AFT Pharmaceuticals has reported a North American licensing deal for Pascomer, a topical formulation of rapamycin being developed for facial angiofibromas in tuberous sclerosis complex (TSC), to private US-based Timber Pharmaceuticals. Timber will fund clinical development and provide AFT with over US$10m in upfront, development and regulatory milestones, as well as over US$10m in sales milestone payments and royalties. An Investigational New Drug Application has been approved by the FDA. The first of two 120-patient clinical studies is expected to start shortly, with results in 2020.
According to the US National Institute of Neurological Disorders and Stroke, TSC affects between 25,000 and 40,000 Americans and one to two million people worldwide. Angiofibromas, which can be highly disfiguring, affect around 80% of patients with TSC. Current therapies are typically surgical, such as chemical peeling, excision and laser surgery.
Oral rapamycin was first approved in 1999 for immunosuppressant use. Initial evidence of its potential efficacy in angiofibromas occurred in a patient who initiated oral rapamycin because of renal transplantation and her facial angiofibromas improve markedly. A review of recent studies indicates that compounded topical formulations of rapamycin have improved lesions in 94% of subjects although there is no topical formulation available commercially
The licensing agreement with Timber allows AFT to retain some of the upside potential of Pascomer but without having to yield near- to medium-term profitability to fund its development. Timber will have full responsibility for R&D investment, while AFT will collect high-margin royalties if Pascomer is successfully developed.
We are maintaining our valuation of NZ$495m or NZ$5.09 per share. To be conservative, we are not including Pascomer development in our estimates due to its early stage but we will revisit this as the programme progresses. Also, the company reiterated its operating profit target is between NZ$9m and NZ$12m for FY20.