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goetzpartners securities Limited
goetzpartners securities Limited: Probiodrug (PBD-NA): Q3 positive, Phase IIb
on track
01-Dec-2017 / 09:28 GMT/BST
*This equity research note was formally published on 30th November 2017 at
2.30pm.*
*goetzpartners securities review on Probiodrug (PBD-NA): Q3 positive, Phase
IIb on track*
*Recommendation: OUTPERFORM*
*Target price: EUR91.00*
*Current price (as at 30th Nov 2017): EUR11.93*
Probiodrug provided a positive Q3 business update confirming that the Phase
IIb clinical programme for lead compound PQ912 for Alzheimer's disease ("AD")
remains on track. R&D expenses of EUR1.13m came in below Q1 and Q2 levels (due
to the completion of the Phase IIa SAPHIR study) and below our estimates,
suggesting a narrower FY 2017 net loss than we currently model. Reported cash
of EUR11.7m should allow Probiodrug to fund operations through at least 2018
in the absence of a licensing deal. We reiterate our OUTPERFORM recommendation
and TP of EUR91 per share, which is based on our net present value ("NPV") for
PQ912 plus cash. We model a 15% chance of PQ912 achieving peak sales of
c.$15bn in 2025E following launch in 2021E, with Probiodrug receiving total
milestone payments worth $475m and 12% royalties on global sales from a
partner.
*PQ912 Phase IIb programme on track*
Probiodrug announced in October that it had started preparations for the
European Phase IIb trial (the second study will be in the US) for PQ912 in AD
leveraging the infrastructure built up in the SAPHIR trial. The focus will be
on finding the right dose that achieves high target inhibition and hence
efficacy whilst minimising adverse events. Phase IIa SAPHIR data presented at
the prestigious CTAD conference earlier this month showed encouraging first
signs of efficacy in the context of synaptic improvement. The compound was
also safe and well tolerated, although the discontinuation rate was slightly
higher in patients treated with PQ912 due to skin and gastrointestinal side
effects, which Probiodrug believes can be minimised by using a lower dose.
PQ912 is a glutaminyl cyclase ["QC"] inhibitor that blocks the formation of
highly neurotoxic and prevalent pGlu-Abeta, a key culprit in Abeta plaque
formation - the hallmark of AD.
*Potential for first-in-class should lead to licensing deal in 2018E*
PQ912 is the most advanced pGlu-Abeta-focused compound in clinical
development, ahead of Eli Lilly's anti-pGlu-Abeta mAb LY3002813 in Phase I.
Partnering discussions with biopharma companies are ongoing and we remain
confident that one or more licensing deals will be signed in 2018E. Our
valuation is based on a deal based on total upfront and milestone payments of
$475m plus 12% royalties on global sales to Probiodrug. A potential deal for
preclinical compound PBD-C06 (anti-pGlu-Abeta mAb) is not currently captured
in our model and would therefore represent further upside to our valuation for
Probiodrug. PBD-C06 has a complementary mechanism of action and could
therefore be used in combination with PQ912. This is strongly supported by
studies conducted in highly relevant preclinical models.
goetzpartners Corporate Research | Research Team
Brigitte de Lima, PhD, CFA | Analyst
goetzpartners Corporate Sponsored Research
goetzpartners securities Limited
The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.
T +44 (0) 203 859 7725 | healthcareresearch@goetzpartners.com /
brigitte.delima@goetzpartners.com
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(END) Dow Jones Newswires
December 01, 2017 04:28 ET (09:28 GMT)
