C4X’s interims revealed a refinement of its hybrid business model, whereby it will stop offering access to its drug discovery technology on a fee-for-service basis, instead seeking to strike more strategic and collaborative agreements with pharma/biotech partners. The recent £1.67m acquisition of Adorial, with an innovative technology to help identify novel drug targets, could significantly enhance and accelerate C4X’s drug discovery capabilities. With £5m in cash as of 31 January 2016, and operating costs on the rise to support pipeline and technology development, we anticipate a fresh financing in H216.
C4X has made progress across a number of therapeutic areas with six pre-clinical projects underway. A number of new drug candidates have been identified across addiction, inflammation and diabetes, with the lead programme, Orexin-1 (for the treatment of addictive disorders) continuing to make good progress with a preclinical candidate and a second differentiated follow-up molecule identified. We anticipate clinical studies to start in mid-2017.
C4X is pursuing a hybrid business model of internally driven, wholly owned drug discovery programmes and programmes via partnerships. To maximise its resources for its own pipeline it announced the discontinuation of its fee-for-service offering, with current relationships being transitioned to shared IP or milestone driven collaborative agreements. Alongside this C4X recently acquired Adorial for £1.67m, which gives access to the technology platform Taxonomy3, a proprietary human genetic technology platform for the identification of novel drug targets. This broadens its capabilities by enabling the ability to identify a therapeutic target as well as design a drug molecule to that target.
H116 saw a significant increase in operating expenses, and we therefore expect R&D and G&A costs to continue this higher run-rate in H216, as the company supports its pipeline and technology development. We have therefore increased our FY16 R&D and G&A forecasts to £5.6m (vs £3.8m) and £1.8m (vs £0.9m), respectively. With a phased discontinuation of its fee-for-service operation, we lower our forecast revenues in FY16 to £0.3m (£0.5m) and in FY17 to £0.2m (£0.7m). With a reported cash position at H116 of £5.0m, and an increase in operating costs, we anticipate a financing round in H216.