Warsaw Stock Exchange: Ryvu Therapeutics – Valuation
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Valuation STING agonist cooperation with Exelixis
Compared to our previous report, we do not change the key parameters in valuation of STING agonists in cooperation with Exelixis and we assume the following:
- Biodollar value of USD 400mn
- Royalty rate 10%
- Peak sales USD 2100mn
- Average sales USD 1257mn
- With total probability of success of 16% we assume that commercial sales of the drug will start in 2030
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 328mn to PLN 283mn.
STING agonist in cooperation with Exelixis
Valuation of HPK1 inhibitor
In the 2022e statement company informed that chemical series and lead compound require improvement of safety parameters related to the potential risks of cardiotoxicity and an increase of the therapeutic window. Also based on the charts presented in 2022 and 2021 financial statements it seems that this project is not progressing. Additionally, competitive HPK1 inhibitors entered the clinic (link). All this factors makes us to apply the following changes in the valuation of company’s HPK1 inhibitor.
- Partnering deal in 2024e (vs. 2023e assumed in our last report) with upfront payment of USD 15mn and bio dollar value of USD 135mn
- Royalty rate 9%
- Peak sales USD 1206mn
- Average sales USD 722mn
- With total probability of success of 6% (12% assumed in our last report) we assume that commercial sales of the drug will start in 2031e (vs. 2030e assumed in our last report)
In addition, due to the change of risk free rate from 6% to 6.2% and change of USDPLN rate from 4.8x to 4.2x, we cut our rNPV valuation from PLN 128mn to PLN 48mn.
HPK1 inhibitor
Valuation of PRMT5
We decided to add to our valuation the company's most advanced project in the synthetic lethality platform with an indication in the treatment of solid tumors. The drug is currently in the discovery phase and company plans to choose development candidate in 2023e and to start phase I in 2024e. In the valuation of this project, we cautiously assumed peak sales and bio-dollar value applied earlier in valuation of HPK1 inhibitors of USD 1206mn and USD 135mn, respectively. But we underline that the median sales of PARP inhibitors, i.e. the first synthetic lethal targeted therapies (Lynparza, Zejula, Rubraca, Talzenna) in 2022 reached USD 1200mn which is in line with our assumption. We also underline that our assumptions are more conservative than these guided by company, which expect that deal parameters could be at comparable levels to deal for STING agonist with BioNTech. In details, we assume the following:
- Biodollar value of USD 135mn
- Royalty rate 5%
- Peak sales USD 1206
- Average sales USD 722mn
- With total probability of success of 10% we assume that commercial sales of the drug will start in 2033e
PRMT5
Collaboration with Merck and Galapagos
Based on the comments provided during the conference that cooperation project with Merck is not going on we cut total probability of success of this project by 50% and we value these project at PLN 6mn. As Galapagos has terminated cooperation with Ryvu in inflammatory diseases, we cut the value of this cooperation to PLN 0mn.
Valuation summary
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.
Marcin Gornik +48 691 701 088 marcin.gornik@pekao.com.pl
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