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Research: Healthcare
Biodexa has reached an agreement to acquire worldwide rights to Adhera Therapeutics’ Phase II-ready asset, tolimidone, a novel lyn kinase activator, with intentions to develop it for type I diabetes (T1D). The deal consideration includes an upfront cash payment of US$0.3m to Adhera and US$2m in American depository shares (ADS) to Adhera’s secured noteholders with up to US$4m in additional deferred stock consideration to noteholders. These rights have been sub-licensed from Melior Pharmaceuticals, which has been developing tolimidone in type II diabetes (T2D) (Phase II) and non-alcoholic steatohepatitis (Phase I). Unlike T2D, which is a lifestyle disease, T1D is an autoimmune condition (requiring daily insulin treatment) and currently has no curative therapies. We see this deal as diversifying Biodexa’s development pipeline outside oncology and into an area with sizable commercial opportunity (US$7.6bn market).
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Biodexa Pharmaceuticals |
Tolimidone licensing expands clinical pipeline
Pharma and biotech |
Spotlight – Flash
4 December 2023 |
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Biodexa Pharmaceuticals is a research client of Edison Investment Research Limited |
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Biodexa has reached an agreement to acquire worldwide rights to Adhera Therapeutics’ Phase II-ready asset, tolimidone, a novel lyn kinase activator, with intentions to develop it for type I diabetes (T1D). The deal consideration includes an upfront cash payment of US$0.3m to Adhera and US$2m in American depository shares (ADS) to Adhera’s secured noteholders with up to US$4m in additional deferred stock consideration to noteholders. These rights have been sub-licensed from Melior Pharmaceuticals, which has been developing tolimidone in type II diabetes (T2D) (Phase II) and non-alcoholic steatohepatitis (Phase I). Unlike T2D, which is a lifestyle disease, T1D is an autoimmune condition (requiring daily insulin treatment) and currently has no curative therapies. We see this deal as diversifying Biodexa’s development pipeline outside oncology and into an area with sizable commercial opportunity (US$7.6bn market).
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Historical financials
Source: Biodexa company filings. Note: PBT and EPADS are normalized. *One ADS is equal to 400 ordinary shares. |
T1D is an autoimmune disease where the immune system attacks pancreatic beta cells, destroying their ability to produce insulin (which regulates blood sugar levels). The disease is believed to afflict 8.4 million people worldwide and currently has no approved curative treatments, offering significant commercial opportunity (the market is expected to grow to US$13.6bn by 2030, at a CAGR of 7.6%, 2023–30). Tolimidone is a selective activator of the lyn kinase enzyme, which modulates insulin sensitivity and regulates blood glucose by potentiating insulin receptor activation and the insulin receptor substrate-phosphatidylinositol-3 (IRS-PI3K) signaling pathway. The drug has been studied in over 700 patients across two Phase II clinical trials in T2D by Melior, displaying a good safety and tolerability profile. Tolimidone’s potential in T1D has been demonstrated in preclinical animal studies conducted by the University of Alberta and the Alberta Diabetes Institute, which identified lyn kinase as a key factor for beta cell survival and proliferation.
Biodexa plans to conduct a Phase Ib dose-finding study to establish the minimum effective dose in patients with T1D. This will be followed by a Phase II double-blinded, placebo-controlled study expected to enroll c 35 patients with T1D with a focus on c-peptide positive patients (320,000–480,000 patients in the US according to Adhera). In addition to the upfront payment and conditional on Adhera secured noteholders subscribing to at least US$4.0m in a Biodexa equity offering, the company will also pay out US$0.4m in cash and US$3m in ADS to Adhera and its noteholders, respectively. The deal will also involve milestone payments to secured noteholders totaling US$4m issuable in ADS (US$1m on positive Phase II studies and US$3m on first commercial sales). We also note that under the agreement, Biodexa is obligated to issue 9.9% of its fully diluted share capital (in ADS) upfront to Melior and partner Bukwang for the new tolimidone license, along with single-digit tiered royalties. This deal should help diversify Biodexa’s clinical pipeline.
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Research: Metals & Mining
On 22 November, Pan African Resources (PAF) announced that operations to date in FY24 had performed in line with, or better than, expected, with gold production for H124 anticipated to be in the range 94,000–98,000oz (cf 92,307oz in H123). As a result, it increased its production guidance for FY24 to 180,000–190,000oz, which caused us to increase our production estimate in turn by 1.9% (or 3,575oz) to 189,725oz. The change made only a modest difference to our EPS forecasts for FY24 (see Exhibit 2). However, it increases our confidence in those estimates, which are already at the top of a relatively wide range of expectations.