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Pharmaxis Shares Spike Ahead Of Promising Year

Shares in Sydney-based pharmaceutical research company Pharmaxis (ASX:PXS) were trading as much as 12% higher yesterday as chief executive Gary Phillips engaged with U.S. investors on the heels of a stellar finish to 2015.

Pharmaxis stock last closed at A$0.355, which represents a 61% improvement since the beginning of last month.

This year-end surge coincided with strong traction in developing the commercial prospectivity of the company's cystic fibrosis treatment, Bronchitol.

The drug works by reducing the amount of mucus build-up in the lungs of patients suffering from chronic respiratory conditions and was demonstrated in December to be efficacious in paediatric trials.

This success has underpinned a move to acquire marketing authorisation for adult cystic fibrosis patients in Europe and helped frame Phillips' recent U.S. roadshow ahead of the first scientific presentation of the results will be made at the European Cystic Fibrosis Society meeting in Switzerland in June.

With this stronger footing to start 2016, Pharmaxis is pressing forward with a portfolio that includes not only Bronchitol but a range of inhibitors targeting the liver related disease non-alcoholic steatohepatitis (NYSEARCA:NASH), which is commonly found in people who are overweight or obese.

Among these products, the anti-inflammatory drug PXS-4728A has stood out, having secured the company a landmark sales deal with Boehringer Ingelheim, one of the world's 20 leading pharmaceutical companies.

These advances have punctuated a strategy to create value via drug discovery and licencing out to Big Pharma with an eye on growing markets.

Pharmaxis' focus on amine oxidase enzyme chemistry exposes the company's innovations to potential applications in treatment sectors as diverse as NASH, Alzheimer's, Parkinson's, stroke, heart failure, cancer, type 2 diabetes, asthma, wound healing and pulmonary fibrosis.

Current products for idiopathic pulmonary fibrosis, for example, are expected to produce global revenues of more than US$1.1 billion.

The company is addressing this market via a research collaboration with U.K. biotech company Synairgen.

Analysis

Pharmaxis growing traction in drug development milestones and new partnerships has culminated in recent weeks with a dramatic upswing in share price valuation, setting the company up for a strong 2016.

Successful results from a clinical trial of Bronchitol in paediatric patients with a fatal disease has propelled the company to be a star performer on the ASX clocking a 300% share price increase on a 52-week basis. Not many Australian companies with an Australian drug discovery program are doing such work.

A growing institutional presence on the share register which now tallies higher than 45% is a testimony to the perceived future upside potential.

Potential price catalysts for the company in 2016 include completion of trial work with partner Chiesi in the U.S. and completion of the pre-clinical program with Synairgen.

Based on these and the momentum ahead with a pipeline of drug candidates for valuable targets and cash reserves of $50m cash balance at September 2015, we consider that there is strong potential for further share price gains.

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