Daily Stock Watch: ESSA Pharma Dips on Trial Suspension

By Duncan Ferris


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Though ESSA Pharma Inc (NASDAQ: EPIX) saw its share price soar last week on strong pre-clinical news, a trial hiccup is giving investors jitters. But is EPIX stock a good investment?

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ESSA Pharma Inc (NASDAQ: EPIX) has seen its share price tumble by more than 30% before the market open after reporting patient recruitment issues with one of its clinical trials.

The business announced that Janssen Research and Development is suspending enrolment into the Phase 1 clinical study of the company’s EPI-7386 treatment candidate for patients with metastatic castration-resistant prostate cancer.

David Parkinson, CEO of ESSA, commented: 

"While we are disappointed that Janssen will not be completing this study, we thank Janssen for the conduct of the study to date and the patients who participated in the study.

"We are encouraged by the favorable safety, pharmacokinetic and initial clinical activity in these patients as these data further support the data generated in the EPI-7386 combination study with enzalutamide that ESSA is conducting.” 

Even so, the suspension of enrolment seems like a significant blow to ESSA Pharma. But is EPIX stock a good investment?

What is ESSA Pharma?

ESSA Pharma is a clinical stage pharmaceutical company, which focuses on developing novel and proprietary therapies for the treatment of prostate cancer. 

It develops EPI-7386, an oral candidate that is in a Phase I clinical study for the treatment of patients with metastatic castration-resistant prostate cancer.

The company has collaboration agreements with Caris Life Sciences, Bayer Consumer Care AG, Janssen Research & Development and Astellas Pharma.

ESSA Pharma was incorporated in 2009 and is headquartered in Vancouver, Canada.


Today’s swing in share price is the stock’s second major movement in less than a week, with EPIX rocketing on 26 October after the company announced strong pre-clinical data for its EPI-8207 treatment candidate.

ESSA reported that the candidate showed “robust potency degrading androgen receptors, including androgen receptor splice variants and clinically relevant androgen receptor mutants that can potentially drive disease progression in patients with castration-resistant prostate cancer”.

While this news led to excitement among investors, the difficulties reported today pertaining to ESSA’s lead treatment candidate could undo the resulting stock price gains.

How Does ESSA Pharma Make Money?

As the company is in the clinical stage, it has yet to earn significant revenues from the sale of any products.

EPIX Stock Financials

The year to date has seen EPIX stock decline in price by 69.5% and by 53.5% over the last 12 months. It reached a 52-week high of $14.88 and a low of $1.40.

ESSA’s most recent quarterly results showed its total operating expenses came in at $9.3m, roughly even with the $9.4m achieved in the same period 12 months prior. Research and development and general and administrative costs remained roughly flat.

The company registered a net loss of $8.8m for the period, consistent with the same quarter 12 months prior. ESSA Pharma had cash and cash equivalents of $67.9m at 30 June 2022.

The business does not distribute a dividend to its shareholders.

EPIX Growth Potential

The company has a significant market opportunity, noting that an estimated 500,000 US residents suffered from prostate cancer in 2020.

The condition is the second most common cause of male cancer deaths, and there are an estimated 248,000 new cases per year, according to the American Cancer Society. Additionally, it caused 31,000 deaths in 2021. 

While antiandrogen treatments for prostate cancer do exist, the company says there is a need for new treatment options as resistance to second-generation antiandrogens is commonplace.

The company says its EPI-7386 differs from all current alternatives as it specifically binds to androgen receptors in a manner that allows it to be effective even against those which are currently resistant to rival antiandrogen treatments.

As such, the company is confident that it is developing a product that provides something different from the competition in an area where there is a significant addressable market.

EPIX Investment Risks

With any clinical-stage company, the primary risk is that it simply won’t be successful in reaching approval for its products. This is a risk exacerbated by the fact that the company is still in the early stages of clinical development, with its phase 2 trials yet to commence.

This leaves a significant amount of time for regulatory goalposts to be moved or for a competitor to develop a more successful treatment.

Additionally, the business could run out of money in its quest to gain approval. Fortunately for ESSA Pharma, the business appears well funded for roughly two years considering its cash and cash equivalents of around $68m and quarterly losses of roughly $8.9m.

Even so, the business will likely have to seek fresh funding before achieving approval, with there being a possibility that these funding efforts could be unsuccessful or could see shareholders’ holdings diluted. 

Is EPIX Stock a Good Investment?

ESSA Pharma appears to be a well-funded business that has developed a unique approach to the development of prostate cancer, which affects a major and growing portion of the US population. 

Clinical-stage companies are always an inherently risky investment because there is a possibility that they will never be able to successfully bring their treatment candidates to market.

Additionally, it is worth considering that EPIX is a penny stock and is thus liable to more volatility than equities with a higher price tag.

However, investing in a pharmaceutical stock at such an early stage can net investors eye-watering returns if the business achieves success, though patience is required as backers might be in for the long haul.

Four analysts listed by the Wall Street Journal currently cover the stock, with each of these offering a Buy rating for EPIX. Additionally, they give an average target price of $22.50, compared with the stock’s current price of $4.41.

If you enjoyed this analysis, why not check out our investigations of DexCom and Matador Resources?


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Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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