Pharmaxis – QuickView

Pharmaxis Ltd. (PXS.AX) is set to release results of a large Phase III trial of Bronchitol (inhaled mannitol) in non-cystic fibrosis bronchiectasis in Q2, which could mark a turning point after its recent travails. Pharmaxis has seen its share price fall heavily (c 65%) in the wake of the negative US FDA advisory committee review of Bronchitol in cystic fibrosis (CF) in January. However, its recent US$40m financing allows it to continue development of Bronchitol for CF/non-CF uses in the US and EU.

Phase III study results expected in Q2
The 485-patient, placebo-controlled UPhase III studyU examines the efficacy and safety of 52-week treatment in non-CF bronchiectasis. Primary end points are rates of graded pulmonary exacerbations, with secondary measures of health-related quality-of-life metrics. Bronchiectasis is an orphan condition affecting c 600,000 people worldwide, with limited treatments. The market is c 8x the size of the CF market in the EU and RoW. US approval of the drug in this indication is possible in 2014.

Promising efficacy observed in acute mucus clearance study
Early data are positive: a Phase IIa trial (n=14) of escalating doses of inhaled mannitol (160mg, 320mg, 480mg) in patients with stable bronchiectasis resulted in mucus clearance increases of 16%, 22% and 31% respectively, after 45 minutes relative to control. Increased clearance was reported in all regions of the lung.

Limited therapeutic options
Bronchiectasis is a condition with multiple underlying primary causes, including cystic fibrosis, characterised by a chronic cough, sputum production and recurrent infections. Current therapies are limited. Antibiotics are generally used to treat infections caused by the build-up of mucus and often coupled with steroids and bronchodilators to alleviate airflow obstruction. Some mucolytic drugs, such as Roche’s Pulmozyme (only approved for CF), are delivered using nebulisers and relatively more cumbersome than a dry powder insufflation offered by Bronchitol.

Valuation: EV of A$95m, attractive bet on Bronchitol
Pharmaxis’s EV is A$95m, based on net cash of c A$72m (pro forma December 2012, including A$19.5m NovaQuest payment still pending). Opportunities exist for new approaches to bronchiectasis providing potential alternative paths to US approval for Bronchitol. Notwithstanding early CF-related sales of Bronchitol in the EU and Australia, favourable data from the Phase III trial could trigger a significant rebound in the shares based on a wider application of the drug.

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