[2001]-[XR9576]-[P-Glycoprotein Inhibitor][Xenova today confirmed progress on its leading product]
Xenova today confirmed progress on its leading product - a drug it hopes will be used with anti-cancer drugs to overcome treatment resistant cells. The shares initially hiked 7% to 61p on the news. But doubts persist over the recent merger with Cantab and today's news did little to remove them. Douglas Smith makes sense of the jargon, and asks if the shares are attractive at this depressed level.
It may not be a cure for cancer itself, but Xenova's home grown drug XR9576 may be able to do its bit by assisting anti-cancer drugs in cases where such drugs could no longer be used. The market potential of such a drug is estimated to be worth between $500m - $1bn, and Xenova is currently in licensing talks with "a number of potential marketing partners".
Phase IIa human trials, used to establish the safety profile of a drug, have shown no serious side effects in using XR9576 with the anti-cancer drugs Paclitaxel, Vinorelbine or Doxorubicin.
Anecdotal evidence at the trials suggests positive efficacy - but this will need to be proved at the next clinical testing phase.
Some 90% of cancer patients develop a degree of resistance to anti-cancer drugs. Of these, the majority stem from the P-glycoprotein pump within the cell membrane. The XR9576 drug could provide the solution - the drug acts as an inhibitor of the P-glycoprotein pump - thus restoring the sensitivity of previously resistant cells to existing treatments. The drug would be used in conjunction with existing anti-cancer drugs to allow effective treatment.
All good stuff surely? But while shares initially jumped 7%, many analysts are asking exactly what was new in today's news.
In February the group announced that "each of the three trials achieved the desired outcome." Just last week, at first quarter results, the product pipeline update confirmed this status and also reported its "anecdotal evidence of efficacy" and status of its licencing talks. It looks a little like reissuing old press releases to build newsflow, using the presentation of the results today at the American Society of Clinical Oncology as an excuse.
The news is not bad - it's just not new, and today's rise looks a little overstated on this announcement alone. But news up to now has been overshadowed by the hiatus following its announcement of the all-paper merger with the vaccine specialist Cantab. Since then, Xenova has had a rough time of it. The shares had nearly halved from 89p to 46p just weeks ago.
Analysts continue to be sceptical of the merger. First-quarter results claimed that the integration was "proceeding well", but analysts are waiting for further evidence to be convinced of the synergistic benefits that exist between the two very different groups.
While strengthened by the addition of the Cantab portfolio, and having reduced some of the technological risk, the group still has a lot to do to convince a pessimistic market. The shares look cheap compared to historical levels - and are now better value long-term, but are likely to mark time until the group shows that it can live up to its merger promises.
hemscott.co.uk |
