cxs.ax cxsp adr chemgenex
Waiting in the wings
Next week, CXS will present Phase IIa clinical trial results for its
second clinical-stage programme, Quinamed, under development to
treat solid tumours. As yet we assign no value to this programme
and consider it a future partnering opportunity. Buy.
Quinamed - don't overlook second clinical stage programme
Quinamed is CXS' second clinical-stage programme under development to treat solid
tumours. The metabolism of Quinamed is affected by the patient's genotype. Through
genetic profiling, CXS is able adjust the dose patients receive for their rate of
metabolism, thereby reducing toxicity issues. A Phase IIa programme trial with
dosing based on NAT-2 genotype in prostate, breast and ovarian cancer cases that
have failed chemotherapy has been completed. Results are expected to be released
at the American Society of Clinical Oncology (ASCO) conference to be held 1-5 June
2007. If, as expected, positive results are released, a Phase IIb clinical trial is
expected to commence in 2HCY07. This is an important milestone for CXS.
Potential partnering opportunity
To determine our valuation to date we have taken the conservative approach of not
applying a value to the Quinamed programme. Following the release of the Phase IIa
results and the commencement of the Phase IIb trial, we expect to assign value to
this project. We note that it also represents a near-term partnering opportunity.
Ceflatonin - still a key focus
Lead-compound Ceflatonin is being tested in registration-directed Phase II/III clinical
trials in chronic myeloid leukaemia for patients who have developed resistance to
current treatments of Gleevec® and have one of the most common point mutations,
T315I. Interim results are expected mid-CY07. Patient recruitment is then expected
to be completed by late-CY07 with results due shortly thereafter.
Outlook - key catalysts due mid CY07, Buy recommendation maintained
We have made no changes to our forecasts and maintain our A$1.36 per share DCF
valuation on the stock (WACC 15.1%, terminal growth rate 3.0%, risk-free rate
5.75%). Our A$0.95 price target has been set at a 30% discount to our valuation to
reflect where we expect the stock will trade in six months assuming key clinical trial
results are reported as expected. Downside risks to our price target include any
delays in the progress of clinical trials.
Produced by: ABN AMRO
