Nuevolution - Place a BET and ROR
2018-04-04 07:29Please 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.
Nuevolution's selective BET-inhibitor is "first-in-class" in inflammotory diseases. So far diseases pinpointed by the company represent a market value of over 70 billion dollars yearly. We may see an extraordinary deal within short (2-8 months according to guidance) as Big Pharma interest is high and the BET-inhibitor is truely unique. An extraordinary deal would add an additional 10 kr to Redeye's bull case, suggesting 50 kr/share, three (3) times the present share price.
The ROR gamma inhibitor partly licensed to Almirall in dermatology is first in line for Nuevolution followed by the company´s own development of ROR gamma inhibitor respectively stimulator for the other areas of inflammatory diseases respectively cancer.
Management has guided that a deal is expected before the end of 2018 in one target – The BET inhibitor seems likely and could result in an extraordinary deal.
As of March 2018 management has in their presentations regarding the very selective BET-inhibitor also included Astma and COPD in excess of Psoriasis, Atopic Dermatitis, Lupus and a line of fibrotic diseases as applicable diseases where the BET inhibitor potentially could be very interesting. The selectivity is important as it also has a very good safety profile. In total we are talking about a market opportunity today of approximately 70 billion dollars and growing to 90-100 billion dollars by 2025.
BET inhibitors are well known to several Big Pharma (and a couple of smaller players* not in deals with Big Pharma). However, more or less all of them are working on cancer only which has, so far, proved to be difficult, mainly because of non-selectivity causing toxicity problems. Any of the Big Pharma (such as Merck, Roche, GSK, Incyte, Abbvie, Gilead, Daichi Sankyo, Celgene, BMS or Astra Zeneca) already working on non-selective BET inhibitors in cancer could benefit enormously from access to Nuevolution’s BET competence for selective inhibitors in combination with the above large market opportunity in inflammatory diseases. The latter applies also for all other Big Pharma not mentioned above. This sound promising for ongoing discussions/negotiations.
Taking Redeye’s Bull case (40 sek vs present share price of 17 sek) – see https://www.redeye.se/company/nuevolution/579046/nuevolution-metamorphosis?utm_source=redeye&utm_medium=RSS&utm_campaign=Nuevolution%3A
and assuming a larger deal – maybe double the size of Redeye’s assumptions, which is not unlikely considering the “first-in-class” potential, the possible broad application and Big Pharma interest – would result in a bull case suggesting _a value of 50 kr per share, i.e. three times the present valuation_. Any further positive development of the third in line molecule, Cytokine-X, which little has been released about so far, apart from some positive hinting in the latest teleconference in Feb-18, might be pushing value further north. The above analysis assumes, in order to cater for availability of cash (probably around 80 msek at March 31, 2018), e.g. a milestone payment from Almirall going forward during 2018.
Truly exciting prospects for present and coming investors.
Time to place a BET and ROR!
*These are Reservlogix (phase 3 in cardiovascular), Constellation Pharma (phase 2, myelofibrosis) Zenith Epigenetics (Phase 1, cancer), Convergene (pre-clinical cancer) and Aptose (discovery)