Astex: EMA Issues 'Positive Opinion' On Dacogen

The European Medicines Agency (EMA) has adopted a positive opinion on J&J’s application for Dacogen (decitabine) for treatment of elderly patients with acute myeloid leukaemia (AML). The decision is the key hurdle to obtaining an EU-wide approval for the drug and thus represents a significant value-creating event for Astex. EU sales of Dacogen should ensure the continuation of a meaningful royalty stream to Astex after the expiry of the drug’s US exclusivity next year. It therefore puts Astex in a position to initiate planned new studies with AT13387 and SGI-110, without needing to raise new finance. This is the first of a number of catalysts for Astex expected in H212, which will also include the read-out from four Phase II studies. As a result of the CHMP decision, we value Astex at $560m.

Positive Opinion Should Lead To Approval By September
The EMA’s positive opinion on Dacogen is now referred for formal approval by the European Commission, which is likely to come through by the end of September. This should pave the way for national approvals and launch, in some cases subject to pricing and reimbursement procedures, across Europe from 2013. The drug is to be indicated for the treatment of patients with newly diagnosed de novo or secondary AML who are not candidates for induction therapy (ie those over 65 years).

Substantial Royalties Confirmed Through 2023
Astex receives a substantial (c $65m per year) royalty on Dacogen and EU approval should ensure the continuation of a meaningful royalty stream after the expiry of the drug’s U.S. exclusivity next year, to the end of EU exclusivity in perhaps 2023.

Four Phase II Study Results Due This Year
Astex expects to see top-line data from Phase II studies with AT13387, SGI-110, amuvatinib and AT7519 this year. AT13387, an HSP 90 inhibitor, and SGI-110, a second generation hypomethylating agent, should each see two new Phase II study initiations this year: one will be in melanoma (AT13387) and one in ovarian cancer (SGI-110). Others indications have not been disclosed.

Valuation: rNPV Of $560m
We value Astex at $560m (including cash) on the basis of a presumed EU approval of Dacogen in AML, following the positive opinion from the CHMP. Dacogen contributes around half of the ex-cash figure.

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