Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Adherence (medicine) wikipedia , lookup
Pharmaceutical industry wikipedia , lookup
National Institute for Health and Care Excellence wikipedia , lookup
Neuropsychopharmacology wikipedia , lookup
Drug discovery wikipedia , lookup
Pharmacogenomics wikipedia , lookup
Prescription costs wikipedia , lookup
Bevacizumab wikipedia , lookup
Clinical trial wikipedia , lookup
Equity | Healthcare / Biotechnology Update (July 20, 2016) DelMar Pharmaceuticals Inc. (Nasdaq: DMPI, Target Price: $19.20) DelMar Pharmaceuticals, Inc. (“DelMar”, Nasdaq: DMPI) is a clinical stage biotechnology company focused on the development and commercialization of new cancer therapies. DelMar specializes in the development of well-validated anti-cancer therapies in orphan drug indications where patients are failing modern targeted or biologic treatments. DMPI’s lead compound, VAL-083 (dianhydrogalactitol), is a potential new treatment for refractory and front-line glioblastoma multiforme ("GBM"), the most common and aggressive form of brain cancer. VAL-083 is a firstin-class small molecule with a novel alkylating agent that has been assessed in over 40 National Cancer Institute-sponsored clinical and pre-clinical trials showing the compound has potential for multiple cancers including brain, lungs, blood, and cervical. VAL083 has also been approved in China for the treatment of lung cancer and chronic myeloid leukemia (CML), a cancer of white blood cells. DMPI continues to take meaningful strides on the corporate and clinical development fronts, most notably with its recent Nasdaq Capital Market listing – an impressive accomplishment by management that reflects the significant progress made at the company. split. In our view it is clear that DMPI is making significant progress advancing its clinical pipeline, with VAL-083 having potential to address a number of therapeutic indications. Management continues to execute on a number of fronts, from securing financing and listing shares on the Nasdaq CM to advancing its clinical pipeline and expanding the number of potential indications that could be addressed by VAL-083. If achieved, the price target represents potential upside of 106.5% from the recent price of $9.40 on July 12, 2016. Stock Details (7/12/16) Nasdaq: Sector / Industry DMPI Healthcare / Biotechnology Price target $19.20 Recent share price $9.40 Shares (incl. Preferred) 12.9 Market cap (in $mn) 120.0 52-week high/low $10.15/ 1.72 Source: Thomson Reuters, SeeThruEquity Research • Key Financial ($mn, unless specified) FY14 Investment Highlights DMPI lists on Nasdaq Capital Market DMPI management competed a key strategic goal on the corporate development front, with the company uplisting shares to the Nasdaq Capital Market as of July 12, 2016. We see the move as a significant accomplishment by management, which should serve to raise DMPI’s prestige in the industry while improving share liquidity and allowing DMPI access to potential institutional investors who could not invest in OTC shares. Financing eases liquidity pressures In May, DelMar completed a private placement in which the company raised a $6.1mn in gross proceeds ($5.6mn net), through the issuance of preferred stock. We believe the raise was a part of the company’s efforts to uplist to the Nasdaq CM (as was a 1:4 reverse stock split). As part of the transaction, DMPI restructured 72% of investor warrants in order to reduce its derivative liability. DMPI management now estimates that it has approximately $10mn of potential additional funding from in-the-money warrants. Considering the financing and potential warrant exercises, management believes it has sufficient funding to last through 2017. DelMar continues to advance its clinical program In addition to the corporate initiatives completed over the last seral months, DMPI continues to advance its clinical program. The company had a successful presentation of Phase 1/ Phase 2 data from its VAL-083 GBM clinical trials to key figures in the global cancer research community at the cancer at the American Society of Clinical Oncology's (ASCO) Annual Meeting in June, and has outlined plans for a Phase 3 clinical trial for VAL-083 for refractory GBM and another two Phase 2 trials for GBM in earlier stage patients. Adjusting price target to $19.20 We are adjusting our price target for DMPI to $19.20 from the prior target of $5.75, reflecting the new share count and the 1:4 reverse FY15 FY16E 0.8 0 0 EBITDA -4.1 -4.8 -4.8 EBIT -4.1 -4.8 -4.8 Net Income -4.1 -5.3 -6.3 -0.48 -0.56 -0.50 Revenues EPS ($) Source: SeeThruEquity Research, adjusted for reverse split Key Ratios FY14 FY15 FY16E Gross margin (%) NM NM NM Operating Margin (%) NM NM NM EBITDA margin (%) NM NM NM Net margin (%) NM NM NM P/Revenue (x) 149.9x NM NM EV/Revenue (x) 147.5x NM NM Source: SeeThruEquity Research Share Performance, LTM 20.00 16.00 12.00 8.00 4.00 0.00 Jul-15 Oct-15 Jan-16 Apr-16 Source: Thomson Reuters © 2011-2016 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 1|Page Jul-16 Delmar completes uplisting to Nasdaq; to ring bell on July 14, 2016 • DMPI management competed a key strategic goal on the corporate development front, with the company uplisting shares to the Nasdaq Capital Market as of July 12, 2016. • DMPI CEO Jeffrey Bacha will ring the Nasdaq’s opening bell on July 14, 2016. • We see the move as a major milestone for the company and a significant accomplishment by management, reflecting the measurable progress by the company over the last several years. As part of the uplisting process, DelMar completed a capital raise (as described in more detail below) to ensure the company would meet shareholders’ equity requirements, and a 1:4 reverse stock split (May 20, 2016) in order to meet the minimum bid requirement to list shares on the Nasdaq. • Additionally, the uplisting to the Nasdaq CM should serve to raise DMPI’s prestige in the industry while improving share liquidity and allowing DMPI access to potential institutional investors who could not invest in OTC shares. New private placement should fund clinical development through FY1Q17E • DelMar raises $6.1mn in gross proceeds from private placement: As part of the process to uplist shares to the Nasdaq CM, DelMar completed a convertible preferred stock private placement financing in April and May. The offering yielded $6.1mn in gross proceeds for the company ($5.6mn net proceeds) and consisted of the issuance of preferred shares and restructuring of the company’s warrants outstanding. As part of the transaction, DMPI restructured 72% of investor warrants in order to reduce its derivative liability. • In addition to allowing DMPI to meet Nasdaq listing requirements, the move enabled DelMar to address its capital needs through 1QFY17, according to management commentary in the financing announcement. Given that the company is clinical-stage, we view the financing as an important step that will allow DMPI breathing room to focus on clinical development, strategic partnerships, and developing institutional relationships over the next year. DelMar continues to make significant progress on its clinical initiatives • Importantly DelMar has continued to advance its clinical development pipeline amidst its corporate development initiatives. On June 3, 2016, DelMar presented positive Phase I/II GBM clinical trial data of VAL-083 at the American Society of Clinical Oncology's (ASCO) Annual Meeting, during which the company showed that VAL-083 attacks cancer with a mechanism distinct from other chemotherapies in the treatment of GBM, making it a promising potential therapeutic for cancer patients whose tumors exhibit resistance to currently available chemotherapies including temozolomide, the current front line therapy in the treatment of GBM. • DelMar reported that 22 patients treated with an assumed therapeutic dose of VAL-083 3 (20mg/m ) showed a meaningful improvement to median survival rates of GBM patients following bevacizumab (Avastin) failure, as shown in the enclosed image, provided by the company. DMPI sees the data as suggesting that VAL-083 has the potential to improve therapeutic outcomes for GBM patients who currently have no viable treatment options. © 2011-2016 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 2|Page • Looking ahead, DelMar reported that it had a “successful” completion of End-of-Phase 2 meeting with the FDA, and the company will advance towards Phase 3 for refractory GBM. The company will pursue a single randomized Phase 3 study measuring survival outcomes compared to a "physicians' choice" control, which, if successful, would serve as the basis for a New Drug Application (NDA) submission for VAL-083. • DelMar is also planning to initiate two separate Phase II clinical trials in earlier stage GBM patients and has the previously discussed first recurrence clinical study ongoing in collaboration with MD Anderson. We have enclosed an updated overview of the company’s pipeline below. Source: Company Investor Materials • Receives Orphan Drug Designation for Ovarian Cancer. Since our last update on the company, the FDA has expanded VAL-083’s orphan designation to include ovarian cancer. DelMar has now received orphan drug designation status for VAL-083 for ovarian cancer, medulloblastoma (the most common malignant pediatric brain tumor) and GBM. • In our opinion, the continued expansion of indications for which VAL-083 receives orphan drug designation from the FDA adds support to the thesis that the value that can be unlocked at DelMar extends well beyond GBM – we note that VAL083 is a “first in class” small molecule that has demonstrated anti-cancer activity in a range of areas in over 40 Phase I and Phase II clinical trials, including brain, lung, cervical, ovarian and leukemia, among others. © 2011-2016 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 3|Page QUARTERLY FINANCIAL SUMMARY Figure 1. Income Statement Summary Figures in $, unless specified Research& Development General & Administrative Operating Expenses YoY growth Operating Income Operating Margin % Other items, net YoY growth Net income EPS, Basic Avg. Shares Outstanding in period (split adjusted) 3Q1FY6 3QFY15 9 mos FY16 9 mos FY15 790,323 630,226 1,420,549 24% -1,420,549 NM 280,148 NM -1,140,401 -0.10 11,077,275 641,839 500,753 1,142,592 NM -1,142,592 NM -944,127 NM -2,086,719 -0.21 9,744,207 2,183,355 1,994,923 4,178,278 18% -4,178,278 NM -1,230,201 NM -5,408,479 -0.50 10,896,887 1,925,635 1,601,982 3,527,617 NM -3,527,617 NM -695,270 NM -4,222,887 -0.45 9,433,249 Source: Company Form 10Q, SeeThruEquity Research Additional Notes: • DelMar reported a net loss of ($0.03) during the March quarter ($0.10 split-adjusted), with $1.4mn in operating expenses including $0.8mn of research and development advancing development of the company’s clinical pipeline, as well as $0.6mn of general and administrative expenses. The primary variance between net loss and operating loss was primarily due to non-cash items including charges related to the valuation of derivatives. • DelMar is clinical stage, and cannot market its products without regulatory clearance, which may take several years. The company is targeting commercial launch of VAL-083 for GBM (refractory) in 2018E, which would be the first commercial product. • Balance Sheet Overview: DelMar ended the quarter with cash on hand of $0.9mn, and had current assets of $1.1mn, versus current liabilities of $0.7mn. Delmar used $3.6mn of cash in operating activities, and we expect the company will continue to have capital needs through at least 2019E to fund clinical product development, given that it does not have revenue-generating products at this time. • $6.1mn financing eases financial pressure in short run: Mitigating its near term capital needs, DelMar raised gross proceeds of 6,1mn in a convertible preferred share private placement, which took place as part of its initiative to list shares on the NASDAQ. • Management has also stated that it believes it has the opportunity to raise approximately $10mn in new capital from the exercise of in-the-money warrants. Considering the financing and the warrants, DMPI management has stated that it should have sufficient capital to fund operations and development through the end of 2017E. Adjusting DMPI price target to $19.20 • We are adjusting our price target to $19.20 for DMPI. The new price target reflects instruments issued as part of the company’s recent capital raising transactions, as well as the 1:4 reverse split completed in May. • We continue to have a favorable view of DelMar, and are encourage by management’s optimism that VAL-083 has the potential to become a major new drug targeting the $1Bn annual market for GBO. • If achieved, the price target represents potential upside of 104.7% from the recent price of $9.38. We continue to view DMPI as an overlooked story in the biotechnology industry. Beyond GBM, VAL-083 appears to have therapeutic potential on a number of areas, including NSCLC, pediatric brain tumors, ovarian cancer, and cervical cancer, among others. © 2011-2016 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 4|Page About VAL-083 VAL-083 is a "first-in-class," small-molecule chemotherapeutic. In more than 40 Phase I and II clinical studies sponsored by the U.S. National Cancer Institute, VAL-083 demonstrated clinical activity against a range of cancers including lung, brain, cervical, ovarian tumors and leukemia both as a single-agent and in combination with other treatments. VAL-083 is approved in China for the treatment of chronic myelogenous leukemia (CML) and lung cancer, and has received orphan drug designation in Europe and the U.S. for the treatment of malignant gliomas. DelMar has demonstrated that VAL-083's anti-tumor activity is unaffected by the expression of MGMT, a DNA repair enzyme that is implicated in chemotherapy resistance and poor outcomes in GBM patients following standard front-line treatment with Temodar® (temozolomide). DelMar recently announced the completion of enrollment in a Phase II clinical trial of VAL-083 in refractory GBM. Patients have been enrolled at five clinical centers in the United States: Mayo Clinic (Rochester, MN); UCSF (San Francisco, CA) and three centers associated with the Sarah Cannon Cancer Research Institute (Nashville, TN, Sarasota, FL and Denver, CO). In the Phase I dose-escalation portion of the study, VAL-083 was well tolerated at doses up to 40mg/m2 using a regimen of daily x 3 every 21 days. Adverse events were typically mild to moderate; no treatment-related serious adverse events reported at doses up to 40 mg/m2. Dose limiting toxicity (DLT) defined by thrombocytopenia (low platelet counts) was observed in two of six (33%) of patients at 50 mg/m2. Generally, DLT-related symptoms resolved rapidly and spontaneously without concomitant treatment, although one patient who presented with hemorrhoids received a platelet transfusion as a precautionary measure. Sub-group analysis of data from the Phase I dose-escalation portion of the study suggested a dose-dependent and clinically meaningful survival benefit following treatment with VAL-083 in GBM patients whose tumors had progressed following standard treatment with temozolomide, radiotherapy, bevacizumab and a range of salvage therapies. Patients in a low dose (≤5mg/m2) sub-group had a median survival of approximately five (5) months versus median survival of approximately nine (9) months for patients in the therapeutic dose (30mg/m2 & 40mg/m2) sub-group following initiation of VAL-083 treatment. DelMar reported increased survival at 6, 9 and 12 months following initiation of treatment with VAL-083 in the therapeutic dose sub-group compared to the low dose sub-group. Further details can be found at http://www.delmarpharma.com/scientific-publications.html. About DelMar Pharmaceuticals, Inc. DelMar Pharmaceuticals, Inc. was founded to develop and commercialize new cancer therapies in indications where patients are failing or have become intolerant to modern targeted or biologic treatments. The Company's lead drug in development, VAL-083, is currently undergoing clinical trials in the U.S. as a potential treatment for refractory glioblastoma multiforme. VAL-083 has been extensively studied by the U.S. National Cancer Institute, and is currently approved for the treatment of chronic myelogenous leukemia and lung cancer in China. Published pre-clinical and clinical data suggest that VAL-083 may be active against a range of tumor types via a novel mechanism of action that could provide improved treatment options for patients. delmarpharma.com © 2011-2016 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 5|Page Contact Ajay Tandon SeeThruEquity www.seethruequity.com (646) 495-0939 [email protected] Disclosure This research report has been prepared and distributed by SeeThruEquity, LLC (“SeeThruEquity”) for informational purposes only and does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any transaction. This report is based solely on publicly-available information about the company featured in this report which SeeThruEquity considers reliable, but SeeThruEquity does not represent it is accurate or complete, and it should not be relied upon as such. All information contained in this report is subject to change without notice. This report does not constitute a personal trading recommendation or take into account the particular investment objectives, financial situation or needs of an individual reader of this report, and does not provide all of the key elements for any reader to make an investment decision. Readers should consider whether any information in this report is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, many of which are beyond the company’s control. Actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain industry, economic, regulatory or other factors. SeeThruEquity is not a FINRA registered broker-dealer or investment adviser, does not provide investment banking or related financial advisory services and does not accept or receive fees or other compensation for preparing its research reports from the companies featured in these reports. SeeThruEquity has not been retained or hired by the company featured herein or by any affiliate of such company to prepare this report, and this report was not solicited, paid or sponsored by such company or any such affiliate. SeeThruEquity and/or its officers, directors or affiliates have in the past and may from time to time in the future receive compensation from companies featured in its reports for presenting at SeeThruEquity investor conferences, distributing press releases and performing certain other ancillary services. Such compensation is received on the basis of a fixed fee and made without regard to the opinions and conclusions in its research reports. SeeThruEquity and/or its affiliates may have a long equity position with respect to a non-controlling interest in the publicly-traded shares of companies featured in its reports. SeeThruEquity’s professionals may provide verbal or written market commentary that reflects opinions that are contrary to the opinions expressed in this report. This report and any such commentary belong to SeeThruEquity and are not attributable to the company featured in its reports or other communications. The price and value of a company’s shares referred to in this report may fluctuate. Past performance by one company is not indicative of future results by that company or of any other company covered by a report prepared by SeeThruEquity. This report is being disseminated primarily electronically and, in some cases, in printed form. An electronic report is made simultaneously available to all recipients. The information contained in this report is not incorporated into the contents of our website and should be read independently thereof. Please refer to the Disclosures section of our website for additional details. Copyright 2011-2016 SeeThruEquity, LLC. No part of this material may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of SeeThruEquity, LLC. © 2011-2016 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 6|Page