Soligenix, Inc. (SNGX, Buy; $1.50 Target Price): Reports 2Q10 Results – Focus Remains on the Confirmatory Phase 3 Trial in Acute GI-GVHD
COMPANY UPDATE
Soligenix, Inc.
(SNGX.OB/OTC)
August 19, 2010
Jonathan Aschoff, Ph.D., 212-702-6652
aschoffj@bmur.com
Reports 2Q10 Results – Focus Remains on the Confirmatory Phase 3 Trial in Acute GI-GVHD
Buy
Target Price:$1.50
Investment Summary
2Q10 Results.Soligenix reported grant revenue of $445,000, which beat our estimate of $350,000, and 2Q10 EPS was $(0.01), which met our estimate. The increased revenues were primarily due to an increase in grants from the NIH for the thermostable vaccine development program. R&D costs were about $1.1 million and G&A costs were $545,000. We expect an uptick in operational expenses in 2H10 as Soligenix initiates the Phase 2 trial of orBec in Chronic GI-GVHD and completes the Phase 2 trial of orBec in GVHD prophylaxis. Soligenix ended the quarter with about $11 million in cash and investments, which combined with the cash provided from grants, should provide a runway through 2011.
Upcoming Catalysts. Quarterly results are not meaningful for Soligenix, at this point. Investor focus is on the confirmatory pivotal trial of orBec in acute GI-GVHD, and we look forward to top-line data from this trial in mid-2011. We are confident about the trial demonstrating results that were at least as robust as the first Phase 3 trial. As such, we anticipate a Class 2 complete response submission to the FDA by YE11, followed by FDA approval by 1Q12 in acute GI-GVHD. Nearer term, we look forward to top-line data from the Phase 2 trial of orBec for GVHD prophylaxis in 3Q10. We anticipate that Soligenix will initiate a Phase 2 trial of orBec in chronic GI-GVHD by YE10.
Valuation. We arrive at a value of $1.50 per share for Soligenix using a discounted cash flow valuation on revenue generated from orBec sales for GVHD (treatment and prophylaxis), and taking into account the company’s projected mid-2011 cash balance.
Risks.Risks to the achievement of our target price include market adoption risks, business development risks, competition, and high share price volatility.
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Price
$0.23
52-Week High/Low
$0.38 - 0.18
Shares Outstanding (mm)
215.81
Market Cap. (mm)
$49.64
Average Daily Volume (mm)
0.46
