Biotie Therapies

Parkinson’s disease candidate tozadenant (A2a antagonist) is a key component of Biotie’s investment case and detailed Phase IIb data indicate a highly competitive profile for the drug. Tozadenant is now Biotie’s primary operational focus, supported by trial milestones from partner UCB, and Phase III studies to start in H115. With €45m in cash and milestones / royalties to flow in from Lundbeck’s EU sales (launched this week) of alcohol-dependence drug Selincro, Biotie’s portfolio review may bring in partners and/or new product opportunities to make best use of these resources. This could add upside to our €231m, or €0.51/share, valuation.

Tozadenant Data Impress
Detailed data presented at AAN last month indicate a highly competitive profile for drug, compared to other A2a antagonists and alternative Parkinson’s disease candidates. Significant reductions in ‘off’ time, increases in ‘on’ time, reductions in UPDRS scores, improvements in clinician/patient assessments and an acceptable safety profile indicate a more robust profile than preladenant and istradefylline.

Backfilling Underway
Biotie has full responsibility for the Phase III programme, funded by UCB payments of over $100m over the next six years; this is additional to the $340m potential clinical/regulatory/commercial milestones payable by UCB to Biotie. The studies will start in H115, while Biotie completes the required manufacturing, toxicology and regulatory work on tozadenant (drawing on UCB’s facilities and expertise).

Selincro Offers A Paradigm Shift
Lundbeck launched Selincro (nalmefene) in Norway, Finland, Poland and the Baltic countries this week, a breakthrough event as Biotie’s first marketed product (further EU launches in 2013-14). Taken as-needed, Selincro reduces alcohol consumption, whereas existing drug therapies target complete abstinence from drinking, which is often not an acceptable or attainable treatment goal. Initial uptake may be slow but the potential is significant given 16m alcoholics across the EU (peak sales €320m).

Valuation: €231m On Increased Tozadenant Probability
We value Biotie at €231m, or €0.51 per share, after raising tozadenant’s probability of success to a Phase III standard of 65% on the strength of the Phase IIb data. Our valuation is based on a risk-adjusted NPV of Biotie’s key products – Selincro, tozadenant and SYN120 – and €45m estimated gross cash at Q113. We see upside potential should Biotie secure a partner(s) for SYN120 (5HT6 antagonist) and/or BTT-1023 (VAP-1 antibody). The ongoing portfolio review, to conclude mid-2013, may bring in fresh product opportunities to build the investment case further.

To Read the Entire Report Please Click on the pdf File Below.