Bionomics: Acquisition Boosts Oncology Pipeline

Bionomics’ (BNO.AX) acquisition of San Diego-based Eclipse Therapeutics last year brought in new technology and expertise in antibody and cancer stem cells, complementing its existing capabilities in the development of small molecule therapeutics. The company’s lead compound remains BNC105, which is in Phase II trials for renal cell carcinoma and ovarian cancer and has recently become the lead vascular disrupting agent in commercial development. Eclipse added BNC101, a late preclinical antibody against LGR5, a cancer stem cell target. Meanwhile, anti-anxiety compound IW-2143, licensed to Ironwood Pharmaceuticals, is now in a Phase I trial in the US.

Eclipse adds CSC antibody to oncology pipeline
The Eclipse acquisition gave Bionomics CSC cancer stem cell technology and provides a late preclinical programme, BNC101, which is expected to enter Phase I trials in 2014. BNC101 is a monoclonal antibody to LGR5/GPR49, a target on cancer stem cells particularly associated with colon and gastric cancer.

BNC105 still the main focus, now lead VDA
Meanwhile, the discontinuation of Sanofi’s ombrabulin after an underwhelming Phase III study result, promotes BNC105 to lead position in the vascular disrupting agent class. Bionomics is focused on securing a partner for this drug, which is in a Phase II study in RCC that is now well into its second stage, with near-term completion of enrolment anticipated in H213. Results of the study should be rendered towards the end of CY13. Bionomics plans to initiate a Phase II study of BNC105 in second-line ovarian cancer in combination with carboplatin/gemcitabine in early Q213 following completion of the current Phase I trial in this setting.

Cash to beyond end-2013
Bionomics’ cash at 30 June 2012 was A$17.3m, which should provide funding to around mid-CY14, not including A$4.2m cash from R&D tax incentives. Additionally, near-term milestones for IW-2143 are anticipated.

Valuation: A$275m risk-adjusted NPV
Our risk-adjusted net present value model for Bionomics’ clinical stage R&D programmes, excluding cash, yields a figure of A$275m. We compare this with the current enterprise value (EV) of A$137m (market cap of A$151m less estimated A$14m net cash), highlighting an attractive investment case. It should also be noted that risk-adjusted NPVs rise rapidly as products advance through development and justify higher probabilities of success.

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