At over 60 pages in length, Evans and Partners’ initiation report on PYC - “Making Sense of Antisense”- is undeniably thorough. The report is the work of E & P Director of Health Research, David Nayagam and analyst, Alan Liang.
As previously noted, there is unlikely to be an analyst better qualified to comment on PYC than Nayagam.
For those whose interest is limited to headlines, the E & P report recommends PYC as a Speculative Buy and puts a risk-adjusted price target of $0.20 on the stock. It is suggested that early safety reads along with subsequent demonstration of efficacy from the (dare I say it?) imminent Phase 1/2 trial could provide a ~80% uplift in that valuation.
Whilst acknowledging that PYC’s assets are still at a relatively early stage of development, Nayagam says he has conviction in the longer-term potential of the company, based on a “multitude” of value drivers.
One perceived value driver is PYC’s focus on rare monogenic diseases that require increased gene expression and have well-understood genotype-phenotype links. Such disease targets have a higher probability of clinical and regulatory success. Compared with the average drug, which commences Phase 1 with a ~10% chance of ultimate approval, the E & P analysts' evidence-backed opinion is that VP-001 at current stage of development has an approval chance of 25 - 50%, and possibly higher. Typically, a drug does not approach~50% likelihood of approval until post-Phase 2.
PYC’s decision to focus on rare (orphan) disease has other potential advantages. These include a faster and cheaper path to market, easier to identify/access patient populations, ability to command higher prices and special market exclusivity provisions. The FDA provides orphan drug developers more guidance, waives some fees, seeks out patient/caregiver perspective on the disease and reviews marketing applications with greater flexibility.
Further, PYC’s targeted diseases have no current treatment options and few competitor drugs in development.
A precise and clinically/commercially validated RNA therapeutic approach is being used for PYC's therapies, overseen by highly experienced CSO Sue Fletcher, who has a successful track record of licensing drugs in this class.
While cellular delivery has been a challenge to date for antisense drugs, PYC is using its extensive peptide library to identify suitable cell-penetrating peptides to enhance drug delivery and efficacy.
Encouragingly, the pre-clinical safety, tolerability and efficacy data for PYC’s lead candidate have been promising and VP-001 has been validated in patient-derived disease models.
Conscious that it needs to “remain on the crest of the wave", PYC is also leveraging in-house capabilities in bioinformatics and data analytics to rapidly screen and derisk further novel drug candidates.
The E & P analysts express a positive view of the team at PYC, including CEO, Rohan Hockings, the scientific team and the Advisory Board. Hockings is said to bring a wealth of experience and a rare combination of scientific and clinical knowledge with commercialisation and capital market experience. The opinions of several clinical and scientific experts who have had dealings with PYC, have formerly worked for the company, or who are currently collaborating with or advising the company, were sought out by the analysts. The feedback received in relation to the current iteration of the company was described as “overwhelmingly positive”.
The analysts point to a “flourishing” macro environment for RNA therapies, particularly antisense, and note that there has been considerable licensing and M&A activity in the space. They anticipate that promising data in PYC’s early clinical trials is likely to generate interest from large pharma suitors.
Summed up, the E & P report analysts view PYC as having “the ingredients of success” – “a passionate team experienced in drug development and commercialisation, a clear strategic focus and purpose, high quality science, sticky financial backing, and a favourable converging industry environment”.
It was reassuring to see that an analyst of Nayagam's calibre shares much of my thinking/logic on PYC. The E & P initiation report on PYC has certainly helped strengthen my confidence in my investment.
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