agreed, page-5

From bell potter research - dont know if you guys have seen this

PI-88 extends disease-free survival by 77.8%
Today's result exceeds our expectations (as per our note dated April 10, 2007). PI-88
increased the disease-free rate by c. 25%. This could be interpreted as patients on PI-88
having a one in three chance of tumour recurrence compared to patients not on PI-88
having a higher chance (one in two) of tumour recurrence. The results showed that
patients on PI-88 had fewer relapses for up to 36 weeks on treatment. Patients on PI-88 at
48 weeks survived for 21 weeks longer than those not on the drug who survived for only 27
weeks. This is an extension of disease-free survival by a remarkable 77.8%.
On track to becoming a very important treatment in liver cancer
One of the most important take away points from today’s result is its potential impact on
the phase 3 trials. PGL’s upcoming phase 3 trial could potentially be accelerated if it
became obvious that patients that received PI-88 survived for much longer than patients not
on the drug. A similar drug, Nexavar, achieved Fast Track status and accelerated approval
on the basis that it became unethical not to give patients the drug given its survival benefits.
On the merit of today’s result, we strongly believe PI-88 could be in a similar position.
Increase in probability of success and placement price
As a consequence of today’s results, the probability of the drug’s success has increased to
70% from 60%. All data to date suggests PI-88 has the potential to be approved for sale
worldwide. We have not placed a 100% probability weighting to allow for sales execution
risk. We have analysed a number of funding scenarios however the valuation is based on
an increase in our capital raising assumptions to $50m from $42m with the issue price
increased to $10/share from $6/share.
Strongly re-iterate Buy 2 rating
We strongly re-iterate our Buy 2 rating on the basis of today’s result. The changes to our
earnings estimates has resulted in a valuation upgrade to $16.31, up 30% from $12.60. PI-
88 will become an important treatment for liver cancer patients and capture significant
market share given the significant survival benefits that patients have experienced on this
phase 2b clinical trial. In valuing PGL, we continue to remain conservative in our
assumptions particularly in terms of market share and cancer types ascribed. At this stage,
we have only ascribed value to the liver cancer indication despite PI-88’s mid-stage status of
development for non-small cell lung cancer, advanced prostate cancer, melanoma and
multiple myeloma.

Valuation and recommendation
DCF $16.31 per share
Today’s result exceeds our expectations (as per our note dated April 10, 2007).
Consequently, our valuation increases by 30% to $16.31/share from $12.60/share. The
following changes to our earnings estimates are:
• Probability of success increased to 70% from 60% - In our view, all data to date
suggests PI-88 has the potential to be approved for sale worldwide. We have not
placed a 100% probability weighting to allow for sales execution risk. .
• Placement increased to $50m from $42m and issue price increased to $10/share
from $6/share - Our valuation assumed PGL would raise $42m after the release of
these phase 2b results to fund phase 3 clinical trials. With a current cash position
of c. $30m, we expect PGL could raise $50m with an issue price of $10/share given
the current share price.
Strongly re-iterate Buy 2 rating
We strongly re-iterate our Buy 2 rating on the basis of today’s result. PI-88 will become an
important treatment for liver cancer patients and capture significant market share given
the significant survival benefits that patients have experienced on this phase 2b clinical
trial.
Sensitivity analysis
We provide a sensitivity analysis on varying assumptions to attempt to show the inherent
value that lies in PGL