From GS 10/21:
TLRK reported Q3 loss of ($0.45), lower than our est. of ($0.48). We are
not changing 2002 loss estimate of $93 million but are lowering our per
share loss to ($1.80) from ($1.83) on higher share count. Plans to begin
Phase III studies with cancer agent T67 are on track for 2003. We look for
Phase II data on T607, new IND submissions and potential partnerships
over the coming quarters. We maintain our MO rating for long-term
investors. Tularik is an early-stage company. Key risks include potential
clinical failures and long development timeframes.
RECOMMENDATION: Tularik is focused on developing novel oral agents to
address multiple diseases that represent large commercial opportunities.
While the most advanced agents are in the oncology area, we believe some
of the more promising candidates are in preclinical development. Several
of these candidates may represent first in class therapeutics. Tularik
maintains its goal of filing 1-2 new INDs per year. Tularik is a development
stage company most suitable for investors with a long-term time frame.
RESULTS: Tularik reported a third quarter net loss of $22.9 million or
($0.45) per share, better than our forecast of a loss of $25 million or
($0.48) per share. We are maintaining loss projection of $93 million for
2002, slightly above management’s guidance of around $90 million. We are
forecasting $28 million in revenues, in the mid-point of management’s
guidance of $25-$30 million. Revenues are difficult to forecast. The upper
end of the range is dependent on potential new partnerships. Tularik
ended the quarter with $156 million in cash and marketable securities,
excluding $21.1 million in cash from Cumbre. In addition, Tularik raised
$25.7 million through the sale of 4 million shares on October 17th. We are
forecasting 2003 losses of $108 million.
I. CLINICAL DEVELOPMENT PROGRAMS
** Pipeline **
Tularik’s most advanced programs are in the oncology field. The company
plans to start pivotal studies early next year with T67, a beta tubulin
binder, for the treatment of primary liver cancer. Phase II study results
were presented at ASCO. The company plans to study the primary endpoint of
survival in approximately 750 patients who will be treated with either T67
or the current standard of care, doxorubicin, as first line therapy. Both
agents are administered by IV infusion. The trial will be performed at
centers in the US, Europe and Asia. Interim data on approximately 100
patients may be provided in 2004. If data from the full trial are positive,
we believe that potential approval could occur in 2006/2007. Given lack of
strong evidence of efficacy in Phase II studies we believe this program is
risky. However, we believe that T67 would be approvable with a modest
improvement in 6-month survival.
Behind T67, Tularik is studying T607, an analog of T67 designed not to
cross the blood brain barrier, in cancer. The company has selected a dosing
regimen for Phase II studies in hepatocellular carcinoma, non-Hodgkin’s
lymphoma, gastric/esophageal cancer, and ovarian cancer. Phase II studies
began enrolling in July. We look for data in 2003.
Phase I clinical trials are underway with a novel compound, T487, an oral
anti-inflammatory agent with potential application in rheumatoid arthritis,
inflammatory bowel disease and psoriasis. The trial will be conducted in
the UK and will investigate the safety and pharmacokinetic profile of the
small molecule in up to 30 healthy adults. The compound inhibits binding
of specific chemokines to lymphocyte receptors, and is therefore predicted
to inhibit migration of lymphocytes to sites of inflammation. T487 has
shown preclinical activity in transplant rejection.
II. Milestones in 2002/2003
For the remainder of 2002, Tularik expects to establish a new
pharmaceutical alliance, file one new IND and one to two INDs per year
thereafter. The company has currently selected over 4 oral compounds as
advanced preclinical candidates. In the immunological/inflammatory
category, T6204, which targets the IL-1/TNF pathway, has shown preclinical
efficacy in animal models of ulcerative colitis and collagen-induced
arthritis. Three candidates target metabolic disorders. T659 is an oral
agent, which increases HDL cholesterol, T792 is an oral agent that acts
through the central nervous system to effect weight loss. Additional leads
have been identified with potential application in diabetes. They target
the PPAR gamma receptor, the same target as the glitizone class of diabetes
drugs. Candidates in development may obviate the fluid retention and weight
gain side effects commonly associated with this class.
2002 Milestones
- Announce new pharmaceutical alliances
- File up to 2 INDs in 2002, potentially 1-2 each year going forward
H1
* Initiate additional Phase II studies of T611 (dropped program)
* Initiate Phase II studies with T607
* Present Phase II results for T67 (ASCO, May)
* Present Phase II results for T64 (ASCO, May)
* Present Phase I results for T607 (ASCO, May)
H2
* File IND with T487
- One new IND filing
- Potential new partnership
* = Milestone attained |
