FY’18 – focus on PTSD drug development

Bionomics (BNO) is an Australian biopharmaceutical company specialising in ion channel drug discovery for central nervous system (CNS) disorders such as anxiety and post-traumatic stress disorder (PTSD). BNO also offers contract and partnered discovery based on its proprietary technology platforms: MultiCore and ionX. The group sales model includes fees-for-service, licensing income, and royalties from successful partnered products. In fiscal 2018, its strategy has been to focus on the development of its lead candidate, BNC210, to completion of Phase II in PTSD – the RESTORE trial is due to read out next month, a potential value inflection point.

• Strategy: BNO’s recently refined strategy is to focus on development of its ion channel drug candidates, particularly allosteric modulators. It intends to partner its priority CNS candidate for late-stage development and commercialisation, and to monetise its clinical-stage, non-ion channel oncology programmes.
• Full-year results: Sales (R&D payments and service-fees) declined 28% to A$4.0m in FY’18, as payments from Merck & Co (MRK) ceased on BNO’s successful completion of research activities. Other income totalled A$1.4m, returning to underlying levels following the $10m/A$13m milestone in FY’17.
• R&D investment: Operational focus in the period was on clinical trials, with the lead candidate, BNC210, progressing in the Phase II PTSD RESTORE trial to full recruitment and to completion of treatment. Data are due to be read out next month. The trial of the oncology candidate BNC101 ceased, pending a deal.
• Risks: BNC210 has therapeutic potential in large patient populations with unmet need. However, there are significant risks in development of any drug, and late-stage clinical trials are expensive. In addition, there are no approved specific cancer stem cell-targeting drugs, and BNC101 is yet to be out-licensed.
• Investment summary: BNO has a clear strategy to invest in developing its CNS drug candidates to a stage that both interests big pharma and generates good potential returns for shareholders. Hardman & Co estimates the post-tax NPV of the whole drug pipeline to be ca.A$650m. The next inflection point is likely to be the BNC210 data in CY 2H’18, or potentially news about the oncology assets.