INDEX PHARMA - Blockbuster

2021-07-21 19:06

INDEX' Cobitolimod has the potential to become a real blockbuster in Ulcerative Colitis (UC) - why doesn't the stock market recognize that....yet?

The UC market is today dominated by the old anti-TNFa drugs Humira (Abbvie) and Remicade (J&J), both with several biosimilars in the market, but also by Pfizer's Jak-inhibitor Xeljenz and Takeda's Entyvio which is an integrin binding drug. All these have more or less severe side effects but Xeljenz stands out with a black box warning. J&J do also have Simponi, another TNF-a drug and Stelara (IL12/IL23) in the market.

How can we expect the market to look like in say 2024-25 when Index' Cobitolimod, subject to continued good results, both from an efficacy and safety point of view now is starting its Phase 3 soon.

Clearly, both Abbvie with Humira and J&J with Remicade and their biosimilars will have a large but probably shrinking portion of the market. Remicade will be gradually substituted by J&J's other approved drugs, Simponi and Stellara. Takeda's Entyvio will be there and maybe also BMS's Zeposia that was granted approval in May 2021. Efficiency data were ok, however several serious heart related events.

Maybe also Pfizer's JAK inhibitor Xeljenz - the latter having a Black Box warning. However, during half a year now, the FDA has been very reluctant to approve JAK inhibitors pending an internal in-depth-analysis of the risks with these. (hence the black box warning for Xeljenz since 2020).

July -21 Endpoints "Two more supplemental new drug applications have been delayed again — this time from AbbVie, and the partners Eli Lilly and Incyte — as the FDA continues its ongoing safety assessment of the class of drugs known as JAK inhibitors."

So what can come to the market 2021-2025?

Eisai's AMJ-300 showed doutful phase 3 data and so did Roche with Etrolizumab - we can more or less cancel them.

Left is:

• Galapagos with Jysleca possibly (JAK) - probably not the US at all - EMA decision this fall

-Eli Lilly with Mirikisumab had an ok induction study and will report maintenance study in Nov-21 and final results in Aug-23.

-Arena with Etrasimod will report close to year-end 2021. Had good phase 2 data but took an easier route than normal to achieve that.

• Abbvie with Rinvoq (JAK). They showed good deltas in the induction studies (21% resp 27%) but also show several serious adverse events as JAKs do. Abbvie is reporting full study in early 2022.

-Abbvie is also reporting Skyrizi but if successful at final reporting it will not be in the market until 2025.

-INDEX' Cobitolimod - market 2024-25?

If we contemplate some form of restrictions on JAK inhibitors by the FDA, the new players to the market in 2024/25, if the others and also INDEX are succsesfull we will see:

-Eli Lilly

-Arena

-Abbvie with Skyrizi

-Index

These above, and the old bunch:

-Humira/Remicade and their biosimilars

-Takeda (Entyvio)

-J&J (Simponi/Stellara)

maybe excluding BMS (Zeposia-serious events) and Pfizer (Xeljenz -JAK)

....will fight for an 8-9 billion dollar market where Cobitolimod is the only drug with excellent safety so far.

Should Arena and/or INDEX be succesful in efficacy, they are clear M&A targets by any of the other Big Pharmas above or e.g Roche, GSK or Merck&Co.

With a potential of sales revenue in the range from 1-1,5 billion dollars, INDEX should clearly not be valued, as of now, at an enterprise value of 200 msek - rather 10-20x that.

Building a position in Index is recommended!