Drug discovery company E-Therapeutics’ (ETX: AIM) latest update has been warmly received by the market. The £90 million cap improved by 14.2% to 34.25p after announcing positive progress in Phase I clinical trials of its cancer treatment.
One of the patients in the trials saw their tumour greatly reduce in size. Moving the treatment, known as ETS2101, into clinical trials was management’s priority last year and they have succeeded in establishing simultaneous trials in the US, to fight brain cancer, and in the UK to treat a variety of tumours.
Such early success appears to have caught the market unaware. Analyst Savvas Neophytou of house broker Panmure Gordon said in a research note to clients: ‘We had been anticipating safety data from the company’s lead product candidate ETS2101 in Q4, 2013. Therefore it was a positive surprise to hear today’s announcement of strong success in the treatment of one particular patient whose tumour was greatly reduced in size.’
Neophytou has increased his share price target by 3p to 70p, more than double today's price. 'This sector is not used to success so the pessimists will scream sample size, chance event and other such instruments of caution,' says the analyst. 'They would be right from a purist point of view but the fact remains one particular patient who had run out of all therapeutic options is still alive as a result of ETS2101 and that is a significant achievement for the company’s first shot at goal. '
E-Therapeutics' management are hoping that such encouraging news so early in the trial process will continue with its anti-depressant treatment. The company has filed a Phase IIb clinical trial application for the drug and results are expected in the second half of 2014.
Funding to take these drugs and others in E-Therapeutics’ portfolio to the stage where licensing deals can be agreed will not be a problem. The company has £45 million cash following a £40 million equity placing in March. An agreement to take its cancer drug ETS2101 to market is expected by 2017, if it continues to produce positive results.
The company is R&D (research and development) intensive, increasing its associated spend by 41% last year, which increased its pre-tax losses. It was £4.2 million in the red during the period, compared to a £3.2 million loss a year earlier.