SGX Pharmaceuticals, Inc. (SGXP)

[surf1944]

Expect a Range-Bound SGX Pharma
Monday May 19, 3:47 pm ET
By Grant Zeng, CFA

SGX Pharmaceuticals, Inc. (NasdaqGM: SGXP - News) is a clinical stage biotechnology company focused on the discovery, development and commercialization of cancer therapeutics. After the discontinuation of its only candidate Troxatyl for third line AML in late August 2006, SGXP shifted its focus to the FAST programs.

Earlier-than-expected dose limiting toxicity observed in the two phase I trials forced the company to discontinue the development of SGX523 in May 2008. While the FAST technology may provide long-term growth for the company, the company remains several years away from getting a product on the market. Therefore, we maintain a Hold rating on the stock.

Although the future of the Troxatyl franchise is uncertain, we believe the FAST technology is a viable one and will be the company's long-term growth driver. As is evident with the setbacks observed in the Troxatyl program and now the SGX523 phase I trials, significant development risks exist in the development of the company s pipeline. We expect the company's share price to remain range bound, hence our Hold rating on the stock and target price of $1.60.