AGI Therapeutics to diversify after disappointing drug test

AGI Therapeutics will widen its focus beyond gastro-intestinal disorders and develop alternative uses for its flagship Rezular product after disappointing clinical trials earlier this year.

The drug maker, which reported a wider first-half loss yesterday, said it would now focus on developing speciality products for the US and has sufficient cash reserves for at least two years to do that.

Earlier this year, AGI ended the development of Rezular, a treatment for irritable bowel syndrome, but the group said the drug may offer potential treatment for chronic diarrhoea as well as non- diarrhoea-related problems which could lead to potential peak sales of €1 billion.

“We are pleased to have completed a rigorous business strategy and portfolio review, which provides a realistic route for rebuilding value in our pipeline,” said chief executive John Devane.

Analysts at Piper Jaffray said the new strategy, focusing on small and less costly “orphan drug” status, made sense for a company of AGI’s size.

The US Food and Drug Administration’s orphan drug status is reserved for new therapies that are being developed to treat diseases or conditions that affect fewer than 200,000 people in the US and grants the drug developers seven years of market exclusivity.

But Piper Jaffray kept its neutral rating on the stock in the absence of more information on the outlook for Rezular.

“We have little visibility on potential newsflow catalysts and find it difficult to value AGI’s portfolio with limited information about the Rezular indications,” it said.

Shares in AGI fell 9% to 10c in thin volumes yesterday to give it a market capitalisation of €6.74m. It said its other flagship drug — AGI-004, for the treatment of chemotherapy-induced diarrhoea, will be considered for further development.