PhillipCapital analyst Paul Chew has reiterated his ‘buy’ rating for iX Biopharma with an unchanged target price of 44.5 cents in a June 14 research note.
His reiteration follows recent developments announced by the company, including the grant of an orphan drug designation by the US Food and Drug Administration (FDA), the expansion of its wafer production capacity as its Australian facility, and a rights issue to raise $9.56 million by issuing 48.8 million shares at 20 cents each.
The FDA grants orphan drug designations to support the development of medicines for rare diseases. Recipients are entitled to benefits such as a shorter timeframe for drug approval, tax credits and research grants.
In iX Biopharma’s case, the designation, which it received in May, relates to the potential application of its Wafermine product for the treatment of Complex Regional Pain Syndrome (CRPS). If iX Biopharma receives approval for Wafermine to be administered to CRPS patients, the company can enjoy seven-year market exclusivity and possible higher drug pricing.
To that end, Chew is positive on the potential for Wafermine to be expanded from its current use which includes acute pain and depression to also include CRPS.
On June 2, iX Biopharma had announced that it will expand wafer production capacity at its Australian facility by six times, with commercial production expected to commence in July.
Chew notes that the new capacity has been factored into his forecasts, which is intended to meet the increasing demand for the company’s Entity and Xativa products. Entity has been gaining traction in China, while Xativa has been approved as a prescription medicine under Australia’s Special Access Scheme and Authorised Prescriber Scheme.
Chew’s unchanged target price is based on a discounted cash flow valuation, with a weighted average cost of capital of 10%. Post-rights issue, his target price stands at 42.8 cents.
“Catalysts include any out-licensing deal for Wafermine Phase 3 clinical trials, revenue contributions from Entity and Xativa and the commercialisation of Wafersil for the treatment of male erectile dysfunction in China,” he says.
Shares in iX Biopharma closed up 0.5 cents or 2.08% higher at 24.5 cents on June 14.
Cover photo: iX Biopharma
