Sitting down with Gary Phillips reminds me of chatting to my favourite chemistry teacher in high school.
Not that you’d usually compare a biotech company CEO to a past teacher but much like Mr McLeod, Gary has the unique ability to get you excited about science.
Gary heads up Pharmaxis (ASX: PXS), a Sydney-based biotechnology company that is unlike others in the Australian market.
“Pharmaxis might be a bit unusual for some investors when they look at it for the first time,” Gary says.
“We actually have two parts to our business- we have a history where we’ve actually developed a drug for cystic fibrosis and we’ve taken it through to market. It’s been approved by the FDA in the US and approved in Europe, Russia and Australia. That business actually generates cash and is cash flow positive.
“The other part of our business, which is, I think, probably the key thing for people looking at Pharmaxis as an investment is the new drug development.”
Pharmaxis has two drugs currently in phase 2 trials with solid science backing them. Results are expected by the end of next year. Gary describes these drugs as the “blue sky in Pharmaxis, and probably where the greatest value appreciation is likely to be going forwards.”
Despite limited investment, the drug discovery group at Pharmaxis has been incredibly productive, discovering 5 new drugs in as many years. The group is led by experienced team members that have backgrounds in big pharma companies such as GSK and Boehringer Ingleheim. “Those guys are really drug developers,” Gary said. “They understand what it takes to get a drug through to the clinic, quickly.”
The diversity of Pharmaxis’ pipeline and proven track record of bringing drugs to market means that an investment in the Company carries significantly less risk than other biotechs around.
Narrow drug pipelines with limited indication diversity and no guarantee of success in the drug development space means it is difficult to predict the performance of emerging micro cap biotech and pharmaceutical companies.
Gary is fully understanding of the arduous drug development process, acknowledging that the risk in biotech investment could cause some investors to shy away from what could potentially be huge opportunities in lucrative markets.
“One of the problems with investing in biotechs is that very often it’s all or nothing. We work in a fairly high risk area.”
That being said, he knows what Pharmaxis may be sitting on in terms of market disrupting ability, saying “An investment in Pharmaxis is not just a binary investment. You’re not waiting just on one program to either go bang or bust. We’ve got a number of different irons in the fire and a lot of really good preclinical data that suggests that we will be successful in the clinic and the money in the bank to actually get there.”
This echoes the numerous analyst reports and forum comments where investors are scratching their heads at why Pharmaxis’ share price doesn’t match its valuation. Either way, Pharmaxis is one to watch, even if it is just to soak up Gary’s brilliant accent…
Interested investors can watch the full interview with Pharmaxis CEO Gary Phillips here or subscribe to their mailing list here.
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