Investment summary

Since receiving a complete response letter from the FDA on Dacogen, Astex will focus on the European regulatory review for the drug due in H2. Existing marketing exclusivity on Dacogen for EU territories could provide significant royalty streams from J&J if the drug is approved. Multiple catalysts are expected this year including top-line data from Phase II studies with AT13387, SGI-110, amuvatinib and AT7519. AT13387 and SGI-110 should each see two new Phase II study initiations, in melanoma and ovarian cancer. Our base-case valuation of $384m provides potential for significant upside from the current market cap.

Last updated on 23/04/2012

Industry outlook

Astex offers a low-risk, oncology play with multiple study read-outs in 2012. Although the potential approval of Dacogen in AML offers a material near-term catalyst, we see the investment case in the longer term and being centred on Astex’s ability to exploit its strong financial position (cash, royalties etc) to generate value from its R&D pipeline and fragment-based discovery technology.

Last updated on 23/04/2012