DCGN :Files IND for DG-051 for Prevention of Heart Attack
2006-07-05 02:46 (New York)
Piper Jaffray & Co.
Hot Comment
(DCGN - $6.21)
Market Perform Volatility: Medium
Health Care
Files IND for DG-051 for Prevention of Heart Attack
Edward A. Tenthoff, Sr Research Analyst
212 284-9403, edward.a.tenthoff@pjc.com
William T. Ho, Research Analyst
212 284-9308, william.t.ho@pjc.com
KEY POINTS:
* As expected, deCODE last week filed an IND for DG-051 for the prevention of
heart attack.
* DG-051 is a follow-on compound to lead drug veliflapon (DG-031) and was
discovered at deCODE.
* We continue to rate shares of DCGN Market Perform.
* deCODE's work in myocardial infarction led to the identification of a second
gene within the leukotriene pathway that confers an increased risk of heart
attacks. The leukotriene-A4 hydrolase enzyme confers risk of MI that is
similar to LDL cholesterol in addition to the risk previously associated
with FLAP.
* deCODE filed an IND on DG-051 and anticipates starting the Phase I trial
later this summer. In preclinical studies, DG-051 demonstrated potent
inhibition of LTB4 production in a once-daily oral formulation.
* DG-051 is a follow-on compound to lead drug veliflapon, which recently
entered into the Phase III Leukotrienes in Coronary Artery Disease (LTCAD)
trial.
* The Phase III trial will enroll 3,450 African Americans who have recently
suffered a heart attack with 80% of patients HapK+, which confers an
increased risk. The randomized, double blind trial will compare 500mg of
veliflapon twice daily (BID) to placebo on top of current therapies. The
primary end-point is a reduction in cardiac events, namely fatal or non-
fatal MI and stroke, hospitalization for unstable angina and need for urgent
revascularization.
* deCODE also intends to develop a DNA-based diagnostic test for leukotriene-
A4 hydrolase for heart attack with Illumina.
* deCODE retains $140 million in cash to advance this pipeline and provided
2006 burn guidance of $75-$80 million.
PRICE TARGET AND JUSTIFICATION:
We are maintaining our Market Perform rating and $8 price target based on a
projected valuation of $450 million.
RISKS TO ACHIEVEMENT OF TARGET PRICE:
Risks associated with deCODE are common to all drug discovery companies,
including developmental, clinical, and regulatory. DG031 could fail in the
clinic. deCODE may fail to file INDs or enter into new collaborations, thereby
lowering revenues. deCODE may require additional capital or may face
litigation. |
