WSE: Ryvu Therapeutics - One more partnering deal in 2023e?
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The year 2022 was very fruitful in terms of partnering agreements as the company signed two deals and sold the rights to its STING agonist project and started a development partnership with BioNTech with a total bio-dollar value of approx. USD 1372mn and received approx. USD 25.2mn of upfront payments. This, combined with the issue of 4.8mn shares, allowed to secure net cash at the end of 2022e in the amount of approx. PLN 343mn and combined with a credit line from the EIB, allows the financing of all expenses (RVU120, pre-clinical projects, G&A, etc.) until the end of 2024e. However, despite such a strong balance sheet position, the company still plans to sell at least one project a year. Based on these guidelines, we also assume that the company will sign a partnering agreement in 2023e. This time, we assume that company will sell synthetic lethality project PRMT5 which we value at PLN 84mn.
SEL24. Based on the company's comments that Menarini currently has no approved plans for SEL24, we moved the year of commercialization from 2027e to 2028e and lower our valuation to PLN 121mn (vs. PLN 174mn assumed in our latest reports).
STING agonist & cooperation with BioNTech. Assuming a bio-dollar value of EUR 876mn, royalties of 3% and peak sales of USD 5250mn for all compounds developed under the agreement, we value this cooperation at PLN 280mn.
HPK1 inhibitor. Since the company needs to improve the cardiotoxicity profile of this compound, we lower the probability of success from 12% to 6% and lower our valuation of this project to PLN 48mn.
RVU120, STING agonist in cooperation with Exelixis. We did not change the key parameters of other programs developed by the company (RVU120, STING agonist in cooperation with Exelixis), but due to the higher risk-free rate and lower USDPLN, we reduced the value of these compounds by approx. 13.6% compared to our last report.
In total, primarily due to conclusion of agreement with BioNTech, we raise our target price from PLN 68.7/sh to PLN 86.5/sh and we maintain our Buy recommendation.
Recent developments
Partnering deal with BionTech
On November 30, Company informed that it signed deal with BioNTech to develop small molecule compounds as part of the development of several programs focused on therapeutics goals indicated by BioNTech. Additionally, Company signed license agreement with BioNTech to develop portfolio of STING agonists discovered and developed by Ryvu Therapeutics. The initial period of cooperation is planned for five years.
The financial parameters of the license agreement are as follows:
- Upfront payment EUR 20mn
- Bio-dollar value EUR 876.2mn
- Low single digit royalties from the sales of products that contains STING compound or any other compound that will be developed under the agreement with BioNTech.
Additionally BioNTech decided to invest in company EUR 20mn by taking up new ordinary shares of series J with price of PLN 48.86 per share. This information was warmly welcomed by us and market participants especially due to the fact that company has already sold part of rights to STING agonists compound to Exelixis in July (upfront payment of USD 3mn and bio-dollar value a touch above USD 400mn) and we did not expect that company would be able to sell the same compound to the other company.
Based on the above parameters, in the valuation of STING agonist sold to BioNTech and cooperation with BioNTech to develop small molecule compounds we assumed the following:
- Biodollar value of EUR 876mn (USD 972mn)
- Royalties 3% for STING agonist and all compounds developed in cooperation with BioNTech
- Total peak sales of USD 5250mn for STING agonist and all compounds developed in cooperation with BioNTech
- Total probability of 16% success for STING agonist and 8% for all compounds developed in cooperation with BioNTech
Valuation of STING agonist sold to BioNTech and cooperation with BioNTech to develop small molecule compounds
Continue reading: Ryvu Therapeutics: Milestones payments from Exelixis, Share issue and 4Q22 results & Conference highlights| FXMAG.COM
Marcin Gornik +48 691 701 088 marcin.gornik@pekao.com.pl
