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Pharmaxis: A Re-Rating Approaching?


The coming months ahead should be a significant period for Pharmaxis (PXS: $0.05) with the readout expected from two Phase II studies. Whilst market conditions currently pose challenges for investors, positive outcomes in one or both studies have the potential for a significant re-rating in a stock that is arguably well undervalued.

At an investment briefing last week, CEO Gary Phillips said that the results should have a fundamental impact on the company's valuation. Of more importance to the company is likely the result in its myelofibrosis study, with an established market and strong licensing interest. Pharmaxis is conducting a Phase IIa monotherapy study in up to 24 patients with myelofibrosis with its drug candidate PXS-5505.

Significant Acquisition in Myelofibrosis Drug Development
In June 2021 Morphosys announced that it would acquire Constellation Pharmaceuticals for US$1.7 billion in cash. Constellation's lead asset was pelabresib, which six months earlier started a 400 patient Phase III study with this drug candidate. This was in combination with the JAK inhibitor ruxolitinib, in patients with myelofibrosis who were treatment naïve to ruxolitinib therapy.

It was an unusual acquisition whereby Morphosys financed much of the deal by selling off its royalty streams to existing products to Royalty Pharma.

Results of the study are summarised in the table below.

In the monotherapy arm, there were Grade 3 but no Grade 4 adverse events, with nine of the 46 patients discontinuing treatment. The most significant negative effect was thrombocytopenia (low platelet levels) which occurred in 15% of patients.

Treatments for myelofibrosis are measured in effectiveness in combination with a JAK inhibitor, ruxolitinib. Data from the Phase II Constellation study presented was mainly from the combination use, with 67% achieving greater than a 35% reduction in spleen volume. With respect to bone marrow fibrosis, 33% achieved at least a one grade improvement, 59% achieved stabilisation of BMF and only 4% showed a worsening of this measure at 24 weeks.

Pharmaxis Initial Data
In the Pharmaxis study, 18 patients have been enrolled with six of those stopping treatment due to lack of clinical response. These patients were either too far advanced or treatment without the combination of ruxolitinib did not show benefit.

Results from six patients have been released. Five of the six patients (83%) showed improvement or stability in BMF. One third of patients achieved a clinical improvement in symptoms and 83% achieved stable or improved platelet/haemoglobin levels.

A particularly important aspect of this trial result so far is the benign safety profile of the PXS-5505, with no serious adverse events reported in the monotherapy. This compares to the Constellation drug candidate in which a 15% rate of thrombocytopenia (low platelet levels) was observed. By comparison, PXS-5505 has achieved an improvement in blood platelet levels in some patients, with two patients more than doubling their platelet levels.

When the Constellation drug candidate was combined with ruxolitinib, the thrombocytopenia incidence increased to 26%. The appeal of the Pharmaxis drug candidate at this point is the potential to maintain treatment with ruxolitinib for longer in combination use, whilst addressing the core fibrotic process in myelofibrosis.

Encouraging results from this study should allow the company to progress the program into a Phase II combination study with ruxolitinib, potentially also in ruxolitinib treatment naïve patients.

Significantly more data from Pharmaxis' Phase IIa study in myelofibrosis is expected around mid-year, with results from the 50 patients scar treatment study expected this half.

Pharmaxis is capitalised at just $36 million. Its proforma cash balance at the end of last year, including funds received last month from the R&D tax rebate, was $21.4 million.

Bioshares recommendation: Speculative Buy Class A


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