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Clinical progress with XF drug platform

Destiny Pharma (DEST) is developing a pipeline of novel antimicrobials from its XF drug platform, to help combat highly prevalent and virulent bacteria. These include eight so far tested of those classed as urgent threats by the World Health Organisation and Centers for Disease Control (CDC), including MRSA (methicillin-resistant Staphylococcus aureus). The unique mechanism of DEST’s new class of drug candidates could also help to overcome Anti-Microbial Resistance (AMR) that is a major limiting factor with standard antibiotic treatments.
Recently, positive results from a blinded, placebo-controlled Phase I dermal irritancy study of lead product XF-73 in aqueous solution, showed that high concentrations of XF-73 applied topically to intact and abraded skin had a ‘similar irritancy potential to water’. Pharmacokinetic sampling confirmed that XF-73 was not absorbed into the bloodstream of volunteers, supporting the drug’s safety profile and that of other XF drugs, in treating and preventing dermal infections.
The data helps to pave the way for a Phase IIb study start in a gel formulation of XF-73 in the new FDA indication for prevention of post-surgical Staphylococcus aureus infection, due to be launched on completion of a second standard dermal safety study of the gel formulation of XF-73 in H2’18.
Safety study results also complement the existing strong body of data on XF-73, including its ability to rapidly kill bacteria, and so reducing the potential for AMR to develop, compared to other antimicrobials tested. The data will further assist DEST in prioritising its pipeline that contains three other preclinical candidates.
XF-73 has potential to be first to a $1.2bn US core market. DEST is targeting a primary market of up to 6 million high risk surgeries in screened S aureus carriers, with secondary market potential for so called Universal Decolonisation, for c 12 million non-carriers. Since there are no products currently approved in post-surgical S aureus infection in the US, XF-73 has potential to be first to the US market, setting a new standard of treatment.
We reiterate our sum-of-parts DCF valuation of DEST, using a 12.5% discount rate, of £117m (269p/share). We include only XF-73 in prevention of S aureus infection in our value, so providing upside on entry of other candidates into human studies.