Positive progress in Nuevolution's (ST:NUEVOL) RORγt partnership with Almirall (LON:0O9B) has triggered a €1m milestone payment (SEK10.5m) and we continue to forecast that it will enter the clinic in 2019. FY18 was defined by the progress in the Amgen (NASDAQ:AMGN) partnership as it opted in for two oncology programmes, further validating Nuevolution’s Chemetics technology. In Nuevolution’s BET-BD1 programme, a development candidate (NUE20798) has been nominated; data in animal cancer models highlight that it may have synergistic effects in combination with immunotherapies. The FY18 net loss was down year-on-year to SEK99.7m (from SEK117.5m) as a result of lower R&D costs. Net cash of SEK108m (FY17: SEK110.6m) should fund operations into 2020. We value Nuevolution at SEK20.7/share.
Almirall milestone achieved with positive CD data
Almirall and Nuevolution have completed significant characterisation of its candidate drug (CD) leading them to believe the program could have potential best-in-class attributes; Almirall will now press forward with its plans to start a clinical trial programme in moderate to severe psoriasis patients. The partnership includes €172m in development milestones and €270m in regulatory milestones, in addition to tiered royalties on future net sales. The timing and design of any clinical trial is ultimately Almirall’s decision and we await further information on these elements.
Amgen opt-ins proving the worth of NUEV technology
Nuevolution continues to demonstrate that it has the in-house ability to execute and deliver on its partnerships. In 2018, Amgen opted-in on two programmes and is now covering development costs. If Amgen exercises its option to license a candidate, Nuevolution will receive an initial licensing fee of at least $10m and potential milestone payments of up to $400m per candidate. With the collaboration spanning multiple undisclosed targets, significant financial potential exists.
Internal pipeline continues to add value
Nuevolution continues to build and strengthen its pipeline of preclinical assets and aims to monetise some of those in the near term via out-licensing. We have no visibility on the timelines for potential new deals for Nuevolution, but believe the BET-BD1 programme, which is the most advanced internal candidate, is well positioned and most likely to be out-licensed or partnered.
Valuation: SEK20.7/share (SEK1,026m)
We value Nuevolution at SEK20.7/share (SEK1,026m), vs SEK19.7/share (SEK974m) previously. The increase in value is driven by the rolling forward of our model, and we have updated net cash and FX rates.
Business description
Nuevolution is a Copenhagen-based biopharmaceutical company. Its patent-protected Chemetics drug discovery platform enables the selection of drugs to an array of tough-to-drug disease targets. To date it has entered into 17 agreements with major pharmaceutical companies.