A Biotech with seven!! international Pharma and Biotech partners
2021-11-11 12:46Please note: Community posts are written by its members and not by Redeye’s research department. As a reader you’re always encouraged to critically analyze the content.
Medivir has partnered with seven international Pharma/Biotechs and has a diversified milestone/royalty cash flow to look forward to in the coming years. Further Phase 2 assets are up for partnering. Including its own MIV-818, which has the potential to be a game changer in Liver cancer, the potential share upside is over 150% in the coming 18 month time frame. A successful phase 1b/2a combo with Keytruda and/or Lenvima, which is starting any day now, and is expected to be ready in May 23, could be the real value inflection point making Medivir a multi-billion company. The study is an open study which means that results may be reported under way.
A couple of weeks ago we did a deep dive into Medivir’s main own products, primarily into Miv-818 that could become a game changer in Liver Cancer:
To further show the company's strength and opportunities we have now looked at Medivir's impressive list of license agreements.
Medivir has today seven (7) licensees for different products ranging from preclinical to market. The licensees are all over the globe;
IGM Bioscience, US
Rheos Medicine, US (option)
Tango Therapeutics, US
Ubiquigent, UK
Vetbiolix, France
GlaxoSmithKline, UK
SYB, China
Further to this, Remetinostat and Miv-711 are available for licensing. Both are phase 2 ready compounds. With those two possibly concluded over the next year Medivir has/will have a very impressive list of licensees which may add considerable revenue over the years to come.
Birinapant - IGM Bioscience, US
Medivir announced 4th of November that their licensee of Birinapant, IGM Bioscience, has started a clinical trial with Birinapant in combo with IG-8444 - IGM is an extremely fascinating company with a market cap of almost $ 2 billion. The focus is on "multispecific" antibodies - the hottest hot in biological drugs - despite the fact that even few "bispecific" have so far been brought to market. The 1.5 musd Medivir received today are "peanuts" if IGM manages to take its own molecule IMG-8444 plus Birinapant in a combo thru development and to the market - in total Medivir can receive 350 musd plus high royalty, of which Tetralogic who originated Birinapant, should receive approximately 25 -35% according to my guesstimate based the official data that Medivir obtains the larger portion of revenues and discussions with management.
MALT1 inhibitor - Rheos Medicine, US
Do you remember the press release from October 15, 2021?
RHEOS Medicines is a VC-financed company with, among others, Third Rock Ventures. On Rheos' website one can see that in their pipeline they have a MALT1 inhibitor in IND enabling phase, i.e. a phase 1 study could start 2022. This is their most advanced project. The project is currently being presented at the American College of Rheumatology conference.
"The results demonstrating MALT1 inhibition support Rheos's lead product candidate, RHX-317, a novel, small molecule MALT1 inhibitor, that the company is initially developing for the treatment of chronic graft versus host disease (GVHD)."
This molecule will also be presented at ASH on December 2021. We are not sure it's this molecule that Rheos has the option to acquire from Medivir but it's likely the case. If so, it is quite probable that the option will be exercised relatively soon. As it has not been exercised yet (issued in late 2018 or early 2019), it is likely that an exercise will lead to a significant revenue for Medivir - an unqualified guess could be at two million dollars. A pre-agreed license agreement is probably included. Let's guess that the biodollar value is at 40 musd plus royalties.
USP1 - Tango Therapeutics, US
From the Tango prospectus (thru a SPAC-transaction) we find the following text about the license agreement from 2020.
“Under the terms of the Medivir Agreement, we (Tango) are obligated to pay Medivir in connection with development, regulatory and commercial activities.
We have agreed to make certain milestone payments of
=>First two specified genetic contexts (inserted for ease of reading)
(i) $1.4 million in the aggregate for the first licensed product that achieves specified clinical milestones
plus $25.0 million for the first licensed product that achieves specified regulatory approval and sales milestones, in each case, in either of the first two specified genetic contexts
and
=>Third genetic context OR the second licensed product achieves such specified development, regulatory and sales milestones in either of the first two specified genetic contexts (inserted for ease of reading)
(ii) $0.7 million in the aggregate if that first licensed product achieves specified clinical milestones
plus $5.0 million if that first licensed product achieves specified regulatory and sales milestones for a third genetic context
or
the second licensed product achieves such specified development, regulatory and sales milestones in either of the first two specified genetic contexts.
We have the right to reduce these milestone payments by a specified amount in the event the licensed product is not covered by Medivir’s patents or if payments are due to a third party for a license under such third party’s intellectual property rights. We are also obligated to pay Medivir a low single-digit royalty on net sales of any product covered by a licensed patent.”
USP1 is Tango's second pipeline candidate and it is expected to enter into a Phase 1 study during 2022.
USP7 - Ubiquigent, UK
USP7 is a "protein degrader" - a very hot area where among others Bayer, Pfizer and Novartis have pumped in huge money recently. Medivir has since March 2021 a revenue sharing agreement re USP7. The split is not official but we are guessing 40% to Medivir. The licensee, Ubiquigent is a deubiquitinase (DUB) enzyme specialist. Ubiquigent has established itself as a respected global partner in the UPS field with a particular focus on the development of DUB inhibitors, with an established track record of supporting the drug discovery efforts of its partners via access to its Drug Discovery Screening Platform and by providing access to its own developing portfolio of novel DUB inhibitors as part of larger partnerships. In October 2021 Ubiquigent renewed and extended its partnership agreement with Bristol Meyer Squibb which very well could result in a license agreement sooner or later. Ubiquigent’s CEO, Jason Mundin commented: “We are delighted to have the opportunity to build on our existing relationship with Bristol Myers Squibb in this rapidly evolving field to provide additional support to the development of novel DUB inhibitors for patients with unmet medical needs.” When and how regarding an agreement is hard to estimate but an upfront of say 20 musd is not improbable in 2022/23 considering the hot area. We have estimated a 500 million biodollar deal which is very conservative in relation to the deals done by above Big Pharma.
MIV-701 - Vetbiolix, France
In the spring of 2019, a licensing agreement was signed for one of Medivir's candidate drugs, MIV-701, with the French company Vetbiolix, granting Vetbiolix the right to develop the product for veterinary use. MIV-701 is a cathepsin K inhibitor that is not suitable for human development due to its rapid degradation, but which has excellent properties for animals. Medivir is entitled to additional milestone payments as well as royalties during the continued development. The first small milestone payment for the candidate drug MIV-701 in veterinary medicine was received in October 2019. No further info available re Miv-701but management has expressed that only small payments are to be expected.
Xerclear excl China - GlaxoSmithKline, UK
In 2009, Xerclear® (Zoviduo®) was approved for the treatment of labial herpes. The marketing rights to Xerclear® in the USA, Canada and Mexico were divested already in 2010. The rights in Europe and the rest of the world have been licensed to GlaxoSmithKline, with the exception of China (see below) and Israel and South America where Medivir has retained the rights. One should probably not expect Medivir to put a lot of effort into these geographic areas. Medivir receives royalties on Xerclear®/(Zoviduo®) sales from GlaxoSmithKline. In addition, Medivir would receive milestones when Zoviduo® is approved as an OTC product in new markets.
Xerclear China - SYB, China
Medivir has out-licensed the rights to Xerclear to Shijiazhuang Yuanmai Biotechnology Co Ltd (SYB). After market approval and production in China, Medivir will receive a fixed royalty from SYB for each unit sold and the agreement guarantees a minimum sale during the first three years on the market amounting to single-digit million SEK.
Potential cashflows from the above licenses
We have tried to make an estimate of the potential cash flows (only milestones -no royalties apart from Xerclear) of each agreement 2022-2031 based on successful development... which of course is not guaranteed. The split over time/milestones are judged from experience of similar licensing deals in the industry. Some are qualified estimates and some more of guesstimates. In terms of Rheos the cash flow requires an option exercise first of all. Table in MSEK.
We can select different probabilities that all this materializes:
Probability NPV
10% 245 msek
20% 490
30% 736
Valuation of Medivir
In terms of all Medivir’s licenses presented above we have chosen to use an overall probability of 20%, i.e an NPV of at least 490 msek. The clinical trails will not cost Medivir anything going forward. They also represent a very diversified portfolio with mostly very capable and/or cash rich licensees. Furthermore, Medivir has 1,2 billion SEK in tax loss carryforwards which will be extremely handy when milestone payments do occur. The licenses also represent a large possibility that Medivir will not need to make any larger new issues, other than for possible larger structural transactions. Corporate development is one of the major tasks going forward for the new CEO joining the company within a number of months. He will be joining an excellent team on both the finance & science side as well as the business development side which can be seen above.
If we use the model that Redeye analysts have at present (since February, 2021) for MIV-818 they arrive at a NPV of 409 msek. In their research report that NPV was lowered for some unknown reason when they included the Birinapant deal. We haven’t chased the previous NPV Redeye had before. Since then MIV-818’s potential position in the market has subsequently improved with good monotherapy phase 1b data and the combo therapy is starting any day now. Based on some pre-clinical data with Keytruda and Lenvima that Medivir will present in depth at a coming conference, the combos seem to be very interesting with a combined increase in effect. We therefore use an NPV of 500 msek for MIV-818.
Before adding all together one should remember to add value related to what we call the “Four Assets”. Medivir has two phase 2 ready projects up for partnering, Remetinostat and MIV-711. Remetinostat has clinical results in three cancer indications. Recently the company agreed with its licensors, Tetralogic & Co, on a similar agreement set up as for Birinapant. This means that the incentives for Medivir to find a licensee for Remetinostat have increased drastically. MIV-711in osteoartrithis (OA) is the only non-cancer clinical project left in Medivir. Phase 3 projects in OA are very expensive but the medical need is huge. Before February 2022 three other biotech/pharma phase 3 studies will have reported – if these do not show good results in terms of disease modification, the chances for Medivir to find a licensee will probably increase during 2022. Furthermore, Medivir’s own MIV-828 is in late pre-clinical development in AML. Resources have not been spent on this project the last 12-18 months as there has, rightly so, financially been a focus on the MIV-818 development in liver cancer. Lastly, the market does not know whether the company has further research/pre-clinical projects in its drawers. We believe that could be the case. If so, further early licensing agreements could turn up. We put a value of 150 msek on these Four Assets.
Adding it all together indicates the following fair valuation of Medivir today:
· MIV-818 500 msek
· Licenses 490
· “Four Assets” 150
· Cash Sept 30, 21 226
Total 1366 msek
With 55,7 million shares the fair value is at least 25kr per share compared to a share price today of 10kr. It could be much higher if MIV-818 is successful in its upcoming phase 1b/2a trail or as Redeye put it in its February 2021 research report “We believe this would lead to a crucial value inflection point in 2022-23 for MIV-818, with a possible multi-billion SEK valuation for Medivir if development is successful.”
Initially, before that value inflection point in 2022/23, with a share price of roughly 10 SEK today, the first step is +150%... with maybe much more to come with a successful MIV-818. Note that the MIV-818 study is an open study which means that the company may supply the market with readouts several times - a fact that was not known to Redeye at the time they wrote about 2022-23 as value inflection point. The point could come already during 2022.