Edison Issues ADR Outlook on Novogen (NVGN)

Novogen's recent market updates presented mixed news for investors. Recruitment in the Cantrixil Phase I is underway and preparations for the Phase II trial of GDC-0084 in glioblastoma are progressing well, although headline data are now likely in H1 CY20, 12 months later than we initially forecast. Mixed data from preclinical studies have seen development terminated for Anisina, which had been expected to enter the clinic in H217. While the termination of Anisina is disappointing, it is encouraging to see that management is taking a disciplined approach to assessing pipeline products. We now value Novogen between $66m ($3.39/ADR) and $111m ($5.74/ADR) under two different development scenarios for GDC-0084. Major milestones anticipated in 2017 include initiation of a Phase II trial of GDC-0084 and full enrolment in the Cantrixil Phase I.

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We revise our indicative valuation to reflect the termination of Anisina and to incorporate GDC-0084 under two different development scenarios: assuming post-Phase III approval of GDC-0084 in 2025, our valuation is $66m; assuming accelerated approval in 2021, our valuation is $111m. Our valuation prior to the GDC-0084 transaction and termination of the Anisina program was $86m ($4.95/ADR). Novogen had $14.1m cash at 31 December 2016 and we estimate that it may require $8m additional funding in FY18 and $12m in FY19.  

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