Index Pharmaceuticals - Time for business

2019-08-28 15:23

Index' presentation of the top line results from phase 2b is likely to lead to a deal sooner or later...many factors point at sooner......rather than later! The potential partners are big and many - competitive bidding is possible!

I have a fairly good picture over the IBD market including both Ulcerative Colitis (UC) and Crohns Disease (CD). It has for years been dominated by the biologics Humira (Abbvie) and Remicade (J&J) but lately several biosimilars to these biologics have been approved and entered the market. These biologics and their biosimilars do have rather broad inflammatory indications. Whether the owners of the biosimilars such as e.g. Amgen, Samsung, Merck&Co, Novartis, Boeringer Ingelheim and Pfizer will or have already started to commercially persue the UC is unclear - other indications available are e.g. psoriasis and RA. Some of the BP do not have that large prescense in the UC market but could with a biosimilar already in the market and partnering with Index, soon in phase 3, have an interesting & good late stage portfolio in the large UC market.

Apart from the above you can find Takeda with its biologic Entyvio and J&J with Simponi in the market. Pfizer is also in the market with its Xeljanz, a JAK inhibitor but also with a black box warning. Pfizer and others are persuing to develop second generation JAK inhibitors (or similar inhibitors like TYK2/RIP1K in several years) to get rid of the severe saftety problems with Xelanjz. As you see, new modes of action with better safety is a hot subject with Big Pharma. Several readouts (about 9 (nine)) of phase 3 studies are expected during 2020/21. During the same period some 8 (eight) phase 2 studies. Apart from Cobitolimod there is only one more readout this year which is from Galapagos who has already partnered with Gilead.

From the above one can concude that the UC field will be in what could be called "strategic decision mode" until sometime after March 2020. Many of the players above will have to make up their mind if Cobitolimod/Index should be part of their UC strategy. With, as said by Index yesterday:  “With an outstanding combination of efficacy and safety, cobitolimod is set to take a leading position within the field. We will now advance cobitolimod towards phase III and in parallel evaluate the best route to commercialisation”, these coming months will be extremely exciting.  

The company has excellent large owners with funding capacity like SEB Venture Capital, Industrifonden, Neomed and e.g. Bengt Julander - futhermore the combination of advisors like Carnegie and Pareto Securities together with an experienced Board of Directors and Management is likely to navigate well between the BigPharma/BigBiotech sharks to get the best deal. 

My guestimate based on market, timing and pipelines are a license partnership or an acquisition by either of the following "most-likely parties" (order without priority):

Amgen

Novartis 

Merck& Co

Boeringer Ingelheim

Pfizer

Eisai

EliLilly

Roche

Abbvie

Several of the above players have probably since before, Cobitolimod on their radar screen. Especially those with a history in IBD/UC which most have. 

It is not often a smaller biotech like Index enters into such an exciting strategic playing field. I have lately exchanged my breifcase to a suitcase to carry the stock. The stock market does not yet appear to understand the potential at all. Where are all the bright life science analytics? Will an American BigPharma/Biotech get an extremely cheap deal again?