Ablynx: Positive Clinical Trial Results

Ablynx’s technology platform received further validation from the promising Phase II study data for ALX-0061, an anti-IL6 Nanobody for rheumatoid arthritis (RA), as well as the formation of a new collaboration with Merck & Co. ALX-0061 seems to compare favourably with Roche’s Actemra, while offering the potential for a more convenient dosing schedule. The positive trial results could attract a partner for ALX-0061 and may even help with partnering of ATN-103 if the two products can be bundled together. We have increased our valuation by €20m to €521m.

Promising Initial Data On ALX-0061
Initial data from a Phase II trial in RA with ALX-0061, an anti-IL-6R Nanobody, showed a promising evidence of efficacy, with encouraging improvements in the key markers of disease progression. Although a small trial, it suggests ALX-0061 is well tolerated. Furthermore, the Nanobody’s safety and efficacy profile would appear to compare favourably with Roche’s tocilizumab (Actemra), while potentially it could have a dose frequency advantage.

Aim To Partner ALX-0061 Could Help ATN-103
Ablynx needs an appropriate partner to progress the ALX-0061 programme. The strength of the data could attract some partners, but RA is very competitive. As well as Roche’s tocilizumab there are three other monoclonals targeting IL-6 or IL-6R in development. This competition led to UCB recently ceasing internal development of olokizumab (anti-IL-6). It is also possible that ALX-0061 and ATN-103 could be bundled together to provide an attractive package to a potential partner.

New Alliance With Merck & Co.
Ablynx has separately formed a new collaboration with Merck & Co to develop Nanobodies targeted towards a voltage-gated ion channel. The deal involves a €6.5m upfront and a €2m fee for research funding. A total of a further €448m in milestones could be payable as well as tiered royalties on eventual sales. There is an option for a second ion channel target with similar commercial terms.

Valuation: DCF Valuation Of €521m
We have increased our valuation by €20m to €521m after increasing the likelihood of ALX-0061 achieving peak sales of $900m by 20% to 30% and adding the potential milestone payments from the Merck & Co collaboration. The next significant catalyst could be the 24-week data on ALX-0061, an update on the potential licensing of ATN-103 or an announcement of another collaboration.

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