A Ray of hope from healthcare player Dimerix amidst Struggling Markets

The havoc created by the coronavirus outbreak on the global markets has reached a level no one would have predicted. The rapid spread of the disease has affected the global economy so profoundly that it is likely to take several years to recover from the losses suffered by economies across the globe, as was the case in the 2009 financial crisis.

Complete lockdown of cities, urging citizens to stay at home maintain social distancing are some of the measures adopted by governments to control the spread of the virus. The COVID-19 pandemic has created turbulence in the capital markets as well with indices falling drastically and several companies withdrawing their full-year outlook. However, even in such difficult circumstances, there are companies which have performed well. Some companies have also profited from the unfavourable event.

Melbourne, Victoria-based biopharmaceutical Company, Dimerix Limited is one such player that is in a relatively stable position. Despite the numerous challenges the economy is facing, DXB is quite confident of its plans and strategy. Let us figure out why:

Dimerix Limited (ASX:DXB) develops novel therapies with a focus on chronic indications. Presently, the Company is developing its proprietary product named DMX-200. The product is used for two types of indications: Diabetic Kidney Disease and Focal Segmental Glomerulosclerosis (FSGS).

DXB utilises Receptor-HIT, an innovative technology to uncover and distinguish the intricate interactions between receptors. The Company also licenses its Receptor-HIT technology worldwide.

Key highlights of the Company, including its financial position, are mentioned below:

• Average share trading volume (daily) of 433,761
• Cash and cash equivalents worth $3.85 million with no debt.
• DMX -200 is likely to increase the life of the kidneys by 3 to 5 years (time to dialysis).
• Also, the Company expects that DMX- 200 would save the annual cost of $100,000 per patient every year.
• The Company states that according to research reports, it is predicted that the diabetic kidney disease market will grow at a CAGR of 1 per cent during the period 2019 – 2022. Also, the FSGS market is expected to grow at a CAGR of over 8 per cent for the period 2017 – 2025.

The value-driving events, as mentioned by the Company for FY 2019–2020, are depicted in the figure below:

Dr Nina Webster, DXB’s CEO & MD, expressed her views that the Company remains on track with its plans. She mentioned that Dimerix would continue to implement the below-mentioned plans or strategy:

• Precise and robust corporate strategy
• A thought-driven risk management plan
• Comprehensive business plan with all minute details

Schedule of DMX-200:

On 18 March 2020, DXB notified the market about the number of activities underway. The most crucial one was the announcement of the results released from its two Phase 2 studies – the DMX-200 Phase 2 study in Diabetic Kidney Disease, and DMX-200 Phase 2a study in Focal Segmental Glomerulosclerosis (FSGS)

• Dimerix two Phase 2 clinical studies at sites situated in Australia are completed under a set budget.
• With an optimistic and diligent approach, the Company expects to finalise both results by the mid of 2020.
• Phase 2 Diabetic Kidney Disease study dosed an additional five patients to get a total of 45 patients and to ensure a study completion population of N = 40, which is required for suitable statistical powering.
• DMX Diabetic Kidney Disease and FSGS study is on track to achieve final patient dosing scheduled in July 2020 and June 2020, respectively, after that, the top-line data is expected shortly.
• With the commercialisation of DMX-200, the Company is expecting to amplify the value of its assets.
• By passing through this critical phase, Dimerix had realised the full commercial potential of its technology platform, and it is marked as a value-adding milestone in its history.

To prepare for the next stage of DMX-200 development, the Company had proactively collaborated with its US-based and FDA approved contract manufacturer. The US FDA is responsible for regulating the quality and manufacturing of pharmaceuticals.

Dimerix mentioned that it had obtained positive feedback during its face-to-face meeting with the US FDA. The positive feedback entails that the DMX-200 manufacturing would remain on track to fulfil the Good Manufacturing Practice (GMP) regulation for human pharmaceuticals.

TGA Special Access Scheme:

The Company confirmed that several patients were treated in both the 2017 Phase 2a studies. The current two Phase 2 studies on DMX-200 have continued via the Therapeutic Goods Association (TGA). While authorizing the submissions, TGA considers clinical evidence on the effectiveness of the drug and its safety profile.

DMX has no visibility of the submissions to the TGA by physicians to have approval for usage of DMX-200. The Company is delighted to mention that clinical leaders have requested extended treatment of their patients with DMX-200. The Company suggests that it intends to help the patients and medical professionals who seek treatment and have low therapeutic options.

Rising Stock Price:

DXB’s stock closed the day’s trade at $0.120 on 27 March 2020, an increase of 4.348 per cent. The Company has performed will with positive returns of 25.00 per cent and 32.18 per cent in the last six months and last 12 months, respectively. The market capitalization of the Company is $20.88 million, with 181.53 million outstanding shares. The 52-week low and high price stand at $0.072 and $0.175, respectively.

The performance of DXB has been sturdy, but the fact that the Company has done well in a time when economies have taken a severe hit makes its performance even more impressive. Almost every stock had witnessed a fall in its price since the mid of the year 2020 but DXB stock has managed to buck the trend.

In the timeframe of April 2019 till March 2020, the return on ASX All Ordinaries (XAO) moving average was -19.26 per cent. However, for Dimerix during the same timeframe with a significant return of 71.69 per cent on DXB moving average was witnessed over the same period. (as indicated in the chart below)

Way Forward:

Looking at the pipeline development of the Company’s products, there are two clinical readouts which are expected by the mid of 2020 and two product candidates in the preclinical stage. (as indicated in the below table)

Apart from the impressive pipeline with both the Phase 2 studies of DMX-200 showing plenty of promise, the following initiatives and factors have been working in favour of DXB and are expected to continue doing so in the remainder of 2020:

• Argonaut Securities initiated the coverage of DXB at a $0.40 target price, reflecting a growing interest in the stock.
• To avoid the impact of any unforeseen event, the Company created contingency plans.
• Assuming that the Phase 2 trial results are favourable, Dimerix has prepared for a scaleup to move to the next phase of drug development.
• The Company is in a position to remain compliant with GMP regulations for mass production for commercial purpose.

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