$42m Cash Injection

Article from Proactive Investors:

Pharmaxis is now expecting a further cash injection
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12:30 15 May 2017
Payments of circa A$42 million are expected this year.
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A substantial amount of the company's market cap is cash backed

Pharmaxis (ASX: PXS) is now expecting a new €10 million payment during 2017 from its drug development partner, Boehringer Ingelheim.

The payment is expected due to Boehringer confirming that a phase 2 study for a second disease indication from drug PXS-4728A will commence this year.

The second indication is in addition to the previously scheduled mid-year phase 2 trial, which triggers an €18 million payment.

Gary Phillips, CEO, commented: “We are delighted to see Boehringer looking to exploit that potential and commence clinical development in a fresh indication in the second half of this year.

“The structure of the deal with Boehringer anticipated its potential in more than one disease and the €10 million we expect for the second indication would bring total expected milestones received for starting phase 2 trials in two diseases to approximately A$42 million in this calendar year.”


Background

Pharmaxis is a pharmaceutical research company with a portfolio including two respiratory products approved in various world markets and a research pipeline focused on areas of high unmet clinical need in inflammatory and fibrotic diseases.

The company’s product pipeline is founded on its expertise in the chemistry of amine oxidase inhibitors.


Boehringer Ingelheim: PXS-4728A development

Boehringer acquired PXS‐4728A from Pharmaxis in May 2015 with initial clinical development focused on finding a treatment for the liver disease known as NASH.

This involved an upfront payment of €27.5 million and a total potential deal value of over A$750 million.

In addition to a phase 2 trial in NASH that is scheduled to start mid‐year, Boehringer has confirmed that a phase 2 study for a second disease indication will commence this year.

Pharmaxis is due to receive milestone payments of €18 million for the start of a phase 2 trial in NASH and €10 million for the second indication.

Boehringer is responsible for all development, regulatory, manufacturing and commercialisation activities.


Analysis

Pharmaxis entered the current June quarter with $26.5 million in cash and these two expected payments are looking to add another A$42 million in 2017.

This significant injection of cash will allow Pharmaxis to further strengthen its drug development pipeline in fibrosis and inflammation and add further scientific expertise.

Pharmaxis continues to show that it can commercialise early stage research into assets with world class data sets that are highly valued by big pharma companies seeking partnerships.

This means that a substantial amount of the company’s equity value is backed by cash, which places little value on the multiple opportunities in the drug pipeline.

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