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C4X Discovery Holdings plc: THE INVESTMENT CASE

C4X Discovery built for growth not a sale

To build the UK's first £1bn, self-sustainable biotech is the aim for chief executive Clive Dix
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As befits someone who has helped to build and sell biotech companies for hundreds of millions of pounds, Clive Dix is relaxed about prospects for C4X Discovery PLC (LON:C4XD).

To retire having produced the UK’s first stand alone biotech is the aim,  the chief executive told Proactive.

An impressive track record suggests he has more than a fighting chance.

Dix was behind PowderJect, a vaccines business sold in 2003 for more than £500mln.

PowderMed, which Dix bought from PowderJect, was sold to Pfizer in 2006 while Convergence Pharmaceuticals, where he was chief executive, was snapped up by Biogen in 2015 for US$675mln.

WATCH: C4X Discovery preparing to do something 'very different' in drug development

A first £1bn British biotech

But a sale is not the plan for C4X.

“Our intention is to grow it, to get it self-sustainable and for the UK to have a £1bn biotech at last.”

That would make a big difference to the UK biotech market, he believes.

Investors in the sector who have suffered more than a fair share of failures would say amen to that, but a market value of just £34mln currently indicates there is still some way to go to achieve the ambition.

Dix, though, is confident that the science behind C4X is a major move step forward in the drug discovery process.

“Every medicine interacts with a protein (a receptor or an enzyme). What we do is work what out which protein we want it to interact with.”

“That is the thing that is going to make the difference."

Sophisticated algorithms

C4X’s Taxonomy-3 platform uses sophisticated algorithms that run over genetic data time and again to identify the genes that contribute to someone having a disease.

“ We find the protein that’s got something to do with the disease. Then we use a second technology (Conformetrix) to see the shape of a molecule.”

“Ours is the only technology in the world that can do that.”

And it is Conformetrix’s ability to deliver a precise shape for a small molecule to fit an enzyme that is crucial.

Dix uses a lock and key analogy.

The lock is the enzyme while the key is the molecule which, as it knows the shape, C4X can design to fit precisely .

That makes the drug discovery process quicker and produces highly potent and better molecules.

The drug discovery production line

Currently, C4X is working on nine programmes, but the aim is to expand this so that eventually every year it can license three or four medicines to a partner for clinical development.

That would require 30-40 programmes on the go at any one time, but once up to that level it almost becomes a ‘production line’.

C4X does not intend to do any clinical development itself, its input ends when a partner gets involved.

At that point it hands over the intellectual property for the partner to carry out clinical tests.

Milestone payments are received depending on the success though Dix says even successful molecules can be improved and it has started to pick up more research work to improve or correct minor ‘faults’.

Addicted to success

A taster of what might be in store came in November when data was released on an antagonist developed by C4X for the Orexin-1 receptor.

Located in the brain, Orexin-1 governs a person’s addictive behaviour.

"We already knew it had an effect on craving, addictive behaviours but the latest results indicated it also stopped relapse impulses."

This latest data was for smoking or nicotine addiction, but the company also has data on cocaine and believes it can play a role in opioid addiction, which has been described as an epidemic in the US.

These markets are colossal in themselves, but Dix sees the ability to inhibit craving as having even wider applications.

“Binge eating, food addiction, and even gambling all use the same centres of the brain.”

Other more generally available data has also shown an effect on anxiety disorders, again a massive target.

Good partner sought

Dix acknowledges what the market is waiting for now is a first partnership to be signed.

A specialist company might do for one indication, he explains, but he hopes the promise might attract a broader partner that can run multiple clinical trials.

As well as Orexin, C4X has drug discovery programmes underway for Parkinson’s, rheumatoid arthritis, cancer, diabetes and COPD.

“We really want to go with a good partner that will have bandwidth to run clinical studies in many disease areas.”

Dix thinks the diverse portfolio of drugs might prove a barrier to any buyers, but he repeats again that it is not the intention to find a purchaser.

" We have purposefully built C4X for growth not for a sale."

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