Prescient Therapeutics Ltd (ASX:PTX, OTC:PSTTF)'s lead compound PTX-100 is potentially a significant future treatment for T-Cell Lymphoma, according to a research note from Pitt Street Research.
PTX-100, which works as a blocker of the GGTase I enzyme, has Orphan Drug Designation for all T-Cell Lymphomas and is currently in a Phase 1 trial.
Pitt Street sees a potential for PTX-100 to gain FDA approval after Phase 2 given the current lack of treatment options for T-Cell Lymphomas.
The research firm has valued Prescient at 11.6 cents per share base case and 16.3 cents per share in an optimistic (or bull) case using a sum of the parts / discounted cash flow methodology.
Prescient shares are currently trading at 6.9 cents.
The following is an extract from Pitt Street’s research note:
Currently Prescient stock is seriously undervaluing a potential near-term payday with PTX-100. Prescient Therapeutics had a market capitalisation on ASX of less than $50m, which is only US$32m. Whatever currency you use, we think the current market capitalisation of Prescient does not begin to take account of the way in which clinical success with PTX-100 in T-Cell Lymphoma can yield a marketed drug in only around three years, where that drug's market opportunity is at least in the hundreds of millions.
Over the last four years Prescient has gathered some great data on PTX-100 in T-Cell Lymphomas. The drug had been in Prescient's portfolio since it acquired the rights in 2014. In 2019 Prescient started a Phase 1 study of PTX-100, initially as a dose escalation study in a variety of tumour types. Phase 1b completed in July 2021 with an excellent safety profile and a clinical signal in T-Cell Lymphoma. This was the clue Prescient needed in terms of how to take PTX-100 forward. An expansion cohort in T-Cell Lymphoma opened in April 2022 to focus on T-Cell Lymphomas and by October 2022 Prescient was reporting favourable clinical activity in this cohort. In July 2022 PTX-100 was granted Orphan Drug Designation by the US FDA in July 2022 for Peripheral T-Cell Lymphoma and for all T-Cell Lymphomas in March 2023. By that time seven of 10 patients T-Cell Lymphoma patients evaluated had durations of response exceeding the standard of care.
In just three years from now, Prescient can be close to having PTX-100 as a marketed drug. That's because the data to date shows that PTX-100 markedly exceeds the standard of care, in cancer indications where that standard of care is less than optimal. Consequently, we expect that, once the current Phase 1 is completed, only a single Phase 2 might be required by the FDA. Should that study yield sufficiently good data, the Agency may be prepared to grant the drug marketing authorisation. That could happen in only around three years' time, with the Phase 2 potentially initiating in late 2024 and reading out data in late 2026. Even if the FDA decides that this Phase 2 is not a registration trial, having a drug as powerful as PTX-100 seems to be in Phase 2 will still warrant a re-rate, given the responses noted in Phase 1.
Orphan Drugs can be very valuable, for their developers. In the US an 'Orphan Drug' is one that treats a disease affecting fewer than 200,000 Americans. In addition to tax credits, Congress incentivised pharmaceutical companies through the Orphan Drug Act of 1983 with a waiver of prescription drug user fees and by offering seven years of market exclusivity after the drug is approved, rather than the standard five years. In more recent years, Orphan Drugs have become notable not so much for these incentives as the high prices they can sell for. A good example is Soliris and Ultomiris, from AstraZeneca (NASDAQ:AZN), each of which has a US$650,000-a-year price tag to treat two obscure blood disorders. They made close to $6bn for AstraZeneca in 2022. Because of the high prices, Orphan Drug developers on Nasdaq will often trade for large market capitalisations once they have products on the market. Consider Amgen’s buyout of Horizon Therapeutics in October 2023. Amgen (NASDAQ:AMGN) bought Horizon for Tepezza, which is the only approved treatment for thyroid eye disease. Horizon earned $1.66bn in sales for Tepezza in 2021, in its first full year on the market, and US$1.97bn in 2022. Amgen paid a massive US$27.8bn for this new franchise.