Company Overview: Bionomics Limited is a clinical-stage biopharmaceutical company engaged in discovery and development of drug candidates focused on the treatment of central nervous system (CNS) disorders and cancer by using its platform technologies. The Company's segments include Drug discovery and development, and Contract services. The Drug discovery and development segment includes the discovery, development and commercialization of compounds to match a target product profile. The Contract services segment includes the provision of scientific services on a fee for service basis to both external and internal customers. Its product candidates include BNC210, BNC375, BNC101 and BNC105. The Company provides treatments for CNS disorders, such as anxiety, depression and Alzheimer's Disease. Its oncology approach targets cancer stem cell therapies in solid tumors. Its technologies include ionX and MultiCore. It operates in three geographical areas, such as Australia, France and the United States.
 

BNO Details
 
Biotechnology group, Bionomics Ltd (ASX: BNO) is regaining its focus on core business and looking at opportunities to monetise its clinical stage non-core oncology assets (including BNC101) in the near future. There are talks that a US firm has been engaged to manage this process. The partnership(s) might fall in place in second half of 2018 given the on-track plan and positive outcomes of clinical trials including that of BNC210.
 
Focusing on core business: Bionomics continues to focus on their core strength in ion channel biology and drug discovery, which provide a competitive edge against peers. The group’s progress on their BNC101, an anti-LGR5 humanized monoclonal antibody being developed to treat solid cancers has been positive. The group reported that their recommended dose level of 15 mg/kg has been confirmed showing BNC101 continuing to be safe and well tolerated. The combined data shows that BNC101 co-localized with LGR5 and induced gene expression changes in patient tumors, support target engagement. The group expects this data and more pharmacodynamic data from the clinical trial to be highly supportive of the ongoing out-licensing efforts. BNC101 is targeted to prevent or delay tumor recurrence by targeting LGR5, a cancer stem cell (CSC) marker that is over-expressed in metastatic colorectal cancers and other solid tumor types. LGR5 is also thought to regulate cancer cell adhesion.
 
Positive progress for BNC210 clinical trial results: The group made a positive progress of their BNC210 clinical trial results in a Phase 2 clinical trial evaluating its potential to decrease brain signals and behaviour related with anxiety as part of evaluation of its potential as a treatment for Generalized Anxiety Disorder (GAD). As per the group’s market research, clinicians find anxiety to be a persistent and difficult to treat symptom in Post-Traumatic Stress Disorder (PTSD) patients. If the drug could reduce anxiety than this might cut the patient’s sleep disturbances. In addition to anxiety, PTSD patients suffer from panic attacks as they re-experience the fear. Moreover, patients also suffer from high rates of depression and the group has preclinical evidence that BNC210 has anti-depressant activity as well as anti-anxiety effects. The group expects more validation in treating Post-Traumatic Stress Disorder next year. The group believes that BNC210 has the potential to revolutionize and enhance the treatment of anxiety and depression with a faster onset of action and without causing many of the unwanted side effects. BNC210 has the potential in meeting an unmet medical need for a fast-acting anxiolytic agent without the side effects against the current treatments, which have side effects like sedation, addiction, impaired memory and so forth. The group expects their clinical trials for BNC210 to continue to show a positive progress and believes this drug could be useful for several anxiety and depression disorders, which often have a large overlap of symptoms. The group has initiated Phase 2b clinical trial of BNC210 in patients with PTSD in Australia and the US.
 

Potential Competitive Advantages of BNC210 (Source: Company Reports)
 
Strategic partnerships: The group intends to maintain their strategic partnerships aiming to facilitate international commercialization and cutting risk while generating revenue. They have a partnership with Merck & Co., (MSD outside the US and Canada) for cognition and especially for treating Alzheimer’s disease. Initial milestone payment of US$10 million from this collaboration was driven by MSD in February 2017 enabling BNO to continue to progress with their drug discoveries and clinical programs, and is currently enough to fund their activities as the group is not seeking to raise further funds from shareholders. The group is still eligible to get up to US$506 million from MSD comprised of the upfront payment, research payments and milestones under the agreement.
 
Market opportunity: The group sees a huge market opportunity for BNC210 than in PTSD as the drug has the potential to be an innovative, first-in-class drug where there is an unmet need in a large patient population. Accordingly, BNC210 could represent a major advancement in care. As per independent market research, up to nine million Americans are forecasted to suffer from PTSD and the Australian statistics are on the same track. Treating PTSD is still challenging and is lacking in treatment options, even though there is huge need in this area. FDA has approved just two anti-depressants for treating PTSD with a further two anti-depressants recommended by Veterans Affairs and the US Department of Defense. About 2.8 million-prescriptions are expected to be written off label each year in the US for treating PTSD. There is a reported 50% rise in overall mortality rates related with long-term benzodiazepine use in PTSD patients – and the efficacy of benzodiazepines in this patient population has been questioned. As a result, the group believes that their BNC210 might represent a potential opportunity to replace current therapies and expand into the already large PTSD market with a safe, non-addictive and effective therapy.
 

Potential market opportunity for BNC210 (Source: Company Reports)
 
FY17 highlights: The group is well positioned to finish their BNC210 PTSD clinical trial and reported $42.87 million in cash and cash equivalents at the end of June 2017. But this also comprises the milestone payment of US$10 million from MSD plus the R&D tax incentive refund of $8 million received in October 2016. The group reported revenue and other income for FY17 financial year of more than $28.2 million. On the other hand, they reported an after-tax loss of $6.8 million impacted by ongoing investments in the clinical development of BNC210 and BNC101 and continued research on their other pipeline programs. Meanwhile, BNC105 is currently in a formal partnering process. This process has been backed by a new data set that became available throughout 2017, including positive data supporting the use of BNC105 in combination with a relatively new class of anti-cancer agent, the checkpoint inhibitors like MSD’s Keytruda and also exciting new data supporting the use of BNC105 for treating blood cancers.
 
Closed US operations: The group closed their US operations in June to focus more on their core strengths and ongoing trials. This move also led to a major cost saving for the firm while the US operations exit would not make a major impact on their clinical and commercial objectives. The move, which consolidates all clinical and business operations in Adelaide, offers the group the ability to be quicker in developing new drug treatments, especially the core BNC210.
 
Outlook: The group believes that they are well positioned to progress the development of BNC210 for treating PTSD in the current Phase 2 trial. They are also in solid position to continue to support MSD to achieve milestones and further show their strength in drug discovery and development. The group is exploring strategic partnership opportunities, including the monetization of BNC101 and BNC105, to achieve their corporate objectives. Meanwhile, BNO has renewed their focus on the ion channel core, the potential for BNC210 to deliver value and the strength of their collaboration with MSD.
 

Platform Technologies (Source: Company Reports)
 
Stock performance: The group’s major clinical stage oncology assets are BNC105 and BNC101, and BNO is progressing well in terms of further plans on these along with seeking opportunities on monetization. The group intends to focus its resources on drugs that have “blockbuster’’ potential and sees their drug candidate BNC210 to be one such promising candidate. On the other side, given the overall survival rates of metastatic colorectal cancer being so low, they see their BNC101 having the potential to offer real therapeutic benefit to patients who still have limited treatment options. The shares of BNO lost over 14% in the last three months (as of December 11, 2017) opening a lucrative entry opportunity and we give a “Buy” recommendation on the stock at the current price of $0.395


BNO Daily Chart (Source: Thomson Reuters)

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