Analytical Report - Ryvu-Therapeutics - WSE:RVU
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New indications provide new valuation opportunity
Company monetized IO project and it sold its STING agonist to Exelixis. As a result of this deal, in the valuation of STING agonist project we increase bio-dollar to USD 400mn (vs. USD 150mn assumed earlier), peak sales to USD 2100mn (vs. USD 1206 assumed earlier) and level of royalties to 10% (vs. 9% assumed earlier), and we value this project at PLN 328mn (vs. PLN 149mn estimated earlier).
On September 22, Ryvu presented key development goals for 1H22-2024, which, among others assumes development of RVU120 in new therapeutics indications (mCRPC and sarcomas) which has not been assumed in our last report. As a result, we assume that RVU120 will be sold in 2025e (vs. 2024e assumed earlier) with upfront payment of USD 60mn (vs. USD 30mn assumed earlier), bio-dollar value of USD 1209mn (vs. USD 525mn assumed earlier). Implementing this assumptions into our model we value RVU120 compound at PLN 746mn (vs. PLN 484 assumed in our last report).
On the other hand, development of RVU120 in new indications will require additional funds that will have to be raised by the company, therefore MB was allowed by supervisory board to issue of up to 8.5mn shares. As a result, we assume that company will issue in 2H22-24e 8.5mn shares at PLN 36.2/sh (price as of yesterday close) and will raise PLN 306mn.
Assuming share issue of 8.5mn new shares and value of STING agonist at PLN 328mn (vs. PLN 149mn assumed earlier), RVU120 at PLN 746mn (vs. PLN 484mn assumed earlier) and other projects at PLN 360mn (vs. PLN 365mn assumed earlier), we estimate TP at PLN 68.7/sh (vs. PLN 58mn estimate earlier) and we reiterate our Buy recommendation.
Assumption for R&D pipeline valuation
We performed valuation of R&D projects using risk-adjusted NPV method based on the following assumptions:
â– We applied discount rate of 13.8% (vs. 12.3% assumed in out last report)
â– We assumed USDPLN at 4.8x (vs. 4.25x assumed in our last report) and EURUSD at 1.0x (vs. 1.1x assumed in our last report)
â– Assuming probability of success we base on the probabilities presented in book Valuation in Life Science
â– Assumption related to sales of drug are based on collected by us statistics of sales comparable drugs.
RVU120
As it has been presented above, we value RVU120 agonist at PLN 746mn (vs. PLN 483mn assumed in our last report).
Valuation of SEL24
We expect some delays in Phase I/II AML study, therefore compared to our last report, we assume that SEL24 will be approved in 2027e (vs. 2026e in our last report) and we do not change all other assumptions and we value this compound at PLN 174mn (vs. PLN 208mn in our last report).
Valuation STING agonist
As it has been presented above, we value STING agonist at PLN 327mn (vs. PLN 149mn assumed in our last report).
Valuation of HPK1 inhibitor
Compared to our last report, we do not change major assumption in the valuation of HPK1, however in the valuation we do not take into account 2022e development costs, as they are already included in net debt 2022e, therefore we value this compound at PLN 143mn (vs. PLN 111mn in our last report).
Risk to our valuation
Risk of milestones, upfront and royalty payment. The assumed payments may differ visibly from our assumption as its levels is determined individually and depends from many factors such like: the advancement of drug development, success rates, sales potential.
Risk of competitive projects. If competitive projects will demonstrate higher efficacy, the projects developed by Ryvu may be abandoned or its potential sales may be much lower than our estimates. If competitive project with similar or slightly lower efficacy will be developed earlier it can take over market share dedicated for company’s drug.
Risk of peak sales and sales curve. Depending on patient number treated be company’s drug the peak sales as well as sales curve may deviate substantially from our assumptions. The number of patients treated by company’s drug depend on population, epidemiology, diagnosed patients access to health care, treatment rate and finally availability of other competitive treatment methods.
Risk of delays. Any delays increase the cost of development of new drug as well as increase the probability that competitive project will reach marker approval before company’s drug.
GPW’s Analytical Coverage Support Programme 3.0
Analyst: Marcin Gornik +48 691 701 088 marcin.gornik@pekao.com.pl
