Arana Therapeutics Limited (AAH.AX) – Current Price: $1.04 AUD;...

Arana Therapeutics Limited (AAH.AX) – Current Price: $1.04 AUD; Target Price: $1.40 AUD
Arana is up over 10% since we initiated coverage a little over a month ago, despite this
small runup we continue to believe the stock is cheap. Arana announced that it has commenced
recruitment for a Phase II trial in psoriasis for its lead anti-TNF drug candidate ART621.
ART621 is an “anti-TNF” - a class of drugs used for the treatment of inflammatory
diseases such as rheumatoid arthritis, psoriasis and Crohn’s disease. ART621 works by
blocking the action of TNF (tumour necrosis factor) a protein which is involved in
generation of inflammation. The study will provide repeat dose, pharmacokinetic, safety and
preliminary anti-TNF efficacy data for ART621 in a psoriasis population. The results will
also be used to inform the design of longer duration clinical studies in rheumatoid
arthritis and other indications. This initial study in psoriasis will quickly enable Arana
to obtain the data necessary to allow its Phase II rheumatoid arthritis program to commence
during the fourth quarter of 2008. The company expects to file an IND for ART621 in
rheumatoid arthritis with the FDA by the end of September 2008. There are currently three
major anti-TNF drugs on the market, Remicade®, Humira® and Enbrel®. In 2007 these drugs
had combined global sales of US$12.8 billion. With a projected market size of greater than
US$20 billion in 2012 this is a rapidly growing market, which is far from saturated. Arana
has a diverse business model including healthy royalty streams, commercial and development
partnerships with major pharmaceutical companies, as well as a strong internal pipeline of
products. For additional information on Arana please download our initiation of coverage
report dated March 18, 2008, the report is available on our website, www.vistap.com.