m)
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Market potential
Veterinary indications
The market for canine cancer drugs is
There is limited data available on the cancer market for pets, but the common view among
expected to expand
both veterinarians and the industry is that the market will expand strongly thanks to several factors:
• Owner trends • Aging pet population • New improved treatment alternatives
20–25% of all dogs develop cancer during
There are about 75m dogs in the US, 45m in the EU (56m in the whole of Europe) and
13m in Japan. It is estimated that 20–25% of dogs will develop cancer during their lifetime. With an average lifespan of almost 13 years, that means around 1.5% of all of dogs get cancer each year. There is also a trend towards an ageing pet population thanks to improved medical care. The risk of getting cancer increases with age for dogs. About 50% of dogs over 10 years of age will die of cancer-related problems.
Large difference in dog population between
There is a large difference in the number of dogs per human population between
countries. In the US, where penetration is highest, there are about 24 dogs per 100 people. The figure is 14 in the UK, 11 in France, 10 in Japan, 8 in Sweden and 6 in Germany. The higher penetration of pets in the US compared with Europe is also evident by the US dominance of the companion animal drug market. In the US, the number of dogs has increased by 35%, from 55m in 1995 to around 75m in 2010. In Europe the number of dogs has been rather stable.
No of dogs (m)
Number of dogs with cancer
Number of dogs per person (%)
Source: Carnegie Research
Source: Carnegie Research
Increased spending on companion animals
Total pet industry expenditure in the US
There is an increased trend in human-animal bonding, with more owners viewing their
increased from USD17bn in 1994 to
pets as family members. This situation has led to significantly more spending on
companion animals. In the US, for example, total pet industry expenditure increased from USD17bn in 1994 to USD48bn in 2010, according to data from the American Pet Product Association. Of this, USD13bn (27%) is related to veterinarian services.
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Spending on pets in the US (USDbn)
Breakdown of US spenditures on pets
Live animal purhcases
Supplies/OTC Medicine
Source: APPA
Source: APPA
In Sweden, household spending on
In Sweden, household spending on veterinary services jumped from SEK400m in 1993 to
veterinary services has increased by 5x
SEK2bn in 2008. Due to the rising costs of veterinary services, the pet insurance premium
since the mid-1990s
in Sweden, for example, doubled between 2003 and 2008.
Costs for Veterinary procedures in Sweden (SEKm)
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Manimalis report 2004 & 2009
Companion animal drug market has doubled in past 10 years
The companion animal drug market has
The companion animal drug market has doubled in the past 10 years and is worth about
doubled in the past 10 years as owners
USD7bn globally. Of this about half is in the US, where the companion market now
spend more on their dogs
represents about 60% of the total US animal health market compared with only 30% in the early 1990s.
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Companion animal drugs market globally (USDbn)
Companion animal drugs market (USD7bn)
Source: AnimalPharm & Carnegie Research
Source: Animal Pharm
Products for cats and dogs represent the absolute majority of the companion animal health market. Excluding products for parasite control, other pharmaceuticals in this market sell for around USD2bn in the US and USD4bn globally. The market for companion animal drugs has been driven by a rising pet population, increased spending on pets, higher incidence due to the aging population of pets, improved diagnostics, and a greater focus on the promotion of key pharmaceutical brands.
Large difference in penetration for pet
Penetration for pet insurance differs between countries. In Sweden, about 80% of owners
insurance, but little correlation with
have insurance for their dogs. The comparable figures are 40% in the UK and Germany
chemotherapy treatment
and less than 10% in the US. However, this seems to have little effect on the number of dogs treated with expensive chemotherapy. According to discussions with veterinarians, it seems such treatment is most common in the US, where the proportion of insurance is very small. It is also worth noting that chemotherapy, for example, has not been covered by the largest pet insurance company in Sweden for a few years now.
Penetration for dog insurance
Source: Carnegie Research
Market for companion animal cancer products
Around 1.6m dogs in the US and EU have
The current market for companion animal cancer products is very difficult to estimate as it
cancer – we estimate around 10% are
is dominated by off-label use of human products. Around 1m dogs in the US and 600,000
treated with chemotherapy and other
in the EU have cancer. Chemotherapy could be a treatment alternative for 30–50% of
these dogs. There are no official statistics available, but based on our dialogue with veterinarians, we think that about 10% of dogs with cancer are treated with different kinds of cancer drugs – a figure that is likely to increase with new treatments developed for canines.
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The number of dogs treated for cancer is
There is a common view that more and more dogs are getting treated for cancer, but there
is no detailed data available. In a large survey conducted by Vetnosis in 2008, 59% of veterinarians in the US say they refer cancer cases to oncology specialists more often. In the UK that figure was 45%, in France 18% and Germany 41%. The number of veterinarians that prescribe chemotherapeutic drugs was 69% in the US, 97% in the UK, 82% in France and 35% in Germany.
Number of vets referring cancer cases to oncologist
Trend in referring cancer cases
Source: Vetnosis
Source: Vetnosis
Drug safety and a lack of validated drugs approved for use by dogs were among the main reasons mentioned for not prescribing chemotherapy drugs.
Key product factors limiting chemotherapy use
Drug safety
Drug cost
Lack of validated chemotherapy drugs
Lack of veterinary licensed chemotherapy drugs
Low willingness of pet owners to treat their petsUser safety concerns for owners and/or clinic staffLimited recognition of cancer in the early stages of diseaseInsufficient knowledge of cancer management/therapeutics
Source: Carnegie research
About 200,000 dogs suffer from
Skin cancer represents around 50% of all canine cancers. Mastocytoma in Stages II–III for
mastocytoma in Stages II–III every year in
which Paccal Vet is seeking approval represent about 20% of skin cancer cases. This
the US, EU and Japan…
means about 100,000 dogs in the US, 85,000 in Europe and 20,000 in Japan suffer from mastocytoma in Stages II–III every year.
…But the potential market for Paccal Vet
In addition, Paccal is likely to be used to a large extent off label, for tumours such as
lymphomas, soft tissue sarcomas, malignant melanomas, mammary tumours, etc. According to Oasmia's calculations, the total number of dogs that could theoretically be suitable for Paccal treatment amounts to 465,000 dogs in the US, 350,000 in Europe and 85,000 in Japan.
Paccal Vet market potential (No of dogs)
Europe Japan
Total dog population
Number of dogs diagnosed with cancer per year
Of which Mastocytomas Grade II&III*
Total Paccal Vet treatable cancers**
*Indication Paccal Vet is seeking approval for**According to Oasmia calculation (including other tumours in addition to skin cancer)
Source: Oasmia
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Paccal Vet market potential
160,000 dogs treated by cancer drugs – a
As Paccal Vet is likely to be used for a broad range of tumours, it means the total market
figure likely to increase with new improved
potential based on our estimate for the current treatment trend (i.e. about 10% of dogs
with cancer treated with chemotherapy or other similar drugs) should be around 100,000 dogs in the US and 60,000 in EU. Paccal Vet will not, of course, take 100% of the chemotherapy market for dogs, but on the other hand the proportion of dogs with cancer that will be treated with chemotherapy is expected to increase as new, improved products tested and approved especially for dogs reach the market.
Including Paccal Vet, there are three new
In addition to Paccal Vet that has been filed for approval in the US and Europe, there are
cancer drugs for dogs
two other drugs that have recently been approved for canine (dog) cancer treatment. In 2009 Palladia was approved in the US and the EU for mast cell tumours in dogs. The drug is marketed by Pfizer animal health. A similar compound called Masivet was also approved in Europe in 2009. Masivet is marketed by the French company AB Science. The product has been filed in the US under the brand name Kinavet. See page 11 for more on these two drugs.
It is very difficult to estimate the market
Due to the lack of market data, it is very difficult to estimate the market potential for
potential due to the lack of data – our base
Paccal Vet. In our base-case scenario, we have assumed the drug will be used by 35,000
scenario assumes 35,000 dogs will be
dogs in the US and 20,000 dogs in Europe six years after its launch, and then peak at
treated with Paccal in the US and 20,000 in
Europe six years after the drug's launch
50,000 dogs in the US and 30,000 dogs in Europe in 2023 before the patent expires. If our assumption that 10% of canine (dog) cancer cases will receive chemotherapy is correct, our estimates would indicate around 30% of dogs treated with chemotherapy would receive Paccal Vet in 2016. Though this figure may look aggressive, as explained above the proportion of dogs with cancer that will get treated with drugs is expected to increase. Further, Paccal Vet is the only cancer drug that has so far been tested on a large dog population against an active control group (both Palladia and Masivet were tested against a placebo). It should also be said that our volume assumptions are much more conservative than what Oasmia and its partners forecast. With a treatment price of about USD3,500, our estimates indicate partner sales of USD200m in 2016, peaking at USD300m in 2023. With a royalty rate of 40%, our base scenario would generate revenues of SEK650m for Oasmia in 2016, increasing to SEK900m in 2023. With an 85% probability rate, our base case yields a value of SEK1,350m for this project, after adjusting for COGS of around 12% of partner sales, but before adjusting for related group operating costs and investments in production capacity. The value for the project would increase to SEK1.6bn with a probability rate of 100%.
Human indications Ovarian cancer
Ovarian cancer is a less common type of
The first human indication for which Paclical could be approved is ovarian cancer.
cancer, affecting 200,000 women globally
Ovarian cancer is a relatively less common type of cancer affecting 22,000 women in the
US and around 65,000 women in Europe each year. Globally, around 200,000 women are diagnosed with ovarian cancer each year. Paclical has orphan drug status in both the US and EU. Chemotherapy following surgery is the standard treatment for ovarian cancer, with taxanes the most common type of chemotherapy for the treatment of this cancer. The patent for Taxol (paclitaxel), which is the main treatment for ovarian cancer, has expired and the drug has several generic versions. It is estimated that 75% of all women with ovarian cancer receive paclitaxel/platinum combination as first-line treatment and that paclitaxel sells for about USD200m globally for this indication.
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Ovarian cancer (number of patients)
Source: Carnegie Research
Potential to expand into other areas for which taxanes are used
Potential to broaden use to more common
In addition to ovarian cancer, taxanes are used in the treatment of large indications such as
cancer types such as breast cancer and
breast cancer and NSCLC (Non Small Cell Lung Cancer).
NSCLC where taxanes are used
Incidence for cancer treatable with Taxanes (no of patients)
Source: Oasmia / Taxanes, Onco Study nr 8
Paclical needs to demonstrate superior effects or better safety
Potential for Paclical will be decided by the
For Oasmia's Paclical to become successful, it needs to show superior effects to Taxol, or
ongoing Phase III trial
much better safety to be able to compete with the cheaper generics. Abraxane is not officially approved for ovarian cancer, but as it has shown positive effects in a Phase II trial, and is probably used off-label for this indication too.
Interesting to compare Paclical with Abraxane
Interest and value of the project should
Due to their similarities, it is interesting to compare Paclical with Abraxane. In June 2010
have increased following Celgene's
Celgene announced it was acquiring Abraxis Bioscience, the company behind Abraxane,
acquisition of Abraxis Bioscience
for USD2.9bn or 9x sales. The deal should increase interest among big pharma companies for Paclical and Oasmia's XR-17 technology. Abraxane was approved in 2005 for the treatment of metastatic breast cancer, but we estimate that 20–30% of its sales are for off-label use for other indications for which Taxol has been approved (but not Abraxane). In
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2009, sales of Abraxane reached USD315m, which represented 87% of total Abraxis Bioscience sales. The product has not been properly marketed outside the US, which generated around 90% of sales. When the deal was announced, Celgene said it expected Abraxane to generate sales of USD1bn in 2015 thanks to label expansion. As described in more detail on page 18, the drug has showed promising data for NSCLC, which is one of the largest tumour types. In addition to the USD2.9bn, Celgene will pay the following contingent payments: USD250m upon US approval for Abraxane for NSCLC with progression-free survival claim in the label, USD300m upon FDA approval for pancreatic cancer with overall survival claim in the label, USD100m upon FDA approval for pancreatic cancer by April 2013; and potential cash royalty payments upon achievement of certain Abraxane and nab-pipeline products net revenue thresholds.
Abraxane sales (USDm)
*Consensus estimates, **Celgene guidance
Source: Carnegie Research
Paclical market potential
In our base case we have assumed 30%
If the Paclical Phase III trial for ovarian cancer is successful, this project could turn out to
penetration in ovarian cancer cases and off-
be a very valuable asset. In our base case, we have assumed the drug will be used in 30%
label use of 30%
of ovarian cancer cases in the US and Europe. We have also assumed that 30% of sales will be for off-label use. Based on this scenario and a treatment price per patient of USD3,500, we forecast partner sales to be USD150m in 2020 – eight years after the launch.
The reason why we are not using a higher penetration rate than 30% is because uptake will be dependent on efficacy in the Phase III trial. With 75% penetration in the ovarian cancer indication but the same off-label use, partner sales would instead be USD320m in 2020 (this figure is higher than current taxanes sales for this indication because of the premium price over the generic products). With the project in Phase III, we think Oasmia should be able to sign attractive partner agreements. Management has said it targets initial downpayments in the range of USD20m–30m for the US and Europe. We have included one downpayment of USD20m in 2011 and another of similar size in 2012. We have also included milestone payments of similar size to be paid for approval in 2012. With a royalty rate of 30–35%, our base case would generate SEK200m in revenues for Oasmia in 2015, increasing to SEK375m in 2020. With a 60% probability rate, our base case yields a value of SEK763m for this project, after adjusting for COGS of around 12% of partner sales, but before adjusting for related group operating costs and investments in production capacity.
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Carnegie Securities Research 29
Company Report
Oasmia Pharmaceutical
Probability-adjusted equity value of
Adding a small value for the Doxophos Vet project that is in an early phase, and adjusting
SEK1,300m dependent on uptake of Paccal
for group operating costs and investments, our estimates for Paccal Vet and Paclical give a
Vet and Paclical Phase III data
total theoretical probability-adjusted equity value of around SEK1,300m. As described above, there is both downside risk and upside potential to this value depending on the uptake of Paccal Vet in the veterinary market and the results from the Paclical Phase III trial.
% of total value
Value (SEKm)
% of total value
Value (SEKm)
Tax loss carry-forward
Operating costs and investments
Source: Carnegie Research
16 September 2010
Carnegie Securities Research
Company Report
Oasmia Pharmaceutical
Estimates
Historical figures
The reported loss has been small due to
The reported operating loss has been quite limited in the past years, due to large
large capitalisation of R&D costs
capitalisation of R&D costs for Paccal Vet and Paclical. In the fiscal year 2009, capitalised R&D amounted to SEK81m; in 2008 it was SEK36m. Net cash flow was SEK-97m in 2009 and SEK-26m in 2008, when it was helped by positive changes in working capital.
Underlying costs have increased due to the
Including capitalised R&D, operating costs have increased from SEK48m in 2006 to
large clinical trials for Paccal Vet and
SEK126m last year. The increase is almost fully explained by higher external costs related
to the clinical trials for Paccal Vet and Paclical.
Sales of SEK70m–80m generated in 2007 and 2008 were mainly an effect of the parallel import business in Sweden that has been inactive since fiscal year 2009.
Over the past year, Oasmia has financed the business with two share issues totalling close to SEK100m. Since its start in 1998, the company has raised SEK200m.
Estimates Operating costs
We expect underlying operating costs to
For fiscal year 2010, we estimate the reported operating loss will rise to SEK-64m (-15m)
decrease slightly in 2010…
due to lower sales (no milestone payments) and higher personnel costs, as the company is expanding the number of employees within production. However, we estimate operating costs including capitalised R&D to decrease slightly, due to lower R&D costs since the Paccal Vet trial was completed in H1(10).
…But to increase in coming years
We project personnel costs will continue to increase slightly further in coming years and that the external costs for trials will be relatively flat. Oasmia has said it will not capitalise R&D costs for new projects, which is why reported operating costs will increase sharply in 2011 and 2012. However, we estimate EBIT will turn positive from 2011 as Oasmia
We estimate EBIT to turn positive in 2011
and cash flow to turn positive from 2012
should start generate revenues from Paccal Vet, which we estimate will be launched in fiscal year 2011, and receive milestone payments for Paclical, when marketing agreements are signed for Europe and the US. Net cash flow should, however, be negatively affected by a large investment in production of around SEK150m in 2011. We forecast cash flow will turn positive from 2012.
Operating profit (SEKm)
-of which royalties
- of which milestones
Amortisation intangibles
Source: Carnegie Research
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Carnegie Securities Research 31
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Oasmia Pharmaceutical
Net cash flow (SEKm)
Non-cash adjustments
perating cash flow
Net cash flow (SEKm)
Source: Carnegie Research
Sales to lift in 2011–12 from royalties and
We estimate revenues of close to zero this fiscal year, but increase to SEK200m in 2011
milestone payments
and SEK350m in 2012. For 2011 we estimate Paclical to generate revenues of SEK50m of which the majority from milestones related to the approval. We have also included Paclical milestone payments of SEK150m related to the signing of a partner agreement in either the US or Europe. The royalty stream for Paccal Vet will be small in 2011, rising in 2012, according to our forecast. Oasmia is receiving royalties of around 40% on partner sales for the product. For Paclical, we have assumed a launch in Europe in fiscal year 2012 and a launch in the US in fiscal year 2013, which should generate large milestone payments, and a partner agreement for either the US or Europe. We estimate royalties for Paclical to be small in 2012, before taking off in 2013.
High uncertainty in sales estimates – initial
As there is no reliable data on the companion animal cancer market, it is very difficult to
uptake of Paccal Vet and Phase III data on
estimate Paccal Vet's market potential. Therefore it will be very important to track the
Paclical will be very important
initial uptake when the product is launched. Paclical's Phase III data will be presented in fiscal year 2011/12 and this will be very important for better estimating its potential.
Sales (SEKm)
- of which royalties
- of which milestones
- of which royalties
- of which milestones
Total Sales
*We have assumed 85% probability of Paccal VET reaching the market**We have assumed 60% probability of Pacclical Human reaching the market
Source: Carnegie Research
About SEK200m in additional equity will
At the end of July, Oasmia had cash of SEK0.1m and interest-bearing debt of around
probably be needed before the cash flow
SEK40m. In our estimates, we have assumed that Oasmia is using the SEK75m Standby
turns positive in 2012
Equity Distribution Agreement (SEDA) it has with Yorkville Advisors, which should be enough to finance operations for this fiscal year. We have not included any other share issues or increases in debt, which explains why our estimates include negative cash for 2011. Based on our forecasts, additional financing of around SEK200m is probably going to be necessary before the cash flow turns positive in 2012 (cash flow in 2011 will be negative due to investments in production capacity).
16 September 2010
Carnegie Securities Research
Company Report
Oasmia Pharmaceutical
Management
Julian Aleksov, CEO
Born 1965. Economist. Julian Aleksov is one of the founders of the company. He has
extensive experience in the coordination of research projects and strategic development of
global intangible assets. Chairman of the Board in Qdoxx Pharma AB and GlucoGene
AB.
Weine Nejdemo, CFO
Born 1948. Weine Nejdemo has extensive international experience on a corporate
management level within life science, mainly in stock-listed companies. He has worked as
a management consultant since 1997, mainly within life science, both for suppliers and
customers but also within other branches such as IT, telecom and manufacturing.
Employed as the CFO at Oasmia since 2009.
Hans Sundin – Executive Vice President Operations
Born 1945. Hans Sundin has over 30 years of experience in pharmaceutical development,
quality assurance and project management. He has extensive international experience in
the business, has held upper management positions in Swedish pharmaceutical companies
and companies with pharmaceutical companies as clients. Employed by Oasmia since
2008.
Annette Ljungmark, Head of Accounting and Human Resources
Born 1950. Annette Ljungmark has previously worked in the pharmaceutical industry in
establishing monthly and annual reports, finance analyses, VAT, pensions and personnel
issues. She has worked as the head of accounting and human resources at Oasmia since
2005.
16 September 2010
Carnegie Securities Research 33
Company Report
Oasmia Pharmaceutical
Profit & loss
Other income & costs
Other amortisation
GW amortisation & Impairment
Other financial items
Net financial items
Share of earnings in ass. comp.
Post-tax minorities interest
Net profit
Tax on EO items
Cash flow
Net financial items
Non cash adjustments
Operating cash flow (OCF)
CAPEX other intang. assets
Net cash flow (NCF)
Share issues & buybacks
Other non-cash adjustments
Change in LT non-IB liabilities
Decrease in net IB debt
Other fixed intangible assets
Shares & participations
Other fixed financial assets
Other fixed assets
Fixed assets
Other current assets
Cash & cash equivalents
Total assets
Sub-ordinated loans
Other IB & Non IB provisions
LT non-IB liabilities
Other ST non-IB liabilities
Fiscal year end: April
Source : Carnegie Research
16 September 2010
Carnegie Securities Research
Company Report
Oasmia Pharmaceutical
Share data & key ratios
Per share data (SEK)
Adj. no. of shares in issue YE (m)
Diluted no. of Shares YE (m)
Dividend yield YE
Dividend Payout Ratio
Share price average
Adj. EBITDA margin
Adj. EBITA margin
Adj. ROCE pre-tax
Adj. ROIC aft-tax
Inventories / Sales
Receivables / Sales
Sales / Capital invested
Capex / Depreciation PPE
Dividend payout ratio
Equity / Total assets
Net IB debt / Equity
Net IB debt / EBITDA
EBITDA / Net interest
EBITA / Net interest
Balance sheet data
Net working capital (NWC)
Capital employed (CE)
Capital invested (CI)
Enterprise value YE (EV)
Fiscal year end: April
Source : Carnegie Research
16 September 2010
Carnegie Securities Research 35
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Oasmia Pharmaceutical
Disclosures and disclaimers
Carnegie Investment Bank AB
Carnegie Investment Bank AB (publ) is a leading independent investment bank with Nordic focus. Carnegie provides value-added services in securities brokering, investment banking, and private banking to
institutions, corporations and private clients. Carnegie has approximately 600 employees in eight countries.
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Stock ratings
Carnegie uses a ‘FCFF' model as a standard to assess long-term fundamental values for companies,
Carnegie stock ratings are relative to Carnegie's coverage universe on a Nordic sector basis.
called ‘DCF values'. Some exceptions are made for sectors such as Financials and Real Estate, where the
OP=Outperform The stock is expected to outperform the return on the Carnegie coverage
model is not practically applicable. We then use an EVA model or other suitable DCF models. FCFF is
universe of the Nordic Sector over the next 6 months.
the cash flow available to al the contributors of capital (equity as well as net interest-bearing debt) after
The stock is expected to perform in line with the return on the Carnegie
tax and all investments.
coverage universe of the Nordic Sector over the next 6 months.
U=Underperform The stock is expected to underperform the return on the Carnegie coverage
Operating profit
universe of the Nordic Sector over the next 6 months
-Tax paid on operating profit
= NOPLAT (net operating profit less Tax)
Sector View
+ Depreciation and amortisation
Carnegie's coverage universe on a Nordic sector basis is rated relative to the total Nordic market.
- Capital Expenditure
Carnegie's strategists, in co-operation with the sector heads, set the sector recommendations.
- Change in net working capital
The sector is expected to outperform the return on the total Nordic market
+ Change in provision other than deferred tax
over the next 6 months.
The sector is expected to perform in line with the return on the total Nordic
= Ordinary free cash flow to firm
market over the next 6 months.
+ Extraordinary free cash flow to firm
The sector is expected to underperform the return on the total Nordic market
= Total free cash flow to firm
over the next 6 months.
Future cash flows are discounted to the present to estimate the value of the ongoing business including
net debt. This must then of course be reflected in the discount rate. When discounting FCFF, it is
Other ratings
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NR=Not rated/UR=Under review/UB=Under bid
currently use a required rate of return of 8.25% consisting of a 4.5% normalised risk-free interest rate
The investment rating, if any, has been suspended temporarily.
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Risk assessment
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consideration the historical risk in the company, but also the current risk profile with the future volatility
Estimated equity beta <0.75
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Estimated equity beta 0.75 to 1.25
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Estimated equity beta >1.25
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The future cash flows discounted by WACC are then the value of the company including net debt. The
The research analyst or analysts responsible for the content of this report certify that, notwithstanding
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the existence of any potential conflicts of interests referred to herein, the views expressed in this report
normally used as an approximation. Adjustments are also needed for associated companies, minorities
accurately reflect the research analyst's personal views about the companies and securities covered. It is
and other non-interest-bearing assets. When all appropriate adjustments have been made, our ‘DCF
further certified that the research analyst has not been, nor is or will be, receiving direct or indirect
value' of the equity in the company is reached.
compensation related to the specific ratings or views contained in this report.
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16 September 2010
Carnegie Securities Research
Company Report
Oasmia Pharmaceutical
Company specific disclosures The following disclosures relate to relationships between Carnegie Investment Bank AB (with its subsidiaries, "Carnegie") and the subject company. Carnegie acts as financial adviser to investigate the possibilities to raise liquid funds through a new share issue or other financial instruments
Stock rating distribution in the previous 12 months
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Carnegie Securities Research 39
Oasmia Pharmaceutical Company Summary
Profit & loss
Per share data
Shareholders' equity
Cash flow
Operating cash flow
Net cash flow (NCF)
Decrease in net IB debt
Company description
Company miscellaneous
Oasmia Pharmaceutical has developed a novel delivery technology aimed at
CEO Julian Aleksov
improving formulations of existing drugs with emphasis on human and veterinary
CFO Weine Nejdemo
oncology. The objective is to improve the safety and efficacy of the drugs as
compared with their original substance. The lead drug candidates are Paclical - inPhase III clinical trials for ovarian cancer - and Paccal Vet - in registration phasefor dog cancer. Oasmia is based in Uppsala, Sweden.
Major shareholders
64.1% Christer Ericson
3.0% Banque Öhman
1.7% Banque Carnegie Lux
Carnegie Investment Bank AB
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Carnegie Investment Bank AB, UK Branch
Tel +44 20 7216 4000 Fax +44 20 7417 9426
16 September 2010
Carnegie Securities Research
The Carnegie Group
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Together with our employees in all offices, Carnegie invests in the future of underprivileged children and youth across the world. We help over 5000 children and youth every year to create a better future for themselves.
Since 2002, we support carefully selected social projects in India, Uganda and the Baltics. These projects educate children in the slums of Mumbai, prevent young girls in Lithuania from becoming victims of trafficking, prevent children at risk in Latvia from abuse and educate poor girls and their families in rural Uganda.
Carnegie as a company values strong social commitment. The involvement in our social projects is also a means of increasing cohesion and uniting employees from different parts of our organization.
Through Carnegie Social Initiative we
– together with our employees – support social projects around the
world helping thousands of vulnerable children and youth
help themselves to a better future
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Source: http://www.oasmia.com/html/upl/376/Analysis%20Carnegie%20Sept%202010.pdf
Doctors' Perceptions towards Domestic and Multinational Pharmaceutical Products: An Investigation from Developing Country Jashim Uddin Ahmed*, Md. Humayun Kabir Chowdhury**, Ishrat Jahan Synthia***, and Ishrat Sultana**** This exploratory study focuses on doctors' perception towards domestic and multinational phar-
Carskadon, M.A., & Dement, W.C. (2011). Monitoring and staging human sleep. In M.H. Kryger, T. Roth, & W.C. Dement (Eds.), Principles and practice of sleep medicine, 5th edition, (pp 16-26). St. Louis: Elsevier Saunders. Chapter 2 – Normal Human Sleep : An Overview Mary A. Carskadon, William C. Dement Abstract
