the remaining positives, page-30

Bioshares report written 23 December 2019. Pharmaxis is one of their top biotech stock picks of 2020 !

Pharmaxis (PXS: $0.145)

LOXL2 Deal a 2020 Driver

Pharmaxis suffered a setback last week when Boehringer Ingelheim decided to not continue

with the development of BI 1467335 (formerly PXS 4728A) for the treatment of

NASH, although it will continue to investigate its application in diabetic retinopathy.

Boehringer Ingelheim based its decision on drug interaction effects observed in one of

the eight Phase I studies. In a higher dose of BI 1467335, it was observed to have an effect

on the activity of other drugs, particularly antidepressants, that interact with an enzyme

involved with dopamine metabolism, monoamine oxidase B (MOA-B).

Boehringer Ingelheim is continuing with a single dose, Phase II proof-of-clinical-principle

study in 100 patients with diabetic retinopathy. In this indication, it is BI 146735's antiinflammatory

properties that are being exploited, in patients with moderately severe nonproliferative

disease. The primary endpoint of the trial is the proportion of patients with

any ocular adverse event. The secondary endpoint is the proportion of patients with at

least two steps improvement in the Diabetic Retinopathy Severity Scale (DRSS). The trial

is expected to be completed in Q1 2020, with results available the following quarter.

Diabetic retinopathy is the biggest cause of irreversible blindness for people with Type 2

diabetes. The estimated prevalence of diabetic retinopathy in diabetics aged over 40 is

28%, according to Zhang et al (JAMA 2010). Blindness imposes high costs to the healthcare

systems. Limiting progression to blindness could be a higher benefit that could outweigh

the risks relating to interactions with antidepressants.

Pharmaxis is a Top Six Stock Pick for 2020 because the company is moving closer to

signing a deal (or deals) for its LOXL2 inhibitor program. This transaction has been an

ongoing process since 2018. However, a deal on favourable terms will inject confidence

back into the stock and the company's business model.

Other drivers of Pharmaxis share price in 2020 will be the completion of a Phase I multiple

ascending dose study of the Pan-LOX inhibitor PXS5505A, followed by its entry into

other clinical studies, most likely the orphan drug indication myelofibrosis, and then in

H2 the receipt of a US$10 million milestone payment by partner Chiesi Farmaceutica on

the launch of Bronchitol in the USA

Pharmaxis is capitalised at $59 million.

Bioshares recommendation: Speculative Buy Class A