Tiziana Life Sciences' Brazil study can give meaningful boost to estimates says Raghuram Selvaraju at HC Wainwright.

Tiziana Life Sciences PLC’s (LON:TILS NASDAQ:TLSA) agreement for a collaborative clinical study investigating nasally-administered foralumab in COVID-19 patients in Brazil, either alone or in combination with orally administered dexamethasone is an intriguing development suggests Raghuram Selvaraju at broker HC Wainwright.

This study is slated to begin enrolment within the coming weeks and may report top-line data before the end of 2020, said the broker.

Selvaraju notes that on July 31, 2020, Tiziana reported its filing of a patent application for the potential use of nasally administered foralumab, a fully human anti-CD3 monoclonal antibody (mAb), for the treatment of COVID-19 either alone or in combination with other antiviral drugs.

Cytokine storm (also known as cytokine release syndrome) and hyper inflammation, resulting in severe lung damage followed by respiratory failure, constitute the main underlying reasons for morbidity and mortality in COVID-19-infected patients, the analyst adds.

Recent clinical evidence suggests that levels of peripheral T regulatory cells (Tregs) is prominently reduced in severely ill COVID-19 patients, which could be one of the reasons for the hyperactivated immune system and damaged lungs seen in these patients.

Since the reduction in Tregs and activation of the immune system are commonly observed in patients with Middle Eastern Middle Respiratory Syndrome (MERS), Severe Acute Respiratory Syndrome (SARS-CoV-1), COVID-19 and Acute Respiratory Distress Syndrome (ARDS), Tiziana scientists believe that stimulation of Tregs represents a highly innovative approach for the treatment of patients with these diseases.

HC Wainwright points out that its current valuation does not include any contribution from the use of foralumab to treat COVID-19-infected patients.

“Thus, if the Brazilian trial proves successful, this could constitute meaningful upside to our estimates.”

Selvaraju added that a change in the ratio of American Depositary Shares to ordinary shares has catalyzed a revision to its price target.

The combined effect of the ADS-to-ordinary shares ratio adjustment and the dilution from the most recent financing transaction has reduced its price target to target to US$11.00 per share from $25.00 per share.

HC Wainwright adds that its US$11 valuation excludes all contribution from foralumab in areas beyond Crohn’s disease; milciclib in cancers beyond HCC; TZLS-501 for any indication; and Accustem Sciences (formerly StemPrintER).

Accustem Sciences to demerge

Plans to effect the demerger of Accustem Sciences (formerly known as StemPrintER) from Tiziana are continuing to advance, notes the broker.

“We expect shares of the new company to be issued on a pari passu basis to Tiziana shareholders of record at the time of the spinout,” said Selvaraju.

“Accustem Sciences intends to list on the London Stock Exchange (LSE) late in 4Q20, and potentially establish a dual listing on NASDAQ in 2021.

In order to effect the demerger, Tiziana plans to distribute a 1:1 share dividend to its shareholders with a record date of October 30, 2020.

“As we have stated previously, Accustem may be publicly listed upon completion of the spinout; its valuation could be fairly reckoned at US$280mln—10% of the valuation placed upon Genomic Health at the time of its acquisition by EXACT Sciences (EXAS; not rated) last year.

“This would imply that the value of StemPrintER could be considered close to the entire current market cap of Tiziana, meaning that Tiziana’s current pipeline of drug candidates is being assigned only nominal value.

“This still provides a compelling incentive to consider an investment in Tiziana shares, in our view.”

Tiziana also reported the grant of three patents last month, said the note.

“We believe that this patent grant notices clearly demonstrate how rapidly and broadly the company’s patent estate is growing,” added the broker.

Story by ProactiveInvestors