GS report:
Stock rating: In-Line
Coverage view: Neutral
Small-Cap Growth
Price: US$9.80
June 12, 2003
TLRK(IL/N): Update from Goldman Sachs
conference
52-Week Range US$10-4
YTD Price Change 31.37%
Market Cap US$542.0mn
Long Term Growth Rate
EPS Growth Estimate NA
Fiscal Year (ending in Dec)
2002 2003E 2004E
US$-1.83 US$-1.92 US$-2.07
At the 24th Goldman Sachs Global Healthcare Conference today, management gave an
update on the company's pipeline and reviewed its recently established collaboration with
Amgen. Tularik has two cancer compounds in Phase II and Phase II/III trials, and two
compounds in Phase I trials for diabetes and immune disorders. Tularik maintains its goal
of filing 1-2 new INDs per year, and expects to file its first IND from its oncology
program in 2004. We maintain IL rating and Neutral coverage view.
INVESTMENT OUTLOOK: 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 early clinical and preclinical development. Several of these candidates
may represent first in class therapeutics. Tularik is a development stage company most
suitable for investors with a long-term time frame and high risk tolerance.
I. CLINICAL DEVELOPMENT PROGRAMS
** T67 for primary liver cancer - pivotal study initiated **
Tularik's most advanced programs are in the oncology field. The company initiated Phase
II/III studies in March with T67, a beta tubulin binder, for the treatment of primary liver
cancer. Phase II study results were presented at ASCO in May 2002. Tularik plans to study the
primary endpoint of survival in approximately 750 patients who will be treated with the current
standard of care, doxorubicin, with or without T67, as first line therapy. Both agents are
administered by IV infusion. The trial will be performed at centers in the US, Europe and Asia. 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 survival. The
average survival period for patients diagnosed with primary liver cancer is estimated at 6 months.
The study is designed to detect an improvement of six weeks (roughly 25%) in survival over the
doxorubicin arm.
** T607 for solid tumors **
Behind T67, Tularik is studying T607, an analog of T67 designed not to cross the blood brain
barrier, in cancer. The company began enrolling Phase II studies in July, 2002 for hepatocellular
carcinoma, gastric/esophageal cancer and ovarian cancer. We look for top line results potentially in
late 2003.
** T487 for inflammatory disorders **
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, specifically the CXCR3 receptor, and is therefore predicted to inhibit
migration of lymphocytes to sites of inflammation. T487 has shown preclinical activity in transplant
rejection.
** T131 for Type II diabetes **
On January 27, 2003, Tularik announced it has begun Phase I studies with T131. The compound is
one of multiple leads, which 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, anemia, and weight gain side effects that have been
associated with this class.
** Merck collaboration **
Merck has initiated Phase I studies for the potential treatment of HIV/AIDS, with a compound
resulting from collaborative research between the two companies. The compound inhibits the HIV
integrase enzyme, which is required for viral replication after the virus has infected the blood. In
addition to the viral protease and reverse transcriptase enzymes, integrase is the third HIV enzyme
required for viral replication. Inhibition of integrase would represent a novel mechanism for HIV
treatment.
II. AMGEN ONCOLOGY COLLABORATION
In May, Tularik and Amgen entered a 5-year collaborative agreement for cancer therapeutics. The
collaboration with Amgen provides a much needed cash infusion, eliminates the overhang of ZKB
shares and provides a top strategic partner in oncology. Amgen has agreed to pay a total of $125
million in committed funding over 5 years and up to $21 million per target, plus potential royalties.
Amgen has agreed to purchase 6M shares of outstanding stock, plus an additional 3M following
Hart Scott Rodino approval, from ZKB Pharma Vision AG. With this deal and revised guidance,
management estimates that they have at least 2 yrs of funding in place.
III. Milestones in 2003
Tularik expects to file one to two new INDs or IND equivalents in 2003 and a like amount per year
thereafter. The company has currently selected six 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. Two candidates target metabolic disorders. T659 is an oral agent, which increases HDL
cholesterol, and T792 is an oral agent that acts through the central nervous system to effect weight
loss.
I, Meg Malloy, hereby certify.. |
