Destiny Pharma targets growth as anti-infection treatments return to prominence

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Anti-infective treatments are an area of the pharmaceutical research industry that had been somewhat neglected – until recently.

Since the 1980s, little development and funding attention has been paid to the development of new antibacterial and anti-infective drugs, however, the steady rise of Superbugs and Antimicrobial Resistance (AMR) combined with the onset of the coronavirus (COVID-19) pandemic has sent the need for infection prevention to the very top of the public consciousness and government policy agendas.

With several potential treatments for serious infections currently in development, Destiny Pharma PLC (LON:DEST) has therefore found itself in an enviable position.

“We have several shots on goal, but infection prevention is our main focus,” Destiny chief executive Neil Clark told Proactive.

Key inflexion point

One of the key events recently has been data from a Phase 2b trial of XF-73, a nasal gel designed to prevent post-surgical Staphylococcal aureus infections such as MRSA (methicillin-resistant staphylococcus aureus). 

It is well known that patients who are carriers of Staphylococcal aureus in the nose have a 10x higher risk of post-surgical infections, therefore the Phase 2b trial is testing if XF-73 can reduce nasal carriage of the bacteria in patients scheduled for surgical procedures who are deemed to be at high risk.

On March 29, the company reported positive top-line results from the study, saying the primary efficacy endpoint was met with an “exceptionally high” statistical significance and there were no treatment-related safety events.

The gel achieved a 99.5% reduction in S. aureus bacterial nasal carriage, which the company said is a very effective reduction by accepted clinical measures. It also showed more than a 99% reduction compared to the placebo in the same patient population. The effect was maintained during surgery, considered the period when the risk for infections is the highest.

The Phase 2b data has been highlighted by Clark as a “key inflexion point” for the programme, which if successful will move to a Phase 3 trial ahead of commercialisation.

Destiny is also moving toward a Phase 3 trial of a separate programme, NTCD-M3, which is designed to help treat the recurrence of C. difficile infection (CDI) a particularly nasty bacterial gut disease.

Both of these, if taken to commercialisation, will initially target the expansive US market, although the CEO said the company will also look at expanding into other markets as these are global opportunities.

Expansion eyed

On the business side of things, Clark says Destiny will aim to expand both by commercialising its existing assets but also by potentially bringing in other treatments into its already well-developed pipeline.

“The world needs new anti-infective drugs. We all learned during the coronavirus pandemic about the need for vaccines, but there is a similar issue with anti-microbial resistance and superbugs,” the CEO said.

“Preventing these infections from happening in the first place is better than curing them.”

With this in mind, Clark said that COVID-19 has raised this need for new treatments and anti-infection drugs to the front of the public consciousness, which in turn has been reflected by greater interest from investors and potential partners over the last year.

He added that Destiny’s mature pipeline of potential treatments means it is well placed for success.

“Hopefully, the coronavirus calms down, but there are still many other infectious diseases that require new treatments.”

2021 to be a year of preparation and delivery

Looking across the remainder of 2021, the current year will be “one of preparation and delivery”, focusing on bringing the company’s existing treatments, particularly the XF-73 and NTCD-M3 trials, towards Phase 3 clinical studies and commercialisation.

Discussions with regulators, preparing the new trials and setting up manufacturing processes are all on the agenda, with Clark adding that the company also has a COVID-19 project, known as SPOR-COV, currently in development that won a government grant in September 2020.

Data from SPOR-COV is due later this year, he said, and that aside from COVID-19 the treatment could also have potential applications in similar areas such as influenza.

The firm is also moving into dermal infections, having won a grant in March from the US government to use its XF-73 technology to combat infections associated with open wounds and broken skin, particularly those associated with diabetic foot ulcers and burn wounds.

Clark said these programmes show the “depth” of Destiny’s pipeline and he is confident of the group producing more clinical candidates in the future.

The firm is also continually looking for partners to help market its treatments, having already secured a partner in the Chinese market while also focusing on potential collaborators in Europe and the US.

The CEO added that the company is well funded through to the end of 2022, meaning it has no immediate need to raise cash and can take time to assess its options.

In the longer term, he said the ongoing prominence of anti-microbial resistance will benefit companies in the anti-infection space.

“There’s a lack of variety in the development of new drugs…it’s been a neglected area, but now regulators and governments are looking to change that with policies that will help companies like us.”

What the brokers say

In a note following the results of the Phase 2b trial of XF-73, analysts at house broker finnCap said this is a significant milestone for the company and a major valuation inflexion point, enabling Destiny Pharma to progress this asset towards Phase 3 development. 

The broker increased the target price to 370p from 300p after increasing the probability of XF-73 being commercialised from 2025 from 53% to 67%.

“Whilst the shares have more than doubled year-to-date, we see further substantial upside,” analysts commented.

“Destiny Pharma is an increasingly attractive investment opportunity focused on serious microbial disease prevention, which should have two Phase 3-ready assets (XF-73 having been awarded both QIDP and Fast Track status by the FDA) for development, licensing and/or co-development by the end of 2021.”

Meanwhile, analysts at Equity Development also raised their fair value of the company to 357p per share from 262p, saying Destiny is now “in the attractive but unusual situation (amongst UK biotech companies) of having two Phase 3-ready assets”.

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