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Hardman & Co

Bionomics Ltd Third Phase II trial of BNC210 begins

Hardman & Co Report Report DownloadsBionomics Ltd (ASX:BNO) is an Australian biopharmaceutical company specialising in ion channel drug discovery for central nervous system (CNS) disorders such as anxiety and post-traumatic stress disorder (PTSD). BNO also offers contract and partnered drug discovery based on its proprietary technology platforms: MultiCore and ionX. The group sales model includes fees-for-service, licensing income, and royalties from successful partnered products. Its strategic focus is on development of its lead candidate, BNC210, to completion of Phase II in PTSD. It has also recently started a third clinical trial of this candidate, this time in a third CNS indication – agitation.

Strategy: BNO’s recently refined strategy is to focus on development of its ion channel drug candidates, particularly allosteric modulators. It intends to partner its priority CNS candidate for late-stage development and commercialisation, and to monetise its clinical-stage, non-ion channel, oncology programmes.

New BNC210 trial: Recruitment for a third Phase II trial of BNC210, this time in agitation, was recently started. One of the big positives of BNC210 is its potential application in a spectrum of underserved patient populations, and this trial follows the Phase IIa trial in GAD that concluded in 2016.

Phase II trial in agitation: The trial has been designed for rapid recruitment and a short treatment duration. Headline data are expected in the first three months of 2019; these will follow those of the PTSD trial, expected in the second half of 2018. Around 40 hospitalised elderly patients with agitation will be treated.

Risks: There are inherent risks in clinical development and commercialisation of medicines, particularly in neurology and with new drug classes. BNO’s current strategy is contingent on partnering its candidates for late-stage development and commercialisation and on monetising its clinical oncology assets.

Investment summary: Bionomics Ltd has a clear strategy to invest in developing its drug candidates to a stage that both interests big pharma and generates good potential returns for shareholders. Hardman & Co estimates the post-tax NPV of the two oncology assets to be around A$21m/$16m, and A$651m for the whole pipeline. Our valuation is unchanged on the news of initiation of the new trial.