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UPDATE - e-Therapeutics' cash management a pleasant surprise to Panmure Gordon

e-Therapeutics revealed its lead drug is making steady progress through the early stages of the clinical trial process as it updated on its own financial health.

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e-Therapeutics (LON:ETX) revealed its lead drug is making steady progress through the early stages of the clinical trial process as it updated on its own financial health.

ETS2101 is currently being given to 33 patients who have brain and other solid tumours, in two studies: one in the US, and the other here in the UK.

The phase I trial is designed to assess how well tolerated the drug is as the dose is escalated.

So far there have been no drug-related adverse events, though there was one incidence of severe fatigue.

e-Therapeutics also said one cancer patient had a partial response to the drug, although phase I is not designed to assess efficacy.

The results of the trial will be reported in the fourth quarter (for brain cancer) and first quarter next year (for solid tumours).

Elsewhere, the group will take ETS6103 for depression into phase IIb trials in the ‘next few weeks’ after a delay as the UK regulator asked for more data. ETX1153c for C.difficile won’t be taken into clinical trials, the firm said.

City firm Panmure Gordon said the ETX1153c decision was not unexpected, and it had previously removed it from its sum-of-the-parts valuation. “We derive our 70p price target entirely from our conservative assumptions on ETS 2101 (Dexanabinol),” the broker revealed.

The financial highlight of Wednesday’s update was the fact the group has more than £45mln in cash to fund its ambitious drug development programme through to 2017.

This follows a successful £40mln cash call launched back in March that was heavily backed by the institutions.

In common with most companies at this phase in its development e-Therapeutics (ETX) posted a loss for the half year – the figure was £2.3mln, up from £1.8mln a year ago.

Chief executive Professor Malcolm Young said: “Following our successful fundraising we are investing in further development of our network pharmacology platform, in applying this technology to add to our drug portfolio and in advancing our leading compounds, notably the cancer drug ETS2101, through clinical trials.

“We are confident this strategy will lead to value-realising partnering deals.”

Broker Panmure Gordon said the good interim results are the prelude to more important events in December.

The figures were ahead of the broker’s forecasts, especially on the key metric of cash reserves, where Panmure Gordon’s forecast of £42mln in the kitty came up £3.4mln short.

Though the broker admits to having erred on the pessimistic side on the profit & loss account, it notes that the usual financial metrics are of little value as key performance indicators in a pre-revenue company such as ETX.

“What will be of greater importance is any news on the pipeline. To us, the most critical news will be in ETS-2101 which is currently ongoing phase I clinical development. No new news was announced on this project today but the company reaffirmed its previous guidance of Q4 2013 for the brain cancer trial and Q1 2014 for the more general solid tumours trial. The company had previously announced encouraging preliminary data in May 2013. Since then we have not had any further updates which probably implies the data is running smoothly,” suggests analyst Savvas Neophytou.

The broker reiterated its ‘buy’ recommendation, and remains positive on the firm’s prospects.

“e -Therapeutics possesses a technology platform that could revolutionise the way the pharmaceutical industry conducts drug development. The platform is increasingly accepted as credible, and the company has intellectual property that puts it in a position of strength, which may necessitate others paying it a licensing fee or, alternatively, result in the company being acquired,” Panmure Gordon concluded.

Quick facts: e-Therapeutics plc

Price: 3.1601 GBX

AIM:ETX
Market: AIM
Market Cap: £8.5 m
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