Novogen — Update 31 October 2016

Novogen has in-licenced the Phase II-ready drug GDC-0084 from Genentech. GDC-0084 is an orally administered small molecule phosphoinositide 3-kinase (PI3K) inhibitor that targets an important growth signalling pathway in cancer cells. The drug was specifically developed to cross the blood-brain barrier and target the aggressive brain cancer glioblastoma, a disease with poor patient survival for which there are few effective therapies. The drug has completed a Phase I trial in patients with advanced disease, which confirmed that it readily crosses the blood-brain barrier and led to dose-dependent inhibition of tumour growth. Seven of the eight patients treated at the maximum tolerated dose of 45mg/day demonstrated levels of drug in the bloodstream that were associated with significant inhibition of tumour growth in preclinical models.

GBM is the most common and most aggressive primary malignant tumour of the brain and spinal cord (Exhibit 1). Approximately 11,500 patients are diagnosed with GBM each year in the US. GBM tumours are characterised by invasive and diffuse growth, which makes complete surgical removal difficult. Standard treatment for GBM entails maximal surgical resection of the tumour followed by radiotherapy with concurrent chemotherapy with temozolomide (TMZ) followed by adjuvant chemotherapy with the same drug to treat the residual infiltrative component of the tumour. Despite this aggressive treatment, the disease invariably returns resulting in a five-year survival rate of only 5%.1

Novogen intends to develop GDC-0084 as a treatment for newly diagnosed GBM patients (first line therapy). Development will target the 61%2 of patients where the promoter of the O6-methylguanine methyltransferase (MGMT) gene in the tumour cells is unmethylated. These patients receive only minimal benefit from treatment with TMZ and are in urgent need of more effective therapies.

The PI3K signalling pathway plays a crucial role in cellular proliferation, metabolism, survival and apoptosis (programmed cell death), as illustrated in Exhibit 2. PI3K signalling is initiated by receptor tyrosine kinases (RTK) or G-protein coupled receptors located at the cell surface, and by some oncogenic proteins such as Ras.

The PI3K pathway is frequently over-activated in cancer. The over-activation can occur through a variety of mechanisms including mutation and amplification of genes in the pathway, or by loss of function of the tumour suppressor PTEN, which is a negative regulator of PI3K signalling.

The first approved cancer drugs that target the PI3K pathway were the rapamycin analogues everolimus and temsirolimus, which inhibit mTORC1. The PI3K inhibitor idelalisib (Zydelig, Gilead Sciences) was first approved by the FDA in 2014 and is approved to treat several types of leukaemia and lymphoma, providing validation for PI3K as a target for anticancer drug development. Idelalisib is a selective inhibitor of the delta isoform of PI3K (PI3Kδ).

Inhibition of the PI3K pathway is a promising target for GBM drug development because abnormal PI3K signalling is associated with over 80% of cases of the disease.3 These changes include: amplification of epidermal growth factor receptor (EGFR), which leads to activation of the PI3K pathway in ~45% of GBM cases; amplification or activating mutations of the genes encoding the PI3K subunits in ~15% of patients with GBM; and loss of PTEN function in ~40% of GBM cases. Loss of PTEN function has been shown to lead to poor survival.

Novogen will benefit from the thorough big pharma preclinical development programme that Genentech has conducted for GDC-0084.

GDC-0084 is a potent brain-penetrant small molecule inhibitor of PI3K (EC50 2nM) that was specifically designed for treatment of brain cancer. The drug is also deliberately designed to be a moderately potent inhibitor of mammalian target of rapamycin (mTOR) kinase (EC50 70nm) to avoid the toxicity seen with drugs that are potent inhibitors of both targets.

GDC-0084 was shown to freely cross the blood-brain barrier in the mouse, rat and dog, with brain to plasma ratios greater than 1 (Exhibit 3 upper section). Studies showed that the drug inhibited PI3K activity in mouse brain, reducing the phosphorylation of Akt (Exhibit 3, lower section)

Exhibit 4 shows that the drug strongly inhibited tumour growth in the GBM6 patient-derived tumour model.

GDC-0084 showed increased efficacy when it was combined with radiotherapy under different treatment schedules in preclinical studies. This is important because radiotherapy is part of the standard treatment regimen for newly diagnosed GBM.

Two separate studies were performed in mice with GBM tumours implanted in the brain, which tests whether the drug crosses the blood-brain barrier in to the brain. The studies were conducted with two different GBM tumour lines in which the MGMT promoter is unmethylated. Both studies showed that combining GDC-0084 with radiotherapy increased efficacy, but differed in when in the course of treatment was the optimum time to administer the drug.

In one animal model the greatest efficacy was seen when GDC-0084 was administered either starting at the completion of radiotherapy or both during and after radiotherapy.

In the other animal model using different patient-derived GBM tumour cells, GDC-0084 as a single agent was more effective than radiotherapy alone, and the greatest efficacy was seen when GDC-0084 was administered at the same time as radiation therapy.

Given the mixed results from the two GBM animal models, it is not clear whether GDC-0084 will be effective when administered as a monotherapy at the completion of a course of radiotherapy or whether it will need to be administered at the same time as radiotherapy to give maximum benefit.

Genentech conducted a Phase I study of GDC-0084 in patients with progressive or recurrent high-grade gliomas (WHO Grade III–IV), including glioblastoma and malignant astrocytoma. The study enrolled 47 patients in eight successive dose escalation cohorts (2-65mg). The maximum tolerated doses (MTD) was identified as 45mg.

Overall, the adverse event profile was consistent with PI3K/mTOR class effects; adverse events at the MTD were amenable to monitoring, manageable and reversible upon dose hold or discontinuation. The most common Grade 3 adverse events related to GDC-0084 were hyperglycaemia (four patients) and mucositis (three patients).

Oral dosing of GDC-0084 demonstrated favourable pharmacokinetics in the Phase I trial, with sustained plasma levels following daily oral dosing (Exhibit 5, left-hand pane).

Seven of the eight patients treated at the MTD of 45mg/day demonstrated levels of drug in the bloodstream over the course of a day (area under the curve, or AUC) that were associated with at least 60% inhibition of tumour growth in preclinical models (Exhibit 5, right-hand pane).

Analysis of tissue samples from a surgical brain specimen from one patient confirmed that the drug crosses the blood-brain barrier in humans, with concentrations seen in healthy brain and in tumour tissue higher than the levels in plasma.

Exhibit 7 summarises the tumour responses for the patients in the Phase I study, grouped by dose cohort. Although none of the tumours reached the 50% reduction in tumour size that would qualify as a partial response, a dose response in tumour growth was apparent, with much less tumour growth in patients treated at 45mg (the MTD) or higher doses.

It is important to note that the Phase I study was performed in patients with late stage disease and rapidly growing tumours. In the planned Phase II trial Novogen will be testing whether this reduction in tumour growth is sufficient to improve PFS and/or overall survival in patients with early stage disease who have undergone surgical resection and radiotherapy.

Novogen anticipates conducting a randomised Phase II trial of GDC-0084 as adjuvant therapy in newly diagnosed GBM patients with unmethylated MGMT promoter who have undergone surgical resection of the tumour and a six-week course of radiotherapy (XRT) in combination with temozolomide.

In a seminal study reported in 2005, Hegi et al4 found that GBM patients with an unmethylated MGMT promoter received only minimal additional benefit when standard of care drug temozolomide was added to radiotherapy in first line treatment of newly diagnosed disease (Exhibit 8).

Exhibit 8 shows that patients whose tumour contained a methylated MGMT promoter received a survival benefit when temozolomide was added to standard radiotherapy; their median survival was 21.7 months, as compared with 15.3 months among those who received only radiotherapy (HR 0.51, P=0.007). In patients with an unmethylated MGMT promoter, there was a smaller and statistically insignificant difference in survival between patients who received temozolomide and radiotherapy (orange line) compared to radiotherapy alone (blue line, 12.7 vs 11.8 months, HR 0.69, P=0.06).

TMZ is an alkylating agent that adds a methyl group to purine bases of DNA, blocking DNA replication and leading to cell cycle arrest and apoptosis. MGMT can repair the DNA by removing the added methyl group, counteracting the cytotoxic effect of TMZ. Methylation of the MGMT promoter silences the gene, reducing MGMT activity in the cell and allowing TMZ to have its desired cytotoxic effect. Low levels of MGMT in tumour tissue are associated with longer survival among patients regardless of whether or not they receive TMZ chemotherapy.

As Exhibit 9 shows, the median PFS among five studies of GBM patients with unmethylated MGMT promoter the average median PFS was only 5.2 months and the median OS was 13.8 months. This means that a two-month improvement in either PFS or OS would be a clinically meaningful benefit. It also means that a study in this patient group will be relatively quick to conduct, with PFS data expected to mature less than six months after the completion of recruitment.

Although initial development of GDC-0084 will target GBM, it also has the potential to treat brain metastases for a range for different cancers. Brain metastases are quite common, but there are few drugs available to treat them. Lung, breast and melanoma represent the majority of brain metastases. Genentech has done preclinical studies showing that GDC-0084 improves survival in mouse models of brain metastases in HER2+ breast cancer.

Additionally, even though GDC-0084 has been specifically designed to cross the blood-brain barrier, it is also likely to be effective against tumours elsewhere in the body. However, at this stage we have not included potential applications of GDC-0084 for any indications other than glioblastoma in our valuation model.

Patent protection for GDC-0084 extends to 2032 in the US and 2031 in other major markets. Given the potential for patent term adjustment to compensate for the time required for clinical studies and regulatory review, we model cash flows for GDC-0084 out to 2035.

Exhibit 10 summarises some of the other PI3K drugs that are on the market or in development.

Idelalisib (Zydelig, Gilead) was approved in 2014 as a second line treatment for chronic lymphocytic leukaemia (CLL) and lymphoma. In March 2016 Gilead halted 6 combination trials of Idelalisib in newly diagnosed patients due to serious side effect including deaths. Idelalisib inhibits the delta isoform of PI3K and inhibiting strongly PI3Kdelta affects the immune system. In contrast, GDC-0084 strongly inhibits PI3Kalpha and only weakly inhibits PI3Kdelta, and has not caused similar side effects in clinical trials. Bayer is undertaking a Phase III study of Copanlisib, which also strongly inhibits PI3Kdelta, in non-Hodgkin’s lymphoma.

A number of PI3K inhibitors have been trialled in GBM, but development of most has been discontinued, including voxtalisib (Sanofi/Exelixis) and PX-866 (Cascadian Therapeutics). Other tha2 GDC-0084 the only other PI3K inhibitor that continues to be developed for GBM is BKM120 (buparlisib; Novartis).

BKM120 is being tested in three Phase I/II trials in recurrent GBM in combination with different drugs. A Phase III trial of BKM120 in advanced breast cancer met its primary endpoint of improving PFS (6.9 vs 5.0 months, HR 0.76, p=0.014). However, the high rate of serious adverse events (77% vs 32%) raised questions about the overall benefit of the treatment; mood disorders were common eg depression 26% vs 9%. Mood disorder is an adverse event that is specific to BKM120 and not observed with other PI3K inhibitors. Efficacy was greater in patients with mutations in the PIK3CA gene (PFS 7.0 vs 3.2 months), so there may be further development of BKM120 in this subgroup of patients.

Toxicity was also an issue when BKM120 was trialled as a first line therapy in newly diagnosed GBM patients. Safety data from the Phase I study that reported in 2015 showed that a tolerable RP2D was not determined for concurrent administration of BKM120 in combination with TMZ during radiotherapy due to challenging toxicity. However, a RP2D was identified for adjuvant use in combination with TMZ after radiotherapy was completed, although 6 of the 16 patients developed dose limiting toxicities. No efficacy data was reported.

Novartis’ latest pipeline update indicates that it anticipates filing BKM120 for approval in unspecified solid tumours some time from 2020 onwards. Although the target indication has not been specified, we believe that it is most likely to be in breast cancer.

Genentech is continuing to develop the PI3K inhibitor Taselisib (GDC-0032), which inhibits the alpha, delta and gamma isoform of the disease. Taselisib is in a Phase III trial in breast cancer and a Phase II/III trial in squamous cell lung cancer. Both of these diseases have much larger patient populations than GBM. We do not know why Genentech chose to develop Taselisib in preference to GDC-0084, but the larger addressable market for Taselisib may have played a role in the decision.

Novartis anticipates filing the PI3Kalpha inhibitor BYL719 for the treatment of advanced breast cancer in combination with fulvestrant in 2019, and for other solid tumours from 2020 onwards. However, this drug is not being developed in GBM.

Consideration for the worldwide licence to develop and commercialise GDC-0084 includes a US$5m upfront payment and modest regulatory and commercial milestones (value of milestones not disclosed - we model US$5m payable on market approval). Novogen will also pay royalties in line with industry benchmarks – we assume an average royalty rate of 10% of net sales is payable to Genentech.

As part of the transaction Novogen will also purchase the privately held company Glioblast. The principals of Glioblast, Paul Hopper, an experienced life sciences executive, and Leslie Chong, who was formerly clinical programme lead for GDC-0084 at Genentech, have strong relationships with the investigators at Genentech and were instrumental in negotiating the transaction; they will become consultants to Novogen on an ongoing basis. Novogen will acquire Glioblast for A$2.1m, comprising A$0.6m in cash and A$1.5m payable as equity.

The Glioblast shareholders will also be entitled to four further payments in cash or equity on the achievement of performance-related milestones. The first two milestones of A$1.25m each, payable as equity, will become payable on the commencement and successful completion of a Phase II clinical trial of GDC-0084. The details of the performance hurdles and the payment amount for the final two milestones have not been disclosed, although the company has disclosed that the payments may be made in cash or equity at Novogen’s sole discretion. In our forecasts we assume that these payments total A$10.5m (five times the upfront payment), split between approval filing and first marketing approval.

Novogen anticipates conducting a randomised Phase II trial of GDC-0084 as adjuvant therapy in patients with unmethylated MGMT promoter who have undergone surgical resection of the tumour. We assume that the trial design will be similar to Exhibit 11, where patients undergo a standard six-week course of radiotherapy (XRT) in combination with temozolomide followed by a four-week treatment break, before being randomised to receive maintenance therapy of either daily oral GDC-0084 or six cycles (24 weeks) of temozolomide. One advantage of this design is that GDC-0084 would be used as a monotherapy just as it was in the Phase I trial, so there would be no need for additional safety studies before the Phase II trial could commence.

Exhibit 12 shows an alternative trial design where GDC-0084 replaces temozolomide entirely, both during and after the six-week course of radiotherapy. However, at this stage it is not clear whether an additional Phase I study would be needed to confirm that GDC-0084 can be safely administered concurrently with radiotherapy at the MTD of 45mg. In this regard it is encouraging that no additional toxicity was observed when GDC-0084 was combined with radiotherapy in preclinical studies, but this question will need to be discussed with the FDA and other regulators.

In our forecasts we take a conservative approach and assume that the Phase II trial follows the design shown in Exhibit 11. Based on discussions with the company and its advisors we assume that the trial will commence recruiting patients in Q2 of CY17, complete recruitment within 15-18 months, and report data for a progression free survival (PFS) primary endpoint in Q1 of CY19. Data for an overall survival secondary endpoint should mature in late CY19. The estimated cost of the 160-patient trial is US$25m.

In this scenario, we assume that the regulators advise that an additional safety study is required before GDC-0084 can be administered during the six-week course of radiotherapy. We assume that in order to satisfy this requirement, such a Phase Ib safety study is conducted while the Phase II trial is underway at an estimated cost of US$1-1.5m. Successful completion of the Phase Ib study would clear the way to conduct a trial where GDC-0084 is used in conjunction with XRT during the first six weeks of treatment as well as during the subsequent maintenance phase, as shown in Exhibit 12. The longer period of treatment with GDC-0084 could potentially lead to greater efficacy.

Exhibit 13 shows that we estimate that the total cost of the acquiring GDC-0084 programme and completing the Phase II trial and additional Phase Ib trial would be US$35.1m (~A$46m). We note that A$4m of the Glioblast upfront and milestone payments would be payable in scrip and not cash.

There are approximately 11,500 new cases of GBM in the US each year1. Sixty-one per cent2 of patients have unmethylated MGMT promoter and would be eligible for first line therapy with GDC-0084. As the only currently-approved chemotherapy for first line GBM has only minimal efficacy in this group of patients, we assume GDC-0084 would get 80% uptake among the eligible patients if approved. Assuming a price of US$50,000 per patient and assuming 4% annual market growth, we estimate peak sales potential in the US in 2030 at US$525m. We estimate that global peak sales would be double the US sales, giving global peak sales of US$1,050m in 2030.

We have assessed the impact of the GDC-0084 licence deal under two different development scenarios; the first scenario assumes accelerated approval at the completion of the Phase II trial, and in the second scenario an additional clinical trial is required to be performed by a partner prior to approval filing.

Approximately 60% of drugs that enter clinical development fail in Phase II, which makes this the riskiest stage of development. If the Phase II trial results are positive we assume that Novogen would out license the drug to a partner, which would complete clinical development (if further trials were required) and market the drug if approved.

If the trial results are positive we envisage two potential development scenarios.

In scenario 1 there is a statistically significant improvement in PFS, which is sufficiently meaningful to justify filing for accelerated approval. Although PFS data could be available in Q119, we take a conservative approach to timing and assume that Novogen (or a partner) waits for OS data to mature in Q419 before filing for approval. This scenario could potentially see the drug launched in Q321 as shown in Exhibit 14. We note that if the approval filing is based on PFS data alone the launch could potentially come nine months earlier, in Q420.

We assume that a Phase Ib trial to identify the MTD for GDC-0084 when used in combination of radiotherapy will be conducted while the Phase II trial is underway. This would ensure that a Phase II combination therapy trial could commence in 2019 if required. We expect 6-12 patients would be recruited for this trial.

Scenario 2 assumes that the results of the first Phase II trial indicate that GDC-0084 is effective against GBM, but that an additional clinical trial is required before filing for approval. The additional study could be a Phase III trial to demonstrate an overall survival benefit, or it could be a pivotal Phase II study of GDC-0084 used during the six-week course of radiotherapy as well as during the maintenance phase after radiotherapy is completed. We anticipate that this second trial could be completed in 2.5 years if it uses the same trial sites as the initial trial.

Our valuation of GDC-0084 includes risk-adjusted upfront payments and clinical/regulatory milestones (but not sales milestones) from potential licensing deals. We assume that GDC-0084 is sub-licensed to a marketing partner in mid-2019 after reporting PFS data from the Phase II trial.

For scenario 1 we assume that the licence deal includes a US$40m upfront payment and US$120m in clinical and regulatory milestone payments (we risk-adjust milestone payments in our forecasts). These payment amounts are based on a review of Phase II oncology drug licencing deal metrics from BioCentury. Upfront payments from these deals averaged US$38m, and total clinical, regulatory and sales milestones averaged US$300m. We assume 40% of the milestone payments (US$120m) are for clinical and regulatory milestones.

We assume Novogen receives a 20% royalty on net sales under this scenario because the data is ready for filing, and that Novogen pays a royalty of 10% to Genentech.

Exhibit 16 shows that under scenario 1 we value GDC-0084 at A$54m, with royalties contributing 67% of the value.

For scenario 2 we assume a smaller US$20m upfront payment due to the additional clinical trial required to be conducted by the licensee, but the same US$120m in milestones. We assume Novogen receives a typical Phase II royalty of 15% and pays a 10% royalty to Genentech.

Exhibit 17 shows that under scenario 2 we value GDC-0084 at A$11m, with royalties contributing 48% of the value.

Our analysis suggests that the most attractive aspect of GDC-0084 is the potential for it to gain accelerated approval following a single Phase II trial, which offers the potential for substantial financial returns to shareholders. If a second efficacy trial is required, delaying approval to 2024, then the returns would be more modest.

Novogen is currently developing two classes of drugs that have performed strongly in preclinical efficacy studies (Exhibit 18). Its super-benzopyran drugs, Cantrixil and Trilexium, have performed strongly in an ovarian cancer stem cell model developed by Yale University, and have shown strong efficacy in cell lines from a range of cancers. Novogen’s second drug class, anti-tropomyosins (ATM), including lead candidate Anisina, show strong synergy with anti-mitotic drugs, such as vinca-alkaloids, that are standard-of-care for a number of cancers. The chemo-sensitising effect of the ATMs in combination with vinca-alkaloids is expected to have a significant clinical benefit, as it may reduce the dose of anti-mitotic drugs that are administered, which would result in a corresponding decrease in associated toxicity. Combination therapy may also slow the development of drug resistance.

While Novogen’s drug candidates have shown a considerable promise in preclinical studies to date, they are still at a relatively early stage of development. Its most advanced in-house drug, Cantrixil, is scheduled to commence a Phase I trial in ovarian cancer in Q416. The company announced in early September that the FDA has allowed the IND submission, clearing the way for the drug to be administered to patients in clinical trials.

Our valuation of Novogen’s existing pipeline is virtually unchanged at A$112m (previously A$113m) or A$0.26/share (undiluted, unchanged) and A$0.23/share after diluting for options and convertible notes, based on a risk-adjusted discounted cash flow model. Novogen is also listed on NASDAQ under the code NVGN, with each NASDAQ-listed ADR representing 25 ordinary shares. Our undiluted valuation equals US$4.95 per ADR at current exchange rates (previously US$4.97 per ADR). Note that the per-share value does not account for the shares that will be issued as part of the acquisition of Glioblast (A$1.5m in shares) or the Glioblast milestone payments (potentially A$1.25m of shares in FY17 on initiation of Phase II, and a further A$1.25m in FY19 on successful completion of the Phase II).

The benefit from the higher 10% success probability assigned to Cantrixil, now that the FDA has accepted the IND for a Phase I trial, expected to commence in Q416, has been offset by a reduction in our assumed market growth rate from 5% to 4%.

Our valuation reflects our understanding of the likely development path for Novogen’s three lead drugs Cantrixil, Anisina and Trilexium. Although we believe that our valuation model represents a likely development scenario, it should be considered as indicative because the choice of cancer indications that are eventually developed will be influenced by the ongoing preclinical efficacy studies, as well as by which patients show initial signs of efficacy in the pending Phase I trials.

Our cash flow forecasts extend out to 2035, but do not include any terminal valuation and apply a 12.5% discount rate. In calculating the diluted NPV/share, we assume that the A$1.5m Triaxial convertible note is converted to 60m shares (the A$1.5m convertible note was issued as part of the purchase of Triaxial and its SBP technology). The conversion of the notes is subject to achieving specified clinical milestones: 20m can be converted on IND allowance; 16m on completion of Phase I trials; and 24m on completion of Phase II trials.

Exhibit 19 shows our market assumptions for Cantrixil, Trilexium and Anisina and the contribution of product royalties and milestone payments to the rNPV. We have offset the risk-adjusted trial cost against milestone revenue for each drug, rather than against royalty revenue. This understates the contribution of the milestone payments to the rNPV and overstates the contribution of royalties.

Under development scenario 1 our valuation for Novogen including the GDC-0084 transaction would increase to A$165.5m or A$0.39/share (undiluted) and A$0.34/share after diluting for options and convertible notes.

Under development scenario 2 our valuation including GDC-0084 would be to A$123.3m or A$0.29/share (undiluted) and A$0.25/share after diluting for options and convertible notes.

The key question regarding GDC-0084 is whether it works sufficiently well as a single agent in adjuvant therapy to justify accelerated approval in line with scenario 1. If it needs to be used concurrently with radiotherapy to deliver sufficient efficacy in the target population then one or more additional efficacy trials may be required, as outlined in scenario two, delaying potential launch until 2024. There is a significant risk that GDC-0084 does not provide sufficient survival benefit to justify approval either as a single agent or combination therapy.

We have assumed that a Phase Ib study of GDC-0084 in combination with radiotherapy is conducted in parallel with the planned Phase II trial, but that will be dependent on adequate funding.

We do not know the details of the final two milestones payable to Glioblast and have had to rely on our own assumptions. From our discussions with management we believe that our analytical assumptions (A$10.5m combined value, payable on filing and approval) gives a reasonable guide to the potential economic impact of the Glioblast milestones.

While Novogen has funds to initiate the Phase II study of GDC-0084 in GBM, it would require additional funds of A$42m over 2018 and 2019 to complete all the planned trials from the existing portfolio (including GDC-0084), which could result in significant dilution of existing shareholders.

Our valuation includes revenues from the development of four drugs in six disease indications, as well as (risk-adjusted) upfront and milestone payments for three licensing deals. While each of these targeted indications is supported by the current preclinical efficacy studies, and evidence of a dose response in the GDC-0084 Phase I trial, the company may not ultimately pursue development of the drugs for all of these indications. On the other hand, ongoing preclinical efficacy studies could identify additional disease indications that should be investigated in clinical trials. While we believe that the drug development timelines used in our forecasts are achievable, at this early stage it is hard to accurately predict how long it will take to get the drugs to market.

FY16 results (year ending 30 June) showed a net loss of A$12.1m, 69% larger than the previous corresponding period (pcp). Normalised after tax loss of A$11.6m was 38% larger than the previous year. R&D expense was A$9.9m compared to A$5.9m in FY15, reflecting the ramp-up of R&D activities, including preparations for the planned Cantrixil clinical trial. Administration expenses were A$5.8m vs A$3.8m pcp. Cash at 30 June was A$33.5m.

We have updated our financial forecasts to reflect the FY16 results and the payments associated with the in-licensing of GDC-0084, the acquisition of Glioblast and funding the proposed Phase II trial. This has increased forecast R&D expenditure by 50% to A$19.6m in FY17 and by 90% to A$30.5m in FY18. We have assumed that the development of Novogen’s in-house drug candidates continues in line with our existing timelines. We estimate that Novogen has sufficient funds to support operations to the end of FY17, but will require addition funds of ~A$20m in FY18 and a further A$22m in 2019 if all three of Cantrixil, Trilexium and Anisina progress to clinical trials in addition to the GDC-0084 Phase II. Note that we include unrisked clinical trial costs in our financial forecasts to show the potential funding requirement if the clinical trial programme is conducted in line with our expectations (trial costs risk-adjusted for NPV calculation).