Poniard Pharma Restructures to Conserve Cash

Friday, 20 March 2009 06:55

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PARD announces minor restructuring. This morning, Poniard announced that the company will further focus its cash resources on the clinical and commercial development of picoplatin, their late-stage oncology candidate. As a result, the company will discontinue all preclinical research activities. To this end, Poniard will release 12 percent of its workforce (eight employees) associated with these activities effective at the end of March 2009.

PARD conserves its cash, focusing all efforts on Picoplatin
PARD: Price: $1.94; Market Cap (MM): $62.1
Market Outperform; Target Price: $10.00

Simos Simeonidis, Ph.D. - Senior Biotech Analyst, Rodman & Renshaw

Our view: We believe that this move is a strategic and necessary decision for the company in the current environment. This will focus the company's efforts exclusively on picoplatin at least near-term, with the goal of commercialization in 2010. We believe this is smart thing to do given the fact that picoplatin represents the vast majority of value in PARD shares right now and the company's best shot at creating shareholder value in the near-term.

SPEAR and the CRC and CRPC trials read later this year : We remind investors that picoplatin, a novel cytotoxic platinum compound for the treatment of solid tumors, is currently in a number of clinical trials. The lead trial is the Phase III SPEAR trial (Study of Picoplatin Efficacy After Release) in patients with small cell lung cancer. Top line data for this trial should be available in mid-09, and if the trial generates the positive results that we expect, would support the filing of an NDA by the end of 2009. In addition, picoplatin is also being evaluated in Phase II trials in other indications, including metastatic castration-resistant prostate cancer (CRPC) and metastatic colorectal cancer (CRC).

Timeline of what's next:

1) April (AACR): data from the Phase I trial comparing the oral vs. the intravenous formulation of picoplatin

2) ~June (maybe at ASCO): PFS data from the Phase II CRC trial

3) post-ASCO (mid-09): completion of enrollment and top line Phase III data from SPEAR

4) 2H09: NDA filing

5) Finally, a partnership announcement could come at any point in '09

We reiterate our Market Outperform rating and $10 price target. We reach our 12-month target price of $10 by applying a 30X P/E multiple to our 2014 fully diluted EPS of $1.16 (second year of profitability) and using a 30% discount rate. We consider PARD shares as undervalued at current levels, given that Poniard is a company with 1) a Phase III asset, 2) that is fully owned, 3) with a known, de-risked mechanism of action, 4) that can address large oncology markets as combination therapy, and 5) is also in two more Phase II trials in CRC and CRPC.

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