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goetzpartners securities Limited
Marinomed Biotech AG (MARI-AT): Solving the insoluble
21-March-2019 / 08:15 GMT/BST
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*Published to the market and investors on 21st March 2019 @ 7.48am (GMT).*
*Marinomed Biotech AG (MARI-AT): Solving the insoluble*
*Recommendation: OUTPERFORM*
*Target Price: EUR95.00 *
*Current Price: EUR78.00 (CoB on 20th March 2019) *
*KEY TAKEAWAY*
We initiate coverage of Marinomed Biotech AG ("MARI") with an OUTPERFORM
recommendation and a target price ("TP") of EUR95 per share (>20% upside).
Marinomed uses its proprietary Marinosolv technology to dissolve hardly
soluble therapeutic compounds to improve their bioavailability and hence
efficacy and safety. Pivotal Phase III data for lead asset Budesolv in hay
fever (allergic rhinitis, "AR") is expected in Q2/2019E, paving the way for
approval and launch in 2021E into a >$12.2bn market. We model peak sales of
EUR750m (<4% market share), with Marinomed retaining up to 16% of value
through distribution deals. Tacrosolv is due to enter Phase II for eye
diseases in 2019E. Marinomed already generates revenues from six marketed over
the counter ("OTC") products for cough and colds, discovered and developed
in-house based on the patented and clinically validated Carragelose platform.
*Budesolv Phase III data in allergic rhinitis in Q2/2019E the key catalyst*
Budesolv contains the steroid budesonide, used for allergy and autoimmune
diseases. It is being developed as a nasal spray for AR, an inflammation of
the nasal mucous membranes that affects up to 30% of people. The ongoing Phase
III trial is designed to show non-inferiority vs. Johnson & Johnson's OTC
product Rhinocort Aqua (budesonide suspension), which generated sales of $250m
in 2017, less than 2 years after the Rx-to-OTC switch. Marinomed plans to
differentiate Budesolv based on faster onset of relief - minutes rather than
days - through a secondary endpoint. This would position it as a competitor to
market leader Flonase, which had sales of c.$1.6bn in 2017.
*Tacrosolv is targeted at common and debilitating, yet underserved eye
diseases*
Tacrosolv is based on tacrolimus, an established immunosuppressant used in
organ transplantation. Marinomed intends to develop the compound as a
prescription drug for local application to the eye to treat allergic
conjunctivitis and dry eye syndrome. The addressable markets were c.$1.4bn and
c.$2.2bn, respectively, in 2017. Preclinical studies have demonstrated
excellent tissue permeation and bioavailability at doses well below those used
when tacrolimus is administered systemically. A Phase II challenge study in
allergic conjunctivitis is due to start in 2019E, paving the way for pivotal
Phase III studies in 2020E. We expect Marinomed to partner Tacrosolv after
Phase II in a EUR500m deal including 12.5% royalties on sales and model peak
sales of EUR1bn, of which dry eye accounts for 75%.
*Marketed Carragelose-based products target a c.$28bn OTC market*
The efficacy of Carragelose, which is based on a biopolymer with antiviral
properties, has been demonstrated in four clinical trials in 650 adults and
children, which showed a reduction in the duration of the cold (by 2 - 3
days), its symptoms, and the number of relapses. Marinomed has six Carragelose
products targeting the cough, cold and allergy ("CCA") market worth c.$28bn in
2017 and growing at 4% - 5% per year. They are marketed through partners
worldwide and generated sales between EUR28m - EUR43m in 2017, yielding
EUR4.8m in total revenue to Marinomed. We forecast peak sales of c.EUR260m in
2030E (<1% market share) - with Marinomed entitled to c.16% - driven by
continued growth of existing products in markets where they are already
launched, entry into new countries that are covered by existing partnerships
and launch of new products.
*TP of EUR95 per share suggests >20% upside*
Marinomed develops products based on two proprietary platforms (OTC medicines
and new, aqueous formulations of existing drugs) that have distinct risk /
reward profiles. We feel that the valuation methodology that best captures
their different risk / reward profiles as well as their long-term potential is
a sum-of-the-parts ("SoTP") analysis based on risk-adjusted net present values
("rNPVs") for Carragelose products and projects from the Marinosolv technology
platform. The most valuable asset is Budesolv, accounting for c.43% of our
valuation, followed by Carragelose products (31%). Positive data for Budesolv
in Q2/2019E would lift our valuation to EUR107 per share.
Kind regards,
Brigitte de Lima | Analyst
goetzpartners Healthcare Research Team | Research Team
goetzpartners securities Limited
The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.
T +44 (0) 203 859 7725 | brigitte.delima@goetzpartners.com /
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790119 21-March-2019
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(END) Dow Jones Newswires
March 21, 2019 04:15 ET (08:15 GMT)
