Lehman report about the new PhaseIIa result
Headline: Texas Biotechnology: Announces Ph.2 Endothelan Data
Author: CA Butler,PhD/R.Rouse (212)526-4410
Rating: 1
Company: TXB
Country: COM CUS
Industry: BIOTEC
Ticker : TXB Rank(Prev): 1-Buy Rank(Curr): 1-Buy
Price : $5 7/8 52wk Range: $7.25-3.75 Price Target: $16
Today's Date : 02/11/98
Fiscal Year : DEC
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EPS 1996 1997 1998 1999
QTR. Actual Prev. Curr. Prev. Curr. Prev. Curr.
1st: -0.24A -0.19A -0.19A -0.19E -0.19E - -E - -E
2nd: -0.23A -0.24A -0.24A 0.21E 0.21E - -E - -E
3rd: -0.23A 0.15A 0.15A -0.12E -0.12E - -E - -E
4th: -0.18A -0.05E -0.05E -0.08E -0.08E - -E - -E
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Year:$ -0.87A $ -0.33E $ -0.33E $ -0.18E $ -0.18E $ 0.05E $ 0.05E
Street Est.: $ -0.42E $ -0.40E $ -0.12E $ -0.17E $ 0.12E $ 0.05E
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Price (As of 2/10): $5 7/8 Revenue (1998): $11 Mil.
Return On Equity (98): N/A Proj. 5yr EPS Grth: N/A
Shares Outstanding: 27.3 Mil. Dividend Yield: N/A
Mkt Capitalization: $160 Mil. P/E 1997; 1998 : N/A; N/A
Current Book Value: $0.44/sh Convertible: None
Debt-to-Capital: N/A Disclosure(s): A
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* Texas Biotechnology announces positive results of a Phase IIa study of its
endothelial receptor antagonist in congestive heart failure patients.
* Our valuation suggests this product to be worth $3.75 to the stock which we
do not believe is reflected in the current price.
* Novastan approval is expected in the Spring. Our rating remains BUY-1.
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Texas Biotechnology reported today that its endothelial receptor antagonist demonstrated positive (statistically significant) results in a Phase IIa study involving 16 patients having Class III/IV congestive heart failure. TXB will continue in another Phase II trial to determine the optimal dose. Essentially, this trial was designed to address the hemodynamics of bolus dosing in patients having heart failure. Two doses (dose was not disclosed) were tested in 9 centers and the principal investigator was Dr. Bill Carlucci. Eight patients were enrolled per dose. Prior to dosing, patients were removed
from their standard therapy of vasodilators and ACE inhibitors. In this hemodynamic study, patients were cardiac catheterized and given a bolus dose of the receptor antagonist or placebo. (The drug is orally bioavailable but was given as a bolus administration in order to monitor the cardiac effects).Physicians were blinded to the drug. Primary endpoints were a decrease in pulmonary artery pressure and a reduction in pulmonary vascular resistance.. Both of these effects in the blinded study were found to be significant(p<0.05, though we do not know the magnitude) versus placebo. Tolerance of the agent was good (one fear might be that the drug would cause a severe drop
in blood pressure or hypotension which did not occur in this study) and
pressure was reduced. While we understand there was a dose-effect, both doses
met the primary endpoint, thus a dose response curve with these two doses was not established. TXB is therefore moving toward a Phase II dose-ranging study in order to test the effect of other doses.
In conclusion TXB established for the first time in man that an antagonist for the endothelial receptor has a beneficial effect in reducing arterial pressure without causing a precipitous drop in pressure (hypotension). This data supports the potential utility of this drug as an adjunct to ACE inhibitors or other vasodilaltors in the congestive heart market.
Congestive heart failure is the chief cause of roughly 400,000 new cases of congestive heart failure and 40,000 deaths in the US every year. This syndrome is the leading cause of hospitalization among people aged 65 and older. The financial cost of CHF has escalated commensurate with the increase in hospitalizations to more than $10 billion in treatment costs in the US. Patients having CHF are estimated to number 3.5 million Americans and 4.5 million Europeans. There exists several classification methodologies for this
syndrome. Approximately 24 percent are diagnosed with Class III disease and 10 percent with Class IV disease, thus patients eligible for treatment are 770,000 in the US and 1.1 million in Europe.
Our valuation model ascribes a value of approximately $77 million (or a 12 month value of $101 million) to the endothelial receptor antagonist. This equates to roughly $3.75 per share which we do not believe is valued at all in the stock currently. Remember, we anticipate FDA approval of Novastan in heparin-induced thrombocytopenia in the Spring. We believe TXB stock to be of
real value and our model supports our current valuation of 1-BUY. |
