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Currency in US$
Last close As at 08/06/2023
US$0.95
▲ −0.25 (−20.83%)
Market capitalisation
US$2m
Research: Healthcare
Biodexa has announced that it has signed a non-binding letter of intent to acquire Varian Biopharmaceuticals, a privately held US-based biopharma company developing a small molecule atypical protein kinase C iota (aPKCi) inhibitor for treating cancer. Varian’s pipeline comprises lead candidate VAR-101 (basal cell carcinoma, BCC) and VAR-102 (solid tumors), both in preclinical development. The proposed acquisition is in line with Biodexa’s strategy to expand its oncology-focused pipeline following its recent repositioning as a therapeutics company. The proposed terms include issuing 10m American depository shares (ADSs) as an initial consideration (which translates to c $3m at Biodexa’s current share price), resulting in Varian stakeholders owning c 34% of the combined business, post consolidation. A further 6m ADSs will be issued based on meeting predefined clinical and regulatory milestones pursuant to the deal, Biodexa also plans to raise a minimum of US$7m in net proceeds to fund the Phase I study for VAR-101, expected to start in Q124.
Biodexa Pharmaceuticals |
Acquisition of Varian Bio to bolster pipeline
Pharma and biotech |
Spotlight – Flash
24 May 2023 |
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Biodexa Pharmaceuticals is a research client of Edison Investment Research Limited |
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Biodexa has announced that it has signed a non-binding letter of intent to acquire Varian Biopharmaceuticals, a privately held US-based biopharma company developing a small molecule atypical protein kinase C iota (aPKCi) inhibitor for treating cancer. Varian’s pipeline comprises lead candidate VAR-101 (basal cell carcinoma, BCC) and VAR-102 (solid tumors), both in preclinical development. The proposed acquisition is in line with Biodexa’s strategy to expand its oncology-focused pipeline following its recent repositioning as a therapeutics company. The proposed terms include issuing 10m American depository shares (ADSs) as an initial consideration (which translates to c $3m at Biodexa’s current share price), resulting in Varian stakeholders owning c 34% of the combined business, post consolidation. A further 6m ADSs will be issued based on meeting predefined clinical and regulatory milestones pursuant to the deal, Biodexa also plans to raise a minimum of US$7m in net proceeds to fund the Phase I study for VAR-101, expected to start in Q124.
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Historical financials
Source: Biodexa company filings. Note: PBT and EPS are normalized. *Adjusted for the 1:20 share consolidation announced in March 2023. |
Protein kinases are widely regarded as key therapeutic targets in cancer due to their role in signaling mechanisms that drive tumorigenesis; more than 70 kinase inhibitors have been approved by the FDA as of 2022. Varian’s lead drug candidate, VAR-101, is an aPKCi inhibitor being developed as a topical formulation for the treatment of BCC and has completed Investigational New Drug-enabling skin toxicology studies with plans to start a Phase I proof-of-concept (PoC) trial in Q124. BCC is the most common skin cancer with 3.6m cases diagnosed each year in the US alone. Currently marketed topical treatments include imiquimod and 5-fluorouracil, although both target superficial and early-stage tumors. The other asset, VAR-102, is an oral formulation targeting solid tumors with an initial focus on non-small cell lung cancer.
We view this proposed acquisition as being in line with Biodexa’s renewed business strategy to focus on oncology and rare/orphan indications. As a reminder, in March 2023, Biodexa announced a new preclinical program, MTD217, targeting leptomeningeal disease and communicated its plans to acquire/in-license another pipeline candidate in FY23. Alongside legacy asset MTX110, this acquisition would take the product portfolio to four programs targeting a range of cancers.
An all-stock transaction would allow Biodexa to preserve funds earmarked for clinical development, in particular to advance lead asset MTX110. We note that as part of the proposed deal, Biodexa also plans to raise at least US$7m in net proceeds, which will be used to fund VAR-101’s Phase I study. While this may lead to some further dilution initially, PoC for the acquired assets, if established, should unlock value on the upside.
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Research: Healthcare
OSE Immunotherapeutics has announced its FY22 results, providing financial and operational updates as the company continues to advance its key clinical assets. A confirmatory and potentially pivotal Phase III study is planned for Tedopi, OSE’s lead cancer vaccine candidate, which we expect to be initiated by end-FY23/early-FY24, and this would mark a significant clinical milestone, in our view. Additional upcoming catalysts for investor attention include readouts in Q423 for OSE-127, being investigated in a Phase II study in ulcerative colitis (UC). OSE-127 had previously been subject to a two-step licensing option granted to Servier. However, following negative readouts from a Phase II Servier-sponsored trial in primary Sjögren’s syndrome (SS), OSE and Servier have mutually decided to terminate the option license agreement. We value OSE at €280.8m or €15.2 per share, with Tedopi as the primary contributor to this valuation, for which we expect commercialisation in 2028.
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