Novogen (ASX: NRT) ​- Picking up where Genentech left off

Today we've initiated coverage on Novogen (ASX: NRT), a Sydney-based cancer drug developer whose lead compound is GDC-0084, for the treatment of glioblastoma.

Glioblastoma is an acute brain cancer with, at the moment, limited treatment options.  As such, there’s a billion-dollar market opportunity waiting to be realised.  That is Novogen’s prime focus – and it commences a Phase 2 trial of its small-molecule GDC-0084 before year end.  Back in 2016, notwithstanding positive Phase 1 results, Genentech offered this candidate for sale and Novogen was the successful bidder, attracted by the prospects for a successful inhibitor of the cellular signalling pathway PI3K.  There are others chasing this pathway and in 2014 Gilead obtained approval for Zydelig.  But unlike their drug, Novogen’s candidate is specifically focused on glioblastoma and has the advantage of a molecule that not only has an already-demonstrated Phase 1 safety record but, uniquely, has the ability to cross the blood-brain barrier.  If Phase 2 is successful, there may be accelerated approval for GDC-0084 given the paucity of current glioblastoma treatments.  In addition to GDC-0084, Novogen has an ovarian cancer drug (developed by Novogen) that completes Phase 1 in 2018.  A proposed name change to Kazia Therapeutics reflects the new lead compound and the arrival of a highly-experienced management team, led by Dr James Garner. We value Novogen at 8 cents per share base case and 26 cents per share optimistic case. Our target price of 17 cents per share sits at the midpoint of our valuation range. We see Novogen being re-rated by the progress into the clinic of GDC-0084.

You can download a copy of NDF Research's initiation report on Novogen by clicking here or visiting ndfresearch.com. We commend the report to you. Note - the usual disclaimers apply - click here.