In a July 11 research note, Dawson James Securities analyst Jason Kolbert reported that coverage of DelMar Pharmaceuticals Inc. (DMPI:NASDAQ) transferred to him and, subsequently, he issued a lower target price on the company, $3 versus $4 per share. In comparison, the Buy-rated biopharma is trading today at about $1.37 per share.
Kolbert described the firm's lead drug candidate and its initial target indication. DelMar is developing VAL-083, a first-in-class small molecule chemotherapeutic for glioblastoma multiforme (GBM). The agent is a "bifunctional alkylating agent that causes DNA methylation of guanine at the N7 position," he explained.
The analyst purported that VAL-083 is "a good asset and is supported by plenty of patient-based data." Since it was introduced in the 1970s, it has been evaluated in more than 40 clinical trials and given to more than 1,000 patients, he relayed. Data from the National Institutes of Health have shown it to be efficacious against brain and lung tumors, melanomas and sarcomas as well as safe.
GBM is the most common type of brain tumor occurring in adults. Each year, 29,000 people in the U.S. and the European Union are diagnosed with it. It is frequently inoperable and associated with a poor prognosis.
Kolbert noted a key characteristic of VAL-083 that could make it superior to the current standard of care for GBM, Temodar (temozolomide). Temodar damages the DNA of cancer cells, and GBM cells respond by turning on multiple DNA repair pathways, including MGMT, to demethylate the DNA. As a result, patients can develop resistance to Temodar and, consequently, have a poor treatment outcome.
Unlike Temodar, MGMT does not repair VAL-083, Kolbert highlighted. In clinical trials, VAL-083 overcame MGMT-related resistance and was shown to be more potent against brain tumor cells than Temodar. "This suggests that VAL-083 has the potential to significantly benefit patients and create a higher, new standard of care for patients facing MGMT-unmethylated GBM," Kolbert added.
Currently, VAL-083 is being evaluated as a treatment for GBM in Phase 2, open-label clinical trials with partner facilities to generate proof-of-concept data while managing operating costs, relayed Kolbert. With the MD Anderson Cancer Center, DelMar is pursuing a recurrent GBM study and a maintenance-stage GBM study. The trial in collaboration with the Sun Yat-sen University Cancer Center in China is on patients with newly diagnosed GBM.
"Based on the outcome of these two trials, VAL-083's designated orphan and fast track status, we believe the company can raise the needed capital to run a pivotal program (by mid-2020)," commented Kolbert. Capital needed to advance VAL-083 is substantial. A recent raise generated $3.6 million, enough to support DelMar's operations through year-end 2019.
About DelMar, Kolbert concluded, "We see little downside to the stock but recognize the challenges ahead for the company to raise capital." DelMar's valuation is "at a severely distressed level" with a market cap below $10 million.[NLINSERT]
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Disclosures for Dawson James Securities, DelMar, July 11, 2019,
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