BioInvent International: Focus On Wholly Owned, Core Projects

The market has taken an irrational view of the failure of un-partnered TB-402 and the return of rights to TB-403. TB-402 accounted for only 4% of Edison’s future revenue estimate, while TB-403 contributed no value. The events focus BioInvent (BINV.ST) on to its two most valuable assets: BI-204 for atherosclerosis and BI-505 for multiple myeloma and possibly other cancers.

Data on both products are due in Q3 and good indicative results on BI-204 could lead to a milestone, sale of ex-North America rights and Genentech/Roche making significant further investments.

Focus on wholly owned, core projects

The two remaining lead projects are the most valuable. If BI-505 can be developed and directly marketed, it would be very valuable given its orphan indication (multiple myeloma). However, as a partnered product, it would be at a reduced value. As the current trial is doses ranging only, the product should progress to Phase II. BI-204 is more experimental and the Phase II data in stable angina, due in mid Q3, should determine whether Genentech starts aggressive development with perhaps Roche acquiring ex-North American rights. However, this is a higher risk inflection point and if BI-204 fails to reduce plaque inflammation, it could lead to project termination.

Lower-value project problems

With only 40% of any returns, the two ThromboGenics-partnered projects needed significant royalties to be of substantive value. TB-402 in the Phase II hip trial was comparable in efficacy to Bayer’s Xarelto (5.3% vs 4.7%), but there was a significantly high bleeding risk (6.5% vs 1.4%). This was very surprising as TB-402 was meant to have a very safe anti-coagulation effect and the results have killed the project. TB-403 is an antibody against PlGF but Roche’s development was desultory and it has now returned all rights. TB-403 may have a role in eye disease, albeit with ThromboGenics.

Valuation: Minor fall in indicative value to SEK19.26/share

The market had an irrational view of TB-402, which was never a plausible value driver and accounted for only 4% of Edison’s valuation, while TB-403 effectively contributed no value. Even without possible TB-402 milestones, Edison’s valuation has only fallen to SEK19.26 per share before any BI-204 milestones. If BI-204 moves to Phase IIb, at 35% probability, the value rises to SEK23.66/share. However, if BI-204 does not progress, the value on BI-505 only with direct sales is SEK14/share. Q2 cash is estimated at SEK200m.

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