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21st June 2012 | | | e-Therapeutics – Commencement of ETS2101 clinical trial | |
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Daniel Elger
Chief Financial Officer
07909 915 068
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e-Therapeutics has announced the commencement of the first clinical trial evaluating its compound ETS2101, a drug discovered using the company's network pharmacology platform, as a treatment for cancer. The AIM-listed biotechnology company also reiterated that it will soon start a second, larger trial in the United Kingdom, which will evaluate the drug in patients with a wide variety of tumours.
Cancer drug ETS2101 progressing well Providing an update on cancer drug ETS2101, e-Therapeutics said that the first trial will enrol up to 24 patients with both primary (glioma) and secondary brain cancer, and will be led by the highly-experienced Professor Santosh Kesari, the director of neuro-oncology at the UC San Diego Moores Cancer Centre in the United States. The main objective of the trial is to evaluate safety and to determine an appropriate dose for phase II development; the trial will also look for preliminary evidence of anti-cancer activity. With encouraging results from the drug being shown in the laboratory, we are pleased with the progress that has been made so far and look forward to seeing the results from the clinic. We expect to see first findings by late 2012 and final results during 2013. Financials We have taken the opportunity to update our forecasts upon the latest news. As discovery work ramps up and new projects are added to the clinical pipeline (we are anticipating at least one to be added in 2013), we are forecasting R&D costs of around £5 million and G&A of £1.2 million for financial years 2013. In the following year, we expect to see R&D and G&A remain, more-or-less, the same. In the long-term, however, we expect partners to bear the costs of later-stage trials (Phase IIb and Phase III) and provide collaboration funding. We also expect to see further R&D tax credits . Accordingly, after considering the modest amount of interest that will be received from its large cash stockpile, we are forecasting a respective pre-tax loss of £6.1 million and £6.3 million for FY13 and FY14. Good share price performance We are pleased with the share price performance since the start of calendar year 2012. Despite the markets (FTSE All-Share index) pretty much remaining flat since the start of calendar year 2012, e-Therapeutics share price is up more than 33%, and we feel that company has the potential to reap even greater returns for investors. Valuation We have tweaked our model slightly in light of the forecast update. So, after discounting to account for the fact that none of the company's compounds have progressed to and through Phase II of the clinical process, we have now derived a Net Present Value of $195 million (£121 million) or a target price of 87p per share. The NPV model does not accrue any value for the unique and fully patent protected drug candidate discovery platform – which should become increasingly valuable as the portfolio expands and more candidates become partnered. Consequently, with the shares currently trading at 34.875p, our stance remains buy. Financial forecasts Year ended: 31st January | Sales (£000) | PBT (£000) | EPS (pence) | PE Ratio (x) | Dividend (pence) | Yield (%) | 2010A | 0 | (2,255) | (3.0) | NA | 0.00 | 0.00 | 2011A | 0 | (2,655) | (3.5) | NA | 0.00 | 0.00 | 2012A | 0 | (3,863) | (2.5) | NA | 0.00 | 0.00 | 2013E | 0 | (6,100) | (3.7) | NA | 0.00 | 0.00 | 2014E | 0 | (6,300) | (3.8) | NA | 0.00 | 0.00 | Source: Company and Growth Equities & Company Research.
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