GDC-0084 Phase II on track to commence Q417

Novogen 11 September 2017 Update
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Novogen

GDC-0084 Phase II on track to commence Q417

FY17 results update

Pharma & biotech

11 September 2017

Price

A$0.04

Market cap

A$19m

A$/US$0.79

Net cash (A$m) at 30 June 2017

14.5

Shares in issue

483.3m

Free float

90%

Code

NRT

Primary exchange

ASX

Secondary exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

(14.9)

(27.3)

(61.9)

Rel (local)

(14.1)

(27.6)

(63.6)

52-week high/low

A$0.1

A$0.0

Business description

Novogen is an ASX- and NASDAQ-listed biotechnology company. It is developing GDC-0084 for brain cancer and its super-benzopyran (SBP) drug technology platform. SBPs show activity against cancer stem cells and are active across many different cancers.

Next events

FDA consultation re GDC-0084 Phase II design

H217

Initiate GDC-0084 Phase II

Q417

Initial Cantrixil Phase I data

Q417/Q118

Analysts

Dennis Hulme

+61 (0)2 9258 1161

Juan Pedro Serrate

+44 (0)20 3681 2534

Novogen is a research client of Edison Investment Research Limited

Novogen is on track to commence a Phase II trial of GDC-0084 in glioblastoma in Q4 CY17, in line with previous guidance. It plans to meet with the FDA to discuss trial design as it finalises preparations for the study. A Phase I trial of Cantrixil in ovarian cancer is well underway, with initial data expected in late 2017 or early 2018 – efficacy data from an expansion cohort at the MTD are likely in H2 CY18. We lift our valuation range slightly to between A$87m and A$152m (A$0.18-0.31 per share), while noting that additional funds may be needed in FY18.

Year end

Revenue (A$m)

PBT* (A$m)

EPS* (c)

DPS (c)

P/E (x)

Yield (%)

06/16

3.7

(11.6)

(2.8)

0.0

N/A

N/A

06/17

8.6

(10.9)

(2.3)

0.0

N/A

N/A

06/18e

7.5

(17.3)

(3.6)

0.0

N/A

N/A

06/19e

17.6

(10.8)

(2.2)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding exceptionals and share-based payments.

GDC-0084 Phase II to start in Q417

Novogen is on track to initiate a Phase II trial of GDC-0084 (a small molecule inhibitor of the PI3K/Akt/mTOR pathway) in glioblastoma (brain cancer) in Q417. It has appointed Chiltern Oncology to manage the trial, and the manufacture of finished dosage capsules of the drug is almost complete. Consultations with the FDA to discuss key features of the clinical trial design are expected before the study commences. The trial will test GDC-0084 in a subset of glioblastoma patients who are known to obtain little benefit from standard temozolomide chemotherapy; the study is supported by encouraging Phase I data. The clear unmet medical need in this patient group could open access to accelerated approval pathways.

Cantrixil ovarian cancer study progressing

The Phase I trial of Cantrixil in ovarian cancer is recruiting patients at three sites in Australia and two sites in the US. The maximum tolerated dose (MTD) of intra-peritoneal Cantrixil in advanced ovarian cancer is likely to be determined in late 2017 or early 2018. In addition to dosage, safety and tolerability, the study will also assess indicators of efficacy such as radiological responses and biomarkers. After six weeks of single-agent Cantrixil therapy, patients may continue to receive weekly Cantrixil in combination with a chemotherapy agent such as carboplatin. Efficacy data are likely in H2 CY18 from a 12-patient expansion cohort at the MTD.

Valuation: A$87-152m in two GDC-0084 scenarios

We lift our indicative valuation range slightly to between A$87m and A$152m or A$0.18-0.31 per share (vs A$86m to A$146m, A$0.18-0.30 per share), under either post-Phase III approval or accelerated approval scenarios for GDC-0084. The valuation changes reflect rolling forward our DCF model to FY18 and reducing FY18 R&D expenses, offset by a deferral to FY28 of the forecast market launch of the preclinical Trilexium drug as the company focuses on its clinical programmes. Novogen had A$14.5m cash at 30 June 2017 and we estimate that it may require A$7m in additional funding in FY18 and A$12m in FY19.

Exhibit 1: Financial summary

 

A$'000s

2015

2016

2017

2018e

2019e

Year end 30 June

AASB

AASB

AASB

AASB

AASB

PROFIT & LOSS

Sales, royalties, milestones

0

0

0

0

9,250

Other (includes R&D tax rebate)

1,637

3,665

8,563

7,483

8,341

Revenue

 

 

1,637

3,665

8,563

7,483

17,591

R&D expenses

(5,935)

(9,894)

(11,136)

(19,184)

(22,447)

SG&A expenses

(3,269)

(4,343)

(7,596)

(4,329)

(4,408)

Other

0

0

0

0

0

EBITDA

 

 

(7,567)

(10,572)

(10,169)

(16,030)

(9,264)

Operating Profit (before GW and except.)

 

 

(7,572)

(10,671)

(10,287)

(16,128)

(9,613)

Intangible Amortisation

(570)

(1,320)

(66)

(1,273)

(1,172)

Exceptionals

1,116

(569)

0

0

0

Operating Profit

(7,026)

(12,560)

(10,353)

(17,402)

(10,784)

Net Interest

(280)

406

(516)

145

13

Profit Before Tax (norm)

 

 

(8,422)

(11,586)

(10,869)

(17,257)

(10,772)

Profit Before Tax (reported)

 

 

(7,306)

(12,154)

(10,869)

(17,257)

(10,772)

Tax benefit

0

0

199

0

0

Profit After Tax (norm)

(8,422)

(11,586)

(10,670)

(17,257)

(10,772)

Profit After Tax (reported)

(7,306)

(12,154)

(10,670)

(17,257)

(10,772)

Average Number of Shares Outstanding (m)

238.4

427.4

467.8

483.3

483.3

EPS - normalised (c)

 

 

(2.99)

(2.84)

(2.28)

(3.57)

(2.23)

EPS - diluted

 

 

(2.99)

(2.84)

(2.28)

(3.57)

(2.23)

Dividend per share (A$)

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

1,491

1,427

16,430

16,408

16,138

Intangible Assets

1,390

822

15,918

14,645

13,473

Tangible Assets

85

592

490

1,742

2,643

Investments

16

13

22

22

22

Current Assets

 

 

44,649

34,090

19,480

9,647

10,154

Stocks

0

0

0

0

0

Debtors

151

199

4,263

7,622

8,476

Cash

44,371

33,453

14,455

1,262

914

Other

127

438

763

763

763

Current Liabilities

 

 

(1,777)

(1,432)

(5,384)

(5,384)

(3,974)

Creditors

(1,619)

(1,300)

(1,873)

(1,873)

(463)

Short term borrowings

0

0

0

0

0

Other

(159)

(132)

(3,512)

(3,512)

(3,512)

Long Term Liabilities

 

 

0

(154)

(5,188)

(12,188)

(24,188)

Long term borrowings

0

0

0

(7,000)

(19,000)

Other long term liabilities

0

(154)

(5,188)

(5,188)

(5,188)

Net Assets

 

 

44,362

33,931

25,338

8,483

(1,870)

CASH FLOW

Operating Cash Flow

 

 

(5,759)

(12,383)

(11,683)

(18,987)

(11,110)

Net Interest

0

405

248

145

13

Tax

0

0

0

0

0

Capex

(97)

(525)

(20)

(1,350)

(1,250)

Acquisitions/disposals

8

3

(7,097)

0

0

Equity Financing

47,415

782

(18)

0

0

Dividends

0

0

0

0

0

Other

0

0

0

0

0

Net Cash Flow

41,566

(11,719)

(18,570)

(20,193)

(12,347)

Opening net debt/(cash)

 

 

205

(44,371)

(33,453)

(14,455)

5,738

HP finance leases initiated

0

0

0

0

0

Other

3,011

800

(429)

0

0

Closing net debt/(cash)

 

 

(44,371)

(33,453)

(14,455)

5,738

18,086

Source: Novogen accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Novogen and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Novogen and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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