Fundie earmarks biotech underperformer for better times

When a fundie refers to a company stock as ‘the cheapest in the world’ it is bound to raise a few eyebrows. More so if the company owns a pre-clinical drug with the potential to effectively treat, as at 2019, the third largest cause of death in the world.

And that’s not the only item in clinical-stage biopharm Dimerix’s (ASX: DXB) bag of tricks. The company is said to have multiple Phase 3 opportunities and is developing innovative new therapies in areas with unmet medical needs.

Speaking on Reach Markets’ The Insider: Meet the Fund Manager in October 2022, Merchant Group’s Andrew Chapman listed Dimerix as one of his favourite stocks despite it being an underperformer in the Merchant Opportunities Fund portfolio. Watch the full The Insider: Meet the Fund Manager session.

“The company went from about 20 cents a little while ago to about 80 cents on some results and then over time it drifted back,” Mr Chapman said in October 2022 regarding the Dimerix’s share price from the end of August 2020.

“A lot of biotech companies were in the same scenario that over COVID a lot of the testing and the trials and so on took a lot longer than what the market was anticipating.”

Dimerix’s flagship DMX-200 is the company’s Phase 3 clinical stage drug that can potentially be used to treat Focal Segmental Glomerulosclerosis (FSGS), a rare disease that causes serious scarring and can lead to permanent kidney damage and kidney failure.

The same drug is also in two Phase 3 clinical trials for COVID respiratory complications.

“FSGS is a gigantic market but it’s a market (with) relatively few competitive drugs out there that actually sort of are showing very very good efficacy in the market,” Mr Chapman said.

“Based on our research, we think that the addressable market is somewhere around $1 billion plus per annum and there’s no real direct competition.”

Dimerix CEO Dr Nina Webster joined Reach Markets’ The Insider: Meet the CEOs session in November 2022 where she discussed at length the company’s assets and how they position Dimerix within the biotech arena. Watch the full The Insider: Meet the CEO session.

“FSGS is a rare ‘orphan’ disease that affects children as young as two years old as well as adults and typically have end stage renal failure in about 5 years,” Dr Webster said.

“The market in terms of this orphan disease globally is around 210,000 patients and typically because we have orphan drug designation you get what’s called orphan drug pricing.”

According to the CEO, the average orphan drug retails around US$7,000 a month in the US and, at the time, DMX-200 had orphan drug designation in the US, UK and Europe.

“You can imagine this is a very lucrative and commercially attractive proposition as well as something that is a huge unmet need given there’s nothing approved for these patients anywhere in the world at this time,” Dr Webster said.

During the session, Dr Webster explained the difference between healthy and unhealthy kidneys and the three key mechanisms that cause kidney disease, the latter of which provides context for how Dimerix’s clinical trials and drugs work.

The company is targeting the commercialisation of DMX-200 through partnership. “We’re actively engaged with a number of potential licensing partners, globally, and we’ve garnered a lot of interest,” Dr Webster said.

“Ultimately, we’re engaging with potential partners that have strong capabilities in sales and marketing with the aim to provide the best outcome for our shareholders but also the patients,” she added before going on to explain how the licence would operate including upfront milestones and royalty model.

In closing, Andrew Chapman, mentioned that the market in October was oblivious to Dimerix’s Phase 3 trials that were at the time fully-funded.

“It’s a tightly coiled spring and it’s highly leveraged at this point in time to some positive results because I think the stock is really being sold down in line with the biotech sector where the whole sector has been sold down,” he said.

In December 2022, the company confirmed the recruitment of the first 72 patients with FSGS kidney disease to its DMX-200 Phase 3 trials. In January 2023, the US Food and Drug Administration confirmed the inclusion of adolescent children aged 12-17 years in the trials,  increasing the total addressable market for DMX-200 if approved.

Click here to view more videos from Andrew Chapman’s The Insider: Meet the Fund Manager session, or click here to view the full The Insider: Meet the CEOs session with Dimerix CEO Dr Nina Webster.

Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets’ position. Any advice contained within this presentation is general advice and does not consider your personal circumstances, you should consider whether it is appropriate for you. 

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