TOL - 12th Jun, 2024
5 pharma & biotech stocks on the move in May
There were some strong moves in the Pharma and Biotech sector in May, with the share prices of 33 companies in the coverage universe rising by 10% or more. Below we take a look at five companies whose share prices rallied during the month.
1) Clarity Pharmaceuticals Ltd (ASX: CU6)
Clarity Pharmaceuticals share price was up 81.4% in May. The company was the 2nd best performer in the pharma and biotech coverage universe over the 12-months to 31 May 2024 with the share price up 570.5%.
The positive share price momentum was due to a few things. On 30 April 2024, the company announced that the first ever patient treated with two doses of Cu-67 SAR-bisPSMA at the 8GBq dose level achieved a complete response based on the Response Evaluation Criteria in Solid Tumours (RECIST). The patient was treated for prostate cancer after having failed multiple lines of therapy. The patient received the first cycle of 67Cu-SAR-bisPSMA as part of cohort 2 of Clarity’s theranostic trial, SECuRE, evaluating 64Cu/67Cu-SAR-bisPSMA in patients with mCRPC, and a second cycle under the US FDA EAP, as requested by the patient’s clinician.
Following the first cycle of Cu-67 SAR-bisPSMA treatment, the patient showed a reduction of Prostate Specific Antigen (PSA) level, a marker of tumour burden and clinical response and indicator of the recurrence of prostate cancer, of >99%.The second cycle resulted in a further reduction of PSA to undetectable levels. The patients PSA remains undetectable for almost 6 months since the administration of the second cycle of treatment. This is an impressive outcome and one that buoyed the market.
In late April, the company also completed an institutional placement and accelerated non-renounceable entitlement offer, raising $121 million (before costs). The capital raising was fully underwritten with shares issued at $2.55 per share. The capital raising has significantly strengthened the balance sheet and provides a cash runway into 2026.
The company has a busy clinical program with the three lead products actively progressing through seven clinical trials. The company is developing radiopharmaceutical products using its Targeted Copper Theranostic platform for both diagnosis and treatment of various cancers. While the clinical program is prostate cancer focused the pipeline of products provides the company the opportunity to roll out a number of products in a number of diseases. The progress of the product pipeline to date has been encouraging with the potential market for the products significant in size. We would expect further positive outcomes from the clinical trials to be a catalyst for the share price.
2) Cynata Therapeutics Limited (ASX: CYP)
Cynata Therapeutics shares were up 59.5% in May, with shares up 148.1% over the 12-months to 31 May 2024.
Cynata Therapeutics is a clinical-stage biotechnology company specialising in cell therapeutics. The company has three active clinical trials across multiple therapeutic areas including Acute graft versus host disease (aGvHD), Diabetic Foot Ulcer (DFU) and osteoarthritis. The company is expecting a number of readouts from these trials over the next two years.
The most advanced clinical trial is the Phase 3 trial of CYP-004 for the treatment of osteoarthritis. This trial is well advanced with patient recruitment complete. The trial is a randomised and placebo-controlled with the primary endpoints being: (i) the proportion of patients achieving patient-acceptable symptom state (PASS) for knee pain at 24 months; and (ii) central medial femorotibial (cMFT) cartilage thickness change from baseline to 24 months. A total of 321 patients were enrolled and will be followed up for two years. With enrolment completed in November 2023 the company anticipates results will be available for release in 1H’CY26.
The company is expected to commence a Phase 1 trial for the use of CYP-001 for the treatment of patients who have received kidney transplants. According to the company, patients who receive a kidney transplant typically require long-term treatment with immunosuppressant drugs to prevent rejection of the transplanted organ.
Immunosuppressants, known as calcineurin inhibitors, are effective at preventing rejection but they are associated with toxicities. CYP-001 is being investigated as a potential immune modulating treatment in patients who have received a kidney transplant. If successful, this could facilitate dose reduction or remove the need for calcineurin inhibitors, which would be expected to reduce or avoid toxicity. The trial seeks to recruit up to 16 patients who have undergone a kidney transplant. The first six patients will receive either one or two infusions of CYP-001 in addition to the standard treatment. Subject to a favourable safety profile, the remaining patients in the study will receive two infusions followed by tacrolimus dose reduction.
The trial is being undertaken in collaboration with Leiden University Medical Centre (LUMC), which will fund and manage the trial. Cynata will provide CYP-001 for use in the trial, while retaining full commercial rights to use the data.
During the month, the company presented at the International Society of Cell and Gene Therapy Annual Meeting in Vancouver, Canada, and the follow-up data for CYP-001 in patients with steroid-resistant aGvHD was published in Nature Medicine.
The company had $9 million in cash as at 31 March 2024, which the company has stated is sufficient to fund the research and development activities through to 2H’CY25.
3) Dimerix Limited (ASX: DXB)
Dimerix shares have been on the rise since October 2023 when the company announced Advanz Pharma had acquired the exclusive rights to register and commercialise DMX-200 for the treatment of Focal Segmental Glomerulosclerosis (FSGS) in Europe, UK, Canada, Australia and New Zealand. The share price closed up 154% on the day of the announcement at $0.155. Since then the share price has increased 219% to $0.495 as at 31 May 2024.
The share price was up 47.8% in May, boosted by the announcement that the company had entered into another exclusive license to commercialise DMX-200 in the Middle East. Under the agreement, Dimerix will receive up to AUD$120.5 million in upfront and milestone payments plus tiered royalties starting at 30% of net sales.
The two license deals secured to date have resulted in total upfront payments of AUD$11.5 million with the potential for up to AUD$340 million in milestone payments plus royalties. In the investor presentation in May, the company stated that the major targets are the US and China with partnering discussions already underway.
FSGS is a rare disease with an estimated >200,000 people with FSGS in the major markets. There are currently no approved treatments available for FSGS and with drugs for rare kidney diseases priced at up to US$120,000 per annum in the US, the market potential for the treatment is substantial despite the rare disease status. We would expect the signing of license agreements in the US and China to be a catalyst for the share price in addition to positive news regarding the clinical development of DMX-200.
4) Medadvisor Limited (ASX: MDR)
Medadvisor shares jumped sharply on the news that the company was expecting to report an inaugural positive EBITDA and Net Profit for FY24. The company provided guidance of Revenue of $120 million to $123 million, EBITDA of $6.8 million to $7.6 million and NPAT of $0.5 million to $0.8 million.
The result is a significant milestone for the company. The result was driven by growth from THRiV in the US and increased transaction fees in Australia.
In its presentation at the ASX Small and Mid Cap Conference in March, the company highlighted that it will be investing $10-$15 million from internal cash flow in FY25 and FY26 to establish he foundations for further operating leverage from late FY25. The company highlighted the following drivers for growth in coming years:
- Increasing patient reach and engagement;
- Strengthening and expanding core solutions;
- Entering new adjacent markets and product whole spaces;
- Moving towards a unified global platform and modern tech stack; and
- Building a team with a high-performance culture.
Revenue of $120 million means group revenue has grown at a CAGR of 31.4% over the four years to FY24. The ability of the company to continue to scale and grow profitability will no doubt have a continued positive impact on the share price.
5) Botanix Pharmaceuticals Ltd (ASX: BOT)
Clinical dermatology company, Botanix Pharmaceuticals, shares were up 31.8% in May. During the month, the company provided a comprehensive update with regards to its commercial launch plans as it nears planned approval of its lead product, Sofdra, from the FDA.
The company has identified in the US there are 3.7 million high priority targets being patients in dermatologists offices that can be reached with a targeted sales force. Beyond that there are an additional 6.3 million potential patients to diagnose and treat through telemedicine.
The company is positioning to hit the ground running for the commercial launch of Sofdra in the US with the market research undertaken by the company suggesting there will be use of Sofdra by clinicians. Hyperhidrosis (HH) is a self-administered drug that will be covered under the pharmacy benefit scheme however does not require a code for coverage. HH is a recognised medical condition with existing coverage policies which provides the opportunity for the company to take advantage of the reimbursement program in the US. In the March quarterly report, the company stated that it had engaged payers that account for 80% of the covered lives in the US.
With $17.3 million cash in the bank as at 31 March 2024, the company appears to have sufficient cash to launch Sofdra with further capital requirements likely depending on the uptake of Sofdra.
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The views here are not recommendations and should not be considered as investment advice.
