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PhillipCap slashes target price on iX Biopharma, but maintains ‘buy’ call

Lim Hui Jie
Lim Hui Jie10/3/2022 05:36 PM GMT+08  • 3 min read
PhillipCap slashes target price on iX Biopharma, but maintains ‘buy’ call
PhillipCap's Paul Chew has cut his target price by almost 30%, from 35.5 cents to 25 cents.
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PhillipCapital’s head of research Paul Chew has maintained his “buy” call on iX Biopharma, but has lowered his target price by almost 30% downwards, from 35.5 cents to 25 cents.

Writing in a Sept 30 report, Chew explains that prospects for the company are highly dependent on development milestone payments and sales royalties from the drug Wafermine, which is used for complex regional pain syndrome (CRPS).

He notes that the annuity stream from milestone and royalty payments of Wafermine is on track, with out-licensing partner Seelos Therapeutics planning phase 2 trials for (CRPS) in 2QFY2023 ending June 2023.

However, he says that “there is a high level of uncertainty” over these cash flows as it assumes completion of drug trials and successful sales of Wafermine.

Separately, the company has also expanded its pipeline of drugs by developing a sublingual wafer - referring to a drug applied under the tongue - containing dexmedetomidine to treat multiple indications, including Alzheimer’s disease-related agitation.

Dexmedetomidine was initially approved as an intravenous infusion (IV) by the US Food and Drug Administration (FDA) as a sedative medication, but Chew says the drug formulation for the sublingual form has been completed and a phase 1 human study is underway with results due in December 2022 or January 2023.

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Other developments that iX Biopharma is in include the signing of a supply agreement with China Resources Pharmaceutical Commercial Group (CRPCG) for the drug Wafesil, which is used for the treatment of male erectile dysfunction.

CRPCG is responsible for obtaining the marketing authorisation for Wafesil in China. There will be upfront and licensing fee payments prior to the commercialisation of Wafesil.

“We expect filling with the Chinese regulators to be conducted by 1QFY2023. iX Biopharma is also looking at the distribution of Wafesil in other countries.”

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iX Biopharma is also planning to market its medicinal cannabis product Xativa in other markets, like the US and the UK, although regulatory approval in the UK was delayed due to the pandemic.

Xativa is currently sold in Australia with a prescription in a variety of dosage strengths, and Chew expects more product enhancements, including combining it with other nutraceutical ingredients.

On this front, the company will also be introducing a Tetrahydrocannabinol (THC) only version (called Hypera) in the second quarter of 2023.

The company plans to market Xativa in larger cannabis markets outside Australia, including the UK and US. Regulatory approval in the UK is progressing, although it was delayed due to the pandemic.

Furthermore, iX Biopharma’s capacity has been boosted six times more with new freeze dry equipment in Australia as of 4QFY2022, which ended on March 31.

As at 4.57pm, shares of iX Biopharma were trading at 14 cents per share, with a FY2023 P/B ratio of 6.7x.

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