1) CRPS is a chronic pain usually triggered by surgery or traumatic injury. There is no approved drug for its treatment currently, which in severe cases can result in chronic and profound disability. The FDA grants special orphan status to support the development of medicines for rare diseases that affect fewer than 200,000 people in the US. Because the medical conditions are so rare, orphan drugs would not be profitable to produce without government assistance. Benefits of orphan status include a shorter timeframe for drug approval, tax credits and research grants. IXBIO can undertake a pilot study and immediately move onto Phase 3 trials. Reviews by the authorities are faster and fewer clinical-trial subjects are required. Once approved, IXBIO can enjoy 7-year market exclusivity and possibly higher drug pricing. To recap, ketamine is a drug used since 1970 as an anaesthetic for pain relief. It is administered intravenously. In contrast, Wafermine releases ketamine sublingually or below the tongue. Sublingual medicines are easier to administer and avail a high bioavailability of the drug. With this announcement, the potential application of Wafermine can widen further from the treatment of acute pain to depression and now CRPS.
2) Once the equipment is installed at its facility in Australia, a few batches would need to be produced for validation and Good Manufacturing Practice certification. The new capacity has been factored into our forecasts. It is earmarked to meet rising demand for Entity and Xativa products. Entity is gaining traction in China from platforms such as Tmall Global and JD Worldwide. Xativa is the world’s first freeze-dried sublingual medicinal cannabis wafer. Xativa has been approved as a prescription medicine under Australia’s Special Access Scheme and Authorised Prescriber Scheme. Doctors prescribe it for pain relief, inflammation and improving sleep quality.
Maintain BUY with an unchanged DCF TP of S$0.445 (before rights) or S$0.428 (post rights). Catalysts include any out-licensing deal for Wafermine Phase 3 clinical trials, revenue contributions from Entity and Xativa and the commercialisation of Wafersil for the treatment of male erectile dysfunction in China.