Destiny Pharma (LON: DEST) expects to report on the study results of the phase 2b clinical study on the use of XF-73 nasal gel for the prevention of post-surgical infections by the end of March. finnCap believes that positive news would increase the broker’s valuation of Destiny by 80p a share.
Destiny is a developer of antimicrobial drugs. The main focus has been on XF-73, which is used to treat post-surgical infections, such as MRSA. There are also other potential uses of the XF platform, including a collaboration with SporeGen for the prevention of Covid-19 and other respiratory viral infections.
The phase 2b trial has enrolled 125 patients undergoing heart surgery in the US and Europe. XF-73 has been shown to be safe and fast. Importantly, it does not appear to generate antimicrobial resistance. The potential addressable market in the US is estimated to be $3bn a year – based on 15 million surgical patients.
An evaluation agreement for a dermal version of XF-73 has been signed with the US National Institute of Allergy and Infectious Diseases.
Finances
Destiny has the cash it requires in the medium-term. In November, Destiny raised £10.4m from a placing and open offer at 65p a share. Since then, Destiny has acquired NTCD-M3, which is a C.diff treatment. There was already cash in the bank and there should still be net cash of at least £5m at the end of 2021.
If Destiny secures a partner for one of its treatments, there could be an initial cash injection with more to come over the long-term.
The 2020 results are due to be published on 14 April.
Valuation
finnCap has a target price of 300p a share and that could rise to 380p a share with positive news about the XF-73 clinical trial.
So far this year, the share price has more than doubled to 159.5p. That leaves plenty of upside, particularly if the trial news is good.
