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Launch of Qualigen Therapeutics, Inc. coverage; Targeting cancer and infectious diseases…

By David Bautz, PhD

NASDAQ:QLGN

READ THE FULL QLGN RESEARCH REPORT

We launch the Qualigen Therapeutics, Inc. (NASDAQ: QLGN) hedge with a valuation of $10.00. Qualigen is a biopharmaceutical company developing novel cancer and infectious disease treatments while pursuing and expanding its FDA-cleared FastPack® system. The Company’s development pipeline includes ALAN, which comprises a DNA aptamer (AS1411) bound to a gold nanoparticle, RAS-F, a family of small molecule RAS protein-protein interaction inhibitors, and STARS™, a treatment device designed to remove various compounds from circulating blood. AS1411 is also being developed as a potential treatment for SARS-CoV-2 infection. The company also markets the FDA-cleared FastPack system, which includes diagnostic instruments and test kits. Qualigen recently began shipping a SARS-CoV-2 IgG diagnostic test for COVID-19 antibodies. The FastPack product line is sold worldwide through its business partner Sekisui Diagnostics, LLC.

Evaluation

We value Qualigen using a probability-adjusted discounted cash flow model that factors in potential future revenue for AS1411, ALAN, RAS-F, and FastPack.

For AS1411 as an antiviral, we expect the company to initiate a COVID-19 clinical trial in the first half of 2021 and receive emergency use authorization and begin selling the drug in 2022 (fiscal 2023) . We also anticipate that the company will test AS1411 as an antiviral for other indications such as influenza. We model maximum sales of AS1411 as an antiviral of $100 million. Using a 15% discount rate and a 25% approval probability leads to a net present value of AS1411 as an antiviral of $10 million.

For ALAN, we model a Phase 1 trial to launch in 2021, NDA filing in 2026, and approval in 2027. We model peak global sales of approximately $2 billion and for the company to receive 15% royalties on net sales. Using a discount rate of 15% and a probability of approval of 33% leads to a net present value of ALAN in AML of approximately $68 million. Additionally, we value the additional potential indications for ALAN at $100 million.

For RAS-F, we model that the company will first develop a drug for pancreatic cancer. We estimate that a phase 1 clinical trial will begin in 2022 with an NDA filing in 2027 and approval in 2028. We model a global peak in pancreatic cancer sales of approximately $2 billion and the company will receive 15 % royalties on net sales. Using a 15% discount rate and a 20% approval probability yields a net present value for RAS-F in pancreatic cancer of $38 million. Additionally, we value the additional indications for RAS-F at $100 million.

Combining the net present value of the company’s development pipeline with the company’s current cash position, cash from warrant exercises and a $50 million valuation for FastPak leads to a combined value of around $400 million. Dividing by the fully diluted number of shares of about 40.7 million gives a valuation of about $10 per share.

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