New Broker note today 10p.15 Dec 2017 20:40
Nuformix (NFX.L), the Cambridge-based pharmaceutical development company which specialises in cocrystal technology to unlock new and improved therapeutic uses for already known and safe drugs, has
announced a key out-licensing deal with Shanghai Newsummit Biopharma Group.
Under the deal agreement, NFX will receive upfront payments of some £2.5m in addition to a double digit royalty stream on all Newsummit revenues derived from the NXP001 product in the Chinese market.
Importantly, this deal rubber stamps NFX’s cocrystal technology, it provides fresh income to help finance product development and should provide a strong and rising royalty income stream going forward.
Cocrystal Technology Solves Several Drug Development Problems
The clever part of NFX’s drug development programme is that of utilising cocrystal technology as a new approach to overcome current performance limitations of safe, known drugs. Known safety equates to lower development costs, shorter timescales and overall reduced risks, thus NFX’s risk/reward profile compares very favourably to its peers.
Billion Dollar Treatment Fields
NFX has two main drug development programmes; one in the cUS$ 20bn treatment field of Oncology Supportive Care (OSC) and the other in the potentially even larger emerging Fibrosis treatment area. New drugs in both areas are highly sought after by big pharma, as today’s deal highlights.
Valuation and Recommendation
Nuformix is currently fully funded for its two key development programmes NXP001 and NXP002 for the coming 18 months, but today’s announcement on the NXP001 programme, rubber stamps NFX’s cocrystal technology, whilst providing fresh near-term funding and longer term, a royalty stream.
This is clearly very positive for NFX and prompts us to raise our target price
significantly, to 10p per share (from 5p) and we reiterate our Speculative Buy
recommendation.
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Nothing hubristic in there Inner-Harmony, and plenty of fundamental rationale.