Destiny Pharma
Ticker: DEST Exchange: AIM

Destiny Pharma is dedicated to the discovery, development and commercialisation of new antimicrobials that have unique properties to improve outcomes for patients and the delivery of medical care into the future.

Latest Reports

Plenty of progress in H1

Published: 17th September 2020

Having navigated the challenge of running a clinical trial during a global pandemic, Destiny has blossomed in mid-2020. It is on track to announce top-line Phase 2b results for XF-73 in the prevention of post-surgical infections in Q1 2021. It has also expanded its pipeline to span the two most contemporary issues in biotech – the microbiome and the prevention of COVID-19 infections.

Destiny’s interim financials demonstrate its continued prudent financial management that underpins these achievements against the backdrop of Covid-19. We leave our FY 2020 financial estimates largely unchanged.

Cash at the end of H1 2020 was £5.6m (£9.1m at the end of H1 2019) and in-line with our estimates. The company’s cash runway now extends to the end of 2021 which should be more than enough time to partner XF-73 after positive Phase 2b results in Q1 2021.

Destiny have weathered the challenges of clinical trial recruitment and management during the global pandemic that led other companies to abandon their studies. The Phase 2b study continues to recruit, with 88 of the 125-patient FDA-agreed target already on board and having breezed through the interim independent safety review.

We value Destiny Pharma at £84.5m, or 193p per share.

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Yet another string to Destiny's bow

Published: 7th September 2020

Destiny Pharma have always had a microbiome tilt with their most advanced product, topical XF-73, being developed for the prevention of post-operative infections. But now, with a new collaboration and grant award for the SPOR-COV program, they have taken this even further to encompass the two hot-button issues in anti-infectives: the microbiome and coronavirus infections.

Now Destiny’s discovery efforts and pipeline have been expanded with the SPOR-COV collaboration and grant award with SporeGen and the University of Liverpool. This allows them to investigate (another) preventative effect of, in this case, a nasally delivered Bacillus formulation developed by SporeGen to stimulate the innate immunity against coronavirus.

This positive development plays to Destiny’s strengths in topical (nasal) administration, preventative indications, as well as the cost-effective management of its earlier-stage pipeline which we described in our recent initiation note. The development of SporeGen’s technology as a preventative therapy for COVID-19 has many advantages over traditional vaccines.

There are no changes to our model arising from the announcement of the SPOR-COV early-stage pipeline development. We retain our valuation of Destiny Pharma at £86.3m, or 197p per share.

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Interview with CEO on Phase 2b trial and outlook

Published: 5th August 2020

Neil Clark updates that the FDA's decision to lower patient numbers in the ongoing trial will not dilute the quality of the outcome, but will save Destiny money and time - with completion expected this year.

At the same time, Covid-19 has filled hospitals highlighting again the signifcant dangers of post-operative infection given the ever increasing resistance of bacteria to antibiotics ('Superbugs').

Destiny's lead product XF-73 is aimed at preventing infection and Neil discusses commercial options for the group if the trial outcome is as hoped, and also updates on the rest of Destiny's pipeline in development. Video is 18 minutes long. 



New Model Anti-infectives

Published: 27th July 2020

Destiny Pharma is not just developing novel anti-infective drugs - its lead product XF-73 is in the US and European Phase 2b study for a new preventative indication that had not been awarded to any other drug before. The clinical study of XF-73, which has proven antimicrobial activity, is expected to report an interim review in August 2020. As anti-infectives have higher probabilities of success than other therapeutic areas, Destiny’s destiny looks bright.

Many august healthcare organisations such as the World Health Organisation and US Centers for Disease Control and Prevention have warned about the shortage of new antimicrobial agents to fight the global threat of antimicrobial resistance (AMR). However, many biotech companies have fallen into the trap of developing new anti-infective treatments in indications where there is no unmet medical need, or where generic competition already exists. Destiny Pharma’s novel first drug neatly side-steps all of these issues by developing XF-73 for the prevention of post-surgical staphylococcal infections.

Destiny’s fruitful discussions with the FDA have resulted in recruitment recommencing in earnest and is now up to 77 patients. A smart protocol adaption has been agreed which reduces enrolment to 125 patients without compromising the power of the study’s primary endpoint. The study is now about two thirds enrolled. This is a positive development since it saves Destiny money and time; and should ensure recruitment completion by the end of 2020.

We use a risk-adjusted NPV model to value Destiny Pharma based only on the development costs, our expectations of future milestone and licensing revenues for XF-73, and Destiny’s cash. Our fair value of Destiny Pharma is £86.3m or 197p per share.

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Differentiated anti-infectives

Published: 29th April 2020

Destiny Pharma’s FY 2019 results featured its ongoing Phase IIb study of its lead drug XF-73 for the prevention of post-operative staphylococcal infections and its prudent cash management. Careful financial management had decreased Destiny’s operating loss to £5.6m (vs. £6.1m in FY 2018) of which, R&D costs were £3.8m (£3.5m in FY 2018).

The coronavirus pandemic has brought swings and roundabouts for Destiny – a pause to the Phase IIb study and therefore a delay in licensing the product, but a raised profile for antimicrobial resistant (AMR) hospital infections, that now make a licensing transaction more likely.

This pause in Destiny’s clinical trial came with 34% of patients so far recruited. However, the probability of success for this active antimicrobial agent in the decolonisation of nasal staphylococcal carriage remains high as demonstrated by the now published Phase I study in 60 healthy volunteers.

Destiny remains well-funded with cash of £7.5m at the end of FY 2019 which provides a runway through Q4 2021 and coronavirus provides an increasingly supportive backdrop to the importance of preventing AMR infections.

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Anti-microbial agents with unique properties

Published: 18th December 2019
Following the set of largely established US and EU guidelines which recommend the decolonisation of patients’ noses of Staphylococcus aureus before surgery to prevent subsequent surgical site infections, Destiny recently reported the new Asia Pacific Society of Infection Control (APSIC) guidelines that are now harmonised with the US and EU positions. This is important for Destiny’s first product – XF-73 which is currently in a US Phase IIb study for the prevention of post-surgical staphylococcal infections. Download Now

Bucking the Big Pharma trend

Published: 15th April 2019
Destiny Pharma (DEST) is focused on developing innovative drugs with the potential to prevent or treat prevalent forms of drug resistant infection. Lead asset XF-73 has potential to be first to a $1.2bn core market. We think that its low propensity to trigger Antimicrobial Resistance (AMR) seen in testing to-date means the strong commercial rationale for XF-73 bucks the trend which has caused a steady retraction in Big Pharma antimicrobials pipelines.

In FY18 DEST made progress on achieving its strategic aims including delivering two successful Phase I skin irritation studies for lead program XF-73 a topical gel for intranasal delivery targeted at a new FDA-backed indication for prevention of post-surgical S aureus infection. These studies demonstrate XF-73 has a benign safety profile, fulfilling the requirements needed to initiate the placebo-controlled randomised Phase IIb study in post-surgical S aureus infection which is to commence imminently. 

XF-73 has low propensity to trigger Antimicrobial Resistance (AMR) meaning that the drug can be used for high risk surgery to replace mupirocin which is routinely employed off-label in US in pre-surgical prep for S aureus carriers, but which has led to rates of resistance up to 95% in some cases. 

The Company ended FY18 with a strong cash position of £12.1m having managed expenses tightly including £3.5m of R&D expenditure, providing a cash reach into 2020 on our forecasts and covering the cost of the Phase IIb trial. Further non-dilutive funding includes the award of up to £1.6m under the UK-China AMR programme for drug discovery with an ocular and dermal focus and is further validation of the XF platform.

DEST shares have underperformed since IPO, falling around 60%. By contrast, the imminent launch of the Phase IIb study is likely to be a key catalyst for revaluation and so we reiterate that at current share price offers a compelling entry point into a novel and commercially attractive antimicrobials pipeline.

We increase our SOTP DCF valuation to £131m updating for cash, FY18 results and with rolling forwards: equivalent to 301p / share.
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Extending the clinical pipeline

Published: 5th October 2018
Destiny Pharma (DEST) is developing a pipeline of novel antimicrobials from its XF drug platform, to help combat highly prevalent and virulent bacteria. These include eight so far tested of those classed as urgent threats by the World Health Organisation and Centers for Disease Control (CDC), including MRSA (methicillin-resistant Staphylococcus aureus). 

DEST is progressing its lead program for Prevention of post-surgical Staph infection with intra nasal candidate XF-73 and is on track to commence Phase IIb studies later this year. The company has also extended its clinical pipeline by adding a new program for high unmet need in treatment and / or prevention of skin infections in diabetic foot ulcers (DFU’s) and in burns wounds. High unmet need in DFU and burns gives a global peak annual sales potential of up to $500m, and with XF-73 already shown to be active against the predominant pathogens associated with infection in these indications. 

A Phase IIb study for a gel formulation of XF-73 in the new FDA indication for prevention of post-surgical Staphylococcus aureus infection, is due to be launched on completion of a second standard safety study of the gel formulation of XF-73 in H2’18. Existing safety data in 166 subjects suggest that this is a relatively low risk hurdle to achieve. The timeline for the Phase IIb study completion remains on track and is anticipated in H2’19. 

DEST has also started Phase I studies of XF-73 in two additional indications, for Diabetic Foot Ulcer DFUs and burns wounds. This follows on from Phase I study results showing that XF-73 is a suitable treatment for longer term treatment. This will be confirmed during additional Phase I studies planned in 2019, targeting the completion of a Phase II ready package in during 2020. This demonstrates the potential versatility of the drug being tested, for both preventative and treatment approaches.

The group reported a healthy cash balance of £15.1m at June 2018 – sufficient to run the ongoing planned studies of XF-73 – taking the cash runway into H2’20 on our forecasts including funding to complete a Phase II ready package for XF-73 dermal program. 

Adding in these new indications, using conservative assumptions, our valuation increases from £117m to £129m, equivalent to 296p per share.

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Clinical progress with XF drug platform

Published: 12th August 2018
Destiny Pharma (DEST) is developing a pipeline of novel antimicrobials from its XF drug platform, to help combat highly prevalent and virulent bacteria. These include eight so far tested of those classed as urgent threats by the World Health Organisation and Centers for Disease Control (CDC), including MRSA (methicillin-resistant Staphylococcus aureus). The unique mechanism of DEST’s new class of drug candidates could also help to overcome Anti-Microbial Resistance (AMR) that is a major limiting factor with standard antibiotic treatments. 

Recently, positive results from a blinded, placebo-controlled Phase I dermal irritancy study of lead product XF-73 in aqueous solution, showed that high concentrations of XF-73 applied topically to intact and abraded skin had a ‘similar irritancy potential to water’. Pharmacokinetic sampling confirmed that XF-73 was not absorbed into the bloodstream of volunteers, supporting the drug’s safety profile and that of other XF drugs, in treating and preventing dermal infections. 

The data helps to pave the way for a Phase IIb study start in a gel formulation of XF-73 in the new FDA indication for prevention of post-surgical Staphylococcus aureus infection, due to be launched on completion of a second standard dermal safety study of the gel formulation of XF-73 in H2’18. 

Safety study results also complement the existing strong body of data on XF-73, including its ability to rapidly kill bacteria, and so reducing the potential for AMR to develop, compared to other antimicrobials tested. The data will further assist DEST in prioritising its pipeline that contains three other preclinical candidates. 

XF-73 has potential to be first to a $1.2bn US core market. DEST is targeting a primary market of up to 6 million high risk surgeries in screened S aureus carriers, with secondary market potential for so called Universal Decolonisation, for c 12 million non-carriers. Since there are no products currently approved in post-surgical S aureus infection in the US, XF-73 has potential to be first to the US market, setting a new standard of treatment. 

We reiterate our sum-of-parts DCF valuation of DEST, using a 12.5% discount rate, of £117m (269p/share). We include only XF-73 in prevention of S aureus infection in our value, so providing upside on entry of other candidates into human studies. 
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Well-funded and on track for Phase IIb

Published: 26th April 2018

Destiny Pharma plc (Destiny) is a UK based clinical stage developer of medicines for the prevention and treatment of infections caused by drug-resistant bacteria.

Destiny is delivering the clinical plan for its novel antimicrobial candidate XF-73 (exeporfinium chloride) on target. The initial focus for DEST is in the US where XF-73 has been granted Fast Track Designation by the FDA in the new indication of ‘Prevention of post-surgical Staphylococcal infection’. The Fast Track supports speedy development of drugs to prevent life-threatening disease.

 Early studies encouragingly showed that Staphylococcus aureus (S aureus) did not generate resistance to XF-73 after multiple exposures. There are currently no approved drugs for Prevention of post-surgical staphylococcal infection and few late stage candidates: so XF-73 could be first to a primary addressable market worth up to $1.2bn.

Following the recent Investigational New Drug (IND) opening, XF-73 is due to enter Phase IIb studies which should lead to data readout in H219. Destiny recently clarified the development plan for XF-73, which has already been trialled in 166 subjects over the course of five Phase I/II studies, detailing the standard safety studies required by FDA. In our view the three Phase I dermal safety studies detailed represent a relatively low risk hurdle towards completing the Phase III ready package.

The terms of Destiny’s December commercialisation and development agreement with China Medical Systems (CMS) included exchange of Asian rights (ex-Japan) in return for a £6m equity stake and data sharing. This validates the XF platform clinical and commercial potential and could help Destiny to accelerate the development of XF-73 and the earlier stage products. China is the world’s second largest consumer of antibiotics so it has a crucial role in managing the threat of AMR.

Our sum-of-parts DCF valuation of Destiny Pharma, using a 12.5% drug development discount rate, rises slightly to give a current worth of £117m (269p/share) after rolling our forecasts forwards and updating for end December 2017 cash. The current market cap implies a low probability of success in the lead program, despite the up to twofold likelihood of success in anti-infection indications vs the average rate.

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XF-73 green light for the fast track

Published: 19th March 2018
Destiny Pharma is a UK-based clinical stage developer of medicines for the prevention and treatment of infections caused by drug-resistant bacteria.

Destiny has confirmed that its lead candidate, topical antimicrobial XF-73, has been granted FDA Fast Track Designation in the new FDA-backed indication - prevention of post-surgical staphylococcal infection. Following the recent Investigational New Drug (IND) opening, XF-73 is due to enter Phase IIb studies this year, positioning it as a potential first-to-market product in the indication. 

Fast track designation is one of a range of incentives granted under Qualified Infectious Disease Product (QIDP) status granted to XF-73.  QIDP supports the development of drugs against priority pathogens, such as S aureus, including methicillin-resistant Staphylococcus aureus - MRSA.  

XF-73 is the lead product from DEST’s XF series and is a topical gel for nasal administration and the first candidate from the XF group, which collectively have demonstrated activity against a wide spectrum of bacteria tested. These include eight of the twelve pathogens that appear on the priority list classified by the Centers for Disease Control and Prevention (CDC) and the World Health Organisation (WHO).

The value of the primary market for XF-73 alone is an estimated $1.2bn - counting the six million patients classed as high risk who are also carriers of S aureus (based on data from US National Center for Health Statistics). In our view the low potential for resistance means that XF-73 should also be widely adopted for the c12 million high-risk non-carriers of S aureus.

We reiterate our DCF valuation of Destiny Pharma at £115m, or 263p / share, including estimated end December 2017 net cash of £16.8m. On our forecasts the group is well funded to cover the Phase IIb program with XF-73, as well as to cover its initial work on the follow-on pipeline, taking our estimated cash reach to the end of 2020. Our valuation includes only XF-73 in the lead indication, so that the entry of pre-clinical candidates into human studies provides pure upside.

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In a class of its own

Published: 9th January 2018
You only have to walk into your doctor's surgery to see signs reminding you to use antibiotics with care; meanwhile the news continues to carry stories which highlight the increasing resistance against antibiotics.  Destiny Pharma’s novel XF platform offers a solution to the global need for new antibiotics with low risk of resistance generation.  With a focus on tackling the most virulent and difficult to target hospital infections like MRSA (methicillin-resistant Staphylococcus aureus), as a group XF drugs have shown activity against eight pathogens tested that appear on the World Health Organisation and US Centers for Disease Control and Prevention (CDC)’s priority list.

Destiny is prioritising XF-73 which has potential to be first to a $1.2bn core market, in a new FDA-backed indication for prevention of post-surgical S aureus infection. CDC estimates that people with MRSA are 64% more likely to die than those with a non-resistant form of infection. 

— The XF platform is based on a novel chemical class which offers the potential to rapidly kill bacteria via mechanisms that differentiate the XF candidates from standard antimicrobial treatments. The commercial potential of such drugs is enhanced, not only to treat or prevent infection, but with low propensity for bacteria such as S aureus to develop resistance as seen in standard microbiology models even after 50-plus exposures to XF-73. Anti-Microbial Resistance (AMR) is a major limiting factor with standard antibiotic treatments. The low potential for resistance to XF-73 could support wider adoption, tripling the core patient pool.

— If the data are borne out in the Phase IIb study, then XF-73 has potential to be first to market in a new FDA-backed indication, setting a new standard and gaining a strong foothold in the market. There appears to be limited competition in later stage pipelines in the preventative space and with no approved drugs in the US. Furthermore, it seems that Destiny’s XF-73 is likely to be a more convenient presentation compared to currently used off-label antibiotic, mupirocin. 

— The company is focused on the fastest route to a Phase III ready data package, first for XF-73 and the next three products in the pipeline, rather than eyeing up a slot as a specialty pharma company. Destiny is already well-funded because of its recent £15.3m fund raise together with a further £3m investment from China Medical Systems, this is sufficient to complete the Phase II program for XF-73 in our forecasts. This route could be accelerated by a range of drivers and policy-led incentives, plus potential to benefit from alternative, non-dilutive sources of funding.

— Looking forward, we consider the probability of securing a deal post-Phase II is high, if efficacy already seen in 166 subjects is confirmed, given the apparent scarcity of novel treatments and recent high-profile vaccines failures.

— China Medical Systems is an ideal partner / investor with access to huge markets.

Our DCF valuation using a 12.5% discount rate is £115m or 263p/share.             

NB at this stage this only reflects the current clinical candidate XF-73 in the US market, and includes our estimated net cash of £16.8m at end of 2017. Consequently, we see the current market value as a fair entry point into a novel pipeline with further upside potential if additional candidates enter clinical development.

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Investor Forum November 2017

Published: 30th November 2017
Neil Clark, CEO, discusses the Group's activity post-IPO and addresses  the firm's plans going forward.