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The global pharmaceutical market is expected to cross $1.5 trillion this year, which represents an annual growth of 4-5% over the past five years. Ocean Biomedical, Inc. (NASDAQ: OCEA) is a biopharmaceutical company that operates as an incubator that partners with inventors, universities, and research institutes to commercialize discoveries for medical care.
Ocean Biomedical focuses on oncology, fibrosis, and malaria treatment, and has a diverse pipeline with multiple formulations in various stages of development. The company, which has an impressive history of successfully taking 59% of its drug candidates from phase III to approval, went public this month. Of these, 88% have reached final approval. It is estimated that the oncology market will grow at a compound annual rate of 8% by 2030. The fibrosis market is expected to grow at a rate of 7% by 2027 globally, and the antimalarial drug market by 4%.
Company
It has a unique business model – inventors and research organizations retain a 20% interest in the invention, and the company will earn the remaining 80% by completing research & development and general & administrative costs. Since the company does not have research facilities, the company will outsource and use third-party facilities for research and clinical trials. The oncology and fibrosis franchise is licensed from Brown University, while the infectious disease franchise is licensed from Rhode Island Hospital.
The company becomes a partner subsidiary for each licensed invention – usually with ownership stakes for the scientist-inventor and affiliated institutions. It also creates pipeline partnerships with leading research institutions to promote the best discoveries.
IPO
Ocean Biomedical became a registered company on February 15, 2023, through the reverse merger of the special purpose acquisition company Aesther Healthcare Acquisition Corp. Shareholders received 23.36 million shares at $10 each. After the merger, 82% of the company is now owned by OCEA shareholders. Ocean Biomedical has a market capitalization of around $365 million.
Finance
In the nine months ending December 2022, Ocean Biomedical had cash and cash equivalents of $54.8 million. It had a net loss of $17.1 million or $0.47 per share during the period. In the quarter ending September 2022, the net loss was $1.02 million or $0.10 per share, compared to a loss of $42,545 in the same period in 2021. order & operation cost for $ 1.37 million. At the end of the quarter, the company had negative cash flow (-) 603,497.
Pipe
The company has three drug candidates to prevent cancer, one for fibrosis and three for malaria. Currently, it is developing five potential therapies for the treatment of lung cancer, brain cancer, pulmonary fibrosis, and malaria. It has sought FDA approval to begin human trials. On average, the time it takes to get approval from phase-I is five to 10 years and the cost is between $200 million and $1 billion.
In oncology, Ocean Biomedical is targeting non-small cell lung cancer and glioblastoma multiforme. Research has shown that an antibody developed by the company against cancer-causing CHI3L1 can significantly shrink tumors. It was also found that the company’s OCF-203 reduces fibrosis by inhibiting Chit1, which could play a key role in research being conducted to find treatments for Idiopathic pulmonary fibrosis and Hermansky-Pudlak Syndrome. For the treatment of Malaria, studies have shown that Ocean Biomedical’s ODA-570 mRNA vaccine has the potential to kill 90% of malaria parasites.
According to research conducted by KPMG, the total value of Ocean Biomedical’s drug candidates is $2.1 billion – oncology $1.2 billion, fibrosis $0.5 billion, and infectious diseases $0.4 billion.
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Risk & Competition
The main risk for business expansion is Ocean Biomedical’s limited operating experience. Because there is no marketable product yet, it is not currently profitable. As the company must seek equity financing, there will be potential for stock dilution. Also, it is not immune to the uncertainties associated with pharmaceutical companies in general, for the successful development and commercialization of drug candidates. Although the company follows an innovative business model and operates in the growing healthcare segment, it may face competition from other companies with similar business objectives.
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