Encouraging AGM and M3 updates

Destiny’s recent announcement on the progress on its lead asset NTCD-M3 maintains the momentum that has built since the acquisition of M3 in 2020. In addition, while the AGM narrative did not promise a licensing transaction on either of Destiny’s Phase 3-ready assets, the timelines for partnerships in 2021 and the Phase 3 studies starting in 2022 remain intact. Destiny also welcomes the recent G7 Health Ministers’ Meeting communique on 4 June and its strong message highlighting the global threat of the “silent pandemic” of Antimicrobial Resistance (AMR) and the urgent need for the development of new treatments.

Although Destiny described NTCD-M3 as its lead asset because the Phase 3 protocol has already been agreed with the FDA, choosing between these two assets is like choosing between your children. Both are viable assets and both could easily be partnered in 2021. 

Destiny’s CEO presentation at its AGM reinforced the additional attributes of a low cost for a single strain product, the convenience and shelf-life advantages of a solid dose oral format. In contrast, Destiny’s M3 product does not have the gene to produce toxin so is firstly a safer option, and additionally an easier product for regulators to assess since it does not need testing for toxin production.

Our financial forecasts and fair value of Destiny Pharma at £200.2m or 335p / share are unchanged, although there is the potential for more than one partnering transaction in 2021. We have only assumed one such deal and would remind investors that licensing transactions can include an equity investment component by the licensee, usually at a premium to market price.