Confirmation that lead candidate, topical antimicrobial XF-73 has been granted FDA Fast Track Designation in the new FDA-backed indication - prevention of post-surgical staphylococcal infection. Following the recent Investigational New Drug (IND) opening, XF-73 is due to enter Phase IIb studies this year, positioning it as a potential first-to-market product in the indication.
Fast track designation is one of a range of incentives granted under Qualified Infectious Disease Product (QIDP) status granted to XF-73. QIDP supports the development of drugs against priority pathogens, such as S aureus, including methicillin-resistant Staphylococcus aureus - MRSA.
XF-73 is the lead product from DEST’s XF series and is a topical gel for nasal administration and the first candidate from the XF group, which collectively have demonstrated activity against a wide spectrum of bacteria tested. These include eight of the twelve pathogens that appear on the priority list classified by the Centers for Disease Control and Prevention (CDC) and the World Health Organisation (WHO).
The value of the primary market for XF-73 alone is an estimated $1.2bn - counting the six million patients classed as high risk who are also carriers of S aureus (based on data from US National Center for Health Statistics). In our view the low potential for resistance means that XF-73 should also be widely adopted for the c12 million high-risk non-carriers of S aureus.
We reiterate our DCF valuation of Destiny Pharma at £115m, or 263p / share, including estimated end December 2017 net cash of £16.8m. On our forecasts the group is well funded to cover the Phase IIb program with XF-73, as well as to cover its initial work on the follow-on pipeline, taking our estimated cash reach to the end of 2020. Our valuation includes only XF-73 in the lead indication, so that the entry of pre-clinical candidates into human studies provides pure upside.
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