A quick, closer look at SGXP

SGX posted their 4Q06 and FY2006 figures, so it's a good time to take a look at them.

SGX's 3 main programs target Bcr-Abl, c-Met, and JAK2.

The Bcr-Abl compound was partnered last May (NVS), which garnered a $25M upfront - though I can't find it on their financial statements - , and $9M in guaranteed research support. Last month SGXP announced a 3Q07 target for an IND filing, which probably triggers a milestone payment.

Under the NVS deal, SGX is responsible for all activities thru the completion of Phase I, and retained US co-promotion rights.

The c-Met program (SGX-523) is unpartnered, and slated for IND filing "within 12 months." Also, SGXP revealed that SGX-523 has "1000-fold more selective for MET over more than 200 human kinases."

The JAK2 program is very early - the press release makes it sound like it has been HTS'd but not much else - with an IND target in 18-20 months.


SGXP has a market cap of $80M, which is a bit better than just a month ago when I last posted about SGX ($61M), including $33M in cash on hand.

The conclusions then are still valid, and are augmented by some info that SGXP published in their year end financials. Specifically, they projected 2007 cash burn at $16-$18M, prior to any partner payments. This suggests that SGXP has about 2 years of cash left, meaning that for investors, you're betting that one or more of SGXP's programs will advance enough to replenish the cash position sometime in the next 2 years.

Using the payments from NVS ($25M upfront, $4.5M in r&d) as a guide, it would only take one deal over the next 2 years for SGX to just tread water. Two development deals in 2 years, or clinical progress by the Bcr-Abl program, or success in a new program started sometime in the next two years would drive value, and only add to the favorable risk equation.

ALL therapies: +12% for next 9 years

Decision Resources expects robust growth thru 2015, based on STI approvals.

Also, I didn't realize it, but NVS' Gleevec successor is now dubbed "Tasigna." I wonder why they didn't build off the Gleevec recognition? (Gleesigna?)

Clinical data for Tasigna looks great, per the press releases.

Separately, NVS has announced an intent to file for Tasigna approval before the end of the year.

Handicapping targeted drugs

Though not the main conclusion, this article suggests that dasatanib may be an even better therapy than gleevec for CML patients because dasatanib also inhibits Src signaling in addition to Bcr-Abl.

If so, from a business perspective, BMS just became a bit more valuable. Analysts predict annual sales of $500M for dasatanib (Sprycel), but it if this article is right, may be more like Gleevec's $2.2B annual revenue.

Does this suggest a Novartis buy-out of BMS?

BMS is trading at $24.50.