Ryvu Therapeutics: Termination of partnering deal with Galapagos, Valuation summary and more
Aa
Share
Slightly to the negative side we see information on the SEL24 which has not approved clinical development plans and we see the risk that the drug will be approved later than our expectation from our last report. We underline that, we valued this drug at PLN 7.1/sh
Also to the negative side we information on the collaboration with Merck (project is not going on) and collaboration with Galapagos (high risk of cancellation). However, these collaborations were valued by us in our last report at PLN 1.7/sh.
On the other hand, we see company’s strong commitment to deliver at least one partnering deal per year and information on the company’s strong balance sheet position which should be sufficient until the 2024e.
To the positive side, we also see information on the potential parameters of the deal on synthetic lethality, which should be similar to the parameters of the deals for STING agonist. We underline that synthetic lethality projects has not been included in our valuation and conclusion of such deal would create strong potential to increase out TP.
Termination of partnering deal with Galapagos
On April 6, the company announced that Galapagos had terminated a partnership agreement for a compound developed in an inflammatory disease. Due to the termination of the Agreement, after the end of the notice period the License granted will expire and Ryvu will obtain full intellectual property rights to all compounds and related know-how transferred to Galapagos under the Agreement and generated under the Agreement before Galapagos exercising the option. Ryvu is also entitled to an exclusive paid license to the intellectual property rights generated by Galapagos upon exercise of the Option to further develop the program. After analyzing the data package received from the Galapagos, Ryvu's management will consider the possibilities of using the intellectual property in Ryvu projects or its re-commercialization.
Our view: SLIGHTLY NEGATIVE
In our last report, we valued this compound at PLN 27mn, i.e. 2% of last close market cap. We point out that during the conference, Management informed that see the high risk of termination of this agreement. Taking all into account, we see this information only slightly to the negative side.
Valuation summary
Assumption for R&D pipeline valuation
We performed valuation of R&D projects using risk-adjusted NPV method based on the following assumptions:
- We applied discount rate of 14.0% (vs. 13.8% assumed in out last report)
- We assumed USDPLN at 4.2x (vs. 4.8x assumed in our last report) and EURUSD at 1.1x (vs. 1.0x assumed in our last report)
- Assuming probability of success we base on the probabilities presented in book Valuation in Life Science
- Assumption related to sales of drug are based on collected by us statistics of sales comparable drugs.
RVU120
We do not change the key parameters in the valuation of company’s key compound RVU120 and we assume the following:
- With 33% probability we assume that in 2025, company will sing a partnering with upfront payment of USD 60mn and bio-dollar value of USD 1209mn
- With total probability of 20%, we assume that the drug will be approved for commercial sales in 2028e
- We assumed the peak sales of USD 6043bn and royalties of 15%. Out of which peak sales in AML indication is to amount to USD 777mn (in line with our previous estimates), breast cancer USD 2255mn (in line with our previous estimates), sarcomas USD 1511mn (in line with our previous estimates) and mCRPC where we estimate peak sales of USD 1500mn (in line with our previous estimates)
Due to the change of risk free rate from 6% to 6.2% and lower change of USDPLN rate from 4.8x to 4.2x, we cut our rNPV valuation from PLN 746mn to PLN 645mn.
RVU120
Valuation of SEL24
Compared to our previous report, taking into account comment provided during the conference, that currently no further clinical development plans have been yet approved, we decided to postpone the schedule of milestone payments by one year and now we expect that he drug will be approved in 2028e (vs. 2027e assumed in our last report). But, right now, based on the information provided during the conference, we do not see support to change all other key parameters of our rNPV valuation of SEL24 which are as follows:
- Biodollar value from 2023e of USD 84mn
- Royalty rate 9%
- Peak sales USD 778
- Average sales USD 466mn
- With total probability of success of 41% we assume that commercial sales of the drug will start in 2028e (vs. 2027e assumed in our last report).
Due to the change of risk free rate from 6% to 6.2%, lower exchange rate of USDPLN rate from 4.8x to 4.2x and postponement of development schedule with commercialization year in 2028e, we cut our rNPV valuation from PLN 174mn to PLN 121mn.
SEL24
Continue reading: Warsaw Stock Exchange: Ryvu Therapeutics – Valuation| FXMAG.COM
Marcin Gornik +48 691 701 088 marcin.gornik@pekao.com.pl
