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Circadian Technologies: Van Leeuwenhoeck places share price target of $1.97

Circadian Technologies (ASX: CIR) has received a glowing valuation from Van Leeuwenhoeck Research, which is a firm specialising in bio technology and life science sectors, and is based in The Hague and in New York.

The following is an extract from the report.

Executive Summary

Circadian Technologies is an Australia-based listed biotechnology company having a strong product pipeline which includes VGX-100 (a fully human antibody against VEGF-C), VGX-200 (a humanized antibody against VEGF-D) and VGX-300 (a soluble recombinant form of VEGFR-3).

Circadian develops and commercialize therapies primarily for cancer, as well as for other serious diseases.

The Company is engaged in the development of biological drugs, including antibodies, for the treatment of cancer, targeted against Vascular Endothelial Growth Factors (VEGF) C, D and the VEGFR-3 receptor as well as developing a rage of in vitro diagnostics.

During the fiscal year ended June 30, 2010 the Company developed a production manufacturing process for VGX-100 and completed the production of drug compound for use in animal pharmacokinetic and toxicology studies.

Data demonstrates efficacy of VGX-100 with other therapeutic agents in mouse models of lung, brain, ovarian and prostate cancers. Besides, VGX-100 significantly reduces the metastatic spread of prostate cancer in a mouse model. VGX-100 is covered by a variety of US and international patents extending beyond 2022.

End of last month the company announced that it has submitted an IND application to the FDA to initiate clinical studies of VGX-100. The Phase I dose escalation study will involve the treatment of a variety of different cancer types in patients with late stage cancer.

Circadian intends to initiate clinical trials of VGX-100 in Q4 2011.

Earlier last month, the company announced the publication of data, which showed that VGX-100 significantly reduced inflammation and corneal epitheliopathy in Dry Eye Disease (DED).

DED is a complex immune mediated disorder that has multiple cuases and affects about 5 million Americans above the age of 50 years. Currently, topical cyclosporine-A is the only approved treatment for DED.

With more than AUD 22 million in cash, the company continues to have a strong financial position. This should be enough to take its lead drug VGX-100 through Phase I and Phase II trials. With the start of clinical trials, the company expects for 2012FY a cash burn of AUD 10-12.5 million.


Based on sum-of-the-parts valuation, we believe Circadian is gravely undervalued at the current share price of AUD 0.47. Using our valuation model, the Company’s total value is AUD 91 million, or A$1.97 per share.

This represents more than 300% upside from the current share price.