TARGET PRICE $1.00 - HC Wainwright Equity Research USA

Just released.Research note from USA Firm HC Waineright. T/P $1.00

Desired PK levels surpassed for next all-important PTSD study;Phase 2b to start in mid-2021. Last night, Bionomics announced thepositive outcome to its 7-day dosing study with its new solid tabletoral formulation of BNC210 in healthy volunteers. The goal of this PKstudy was being able to meet at least a 12-hourly blood exposureof approximately 25 mg.h/L associated with positive efficacy in theRESTORE Phase 2b discussed below, which negative confoundingfood effect impact in some patients with the previous liquid suspension formulation; the new tablet formulation is not dependent on food intake.The major takeaway from the completed PK study is that the tablet formulation surpassed the needed steady-state 12-hourly levels, an dhit ranges of 33-57 mg.h/L; had the patients in RESTORE who had confounding food impact reached these levels, the study would havemost likely been positive. As discussed below, the patients who did hitthe desired PK levels showed significant efficacy on the gold standardCAPS-5 scoring. The study enrolled five healthy male and five healthyfemale volunteers, and there were not gender differences observed inblood exposure levels. The chart below depicts the mean concentrationsof drug achieved in these patients, and the key takeaways include: (1)steady state blood exposures were reached after one day of twice dailydosing; (2) steady state 12-hourly blood exposures reached a meanof 49 mg.hr/L, exceeding the 25 mg.hr/L target from pharmacometricanalyses; and (3) BNC210 continues to be well tolerated at these higher exposures. We are certainly encouraged by the formulation work completed by the company and look forward to the start of the new Phase 2b study in mid-2021, which we now believe has been significantly de-risked.



MSD partnership important for Bionomics franchise; we continue to believe MSD (Merck) could just acquire the companyoutright. Recall that the partnership was formed in 2014 to develop drugs for cognitive dysfunction. MSD is funding all earlystage and clinical development and is fully responsible for worldwide commercialization. Under the terms, Bionomics initiallyreceived an upfront payment of $20 million, $10 million for the Phase 1 initiation and ongoing research payments. The companyis eligible for an additional $465 million in milestone payments plus undisclosed royalties on product revenue.