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Global licensing deal for mesdopetam

IRLAB Therapeutics 16 July 2021 Flash note
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IRLAB Therapeutics

Global licensing deal for mesdopetam

Licensing agreement

Pharma & biotech

16 July 2021

Price

SEK48.9

Market cap

SEK2,528m

Net cash (SEKm) at 31 March 2021

253.9

Shares in issue

51.7m

Free float

56%

Code

IRLABA

Primary exchange

NASDAQ Stockholm

Secondary exchange

N/A

Share price performance

Business description

IRLAB Therapeutics is a Scandinavia-based biotechnology company focused on developing novel drugs for the treatment of neurodegenerative diseases utilising its ISP technology platform. Its two lead assets are in late-stage clinical trials for the symptomatic treatment of Parkinson’s disease: mesdopetam (D3 antagonist) and pirepemat (PFC enhancer).

Analysts

Dr John Priestner

+44 (0)20 3077 5700

Dr Susie Jana

+44 (0)20 3077 5700

IRLAB Therapeutics is a research client of Edison Investment Research Limited

IRLAB has signed an exclusive global licensing agreement with Ipsen worth up to $363m for its lead asset, mesdopetam, which is currently in a Phase IIb/III study in Parkinson’s disease (PD) patients with levodopa-induced dyskinesias (PD-LIDs). IRLAB will receive a $28m upfront payment and is eligible to receive up to $335m in potential development, regulatory and commercial milestones (spread across multiple indications) plus low double-digit tiered royalties on net sales. This deal provides strong external validation of mesdopetam’s potential as well as IRLAB’s Integrative Screening Process (ISP) research platform that discovered it. While IRLAB will still be responsible for the ongoing Phase IIb/III study in PD-LIDs, Ipsen will assume responsibility for all remaining clinical development and global commercialisation. This significantly de-risks its development for IRLAB and allows it to focus on pirepemat (IRL752) in PD-related falls and its preclinical assets (including IRL942 and IRL1009), potentially expediting their development. Our forecasts are under review.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

DPS
(%)

Yield
(%)

12/19

0.4

(95.1)

(2.34)

0.0

0.0

N/A

12/20

0.4

(91.4)

(1.92)

0.0

0.0

N/A

12/21e

N/A

N/A

N/A

N/A

N/A

N/A

12/22e

N/A

N/A

N/A

N/A

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Ipsen is a global pharmaceutical company (market cap: €7.3bn) that focuses on neuroscience as one of its three core drivers. It currently commercialises >20 products globally (FY20 sales of €2.6bn) and has a direct commercial presence in >30 countries. In our view, this deal makes sense for IRLAB as its strategy has always been to partner its assets for commercialisation, allowing it to focus on its core competency of research and development utilising its ISP platform. IRLAB is well funded in the medium term and has sufficient resources to potentially expand its discovery efforts beyond PD to focus on other neurological diseases as well.

Mesdopetam (IRL790) is an oral D3 antagonist that has a novel mechanism of action and belongs to a new class of CNS agents called psychomotor stabilisers. It has the potential to transform the current PD treatment algorithm by being added to standard-of-care levodopa for the symptomatic treatment of mid- to late-stage patients experiencing LIDs. This represents a significant unmet medical need with substantial market potential and could enable optimisation of levodopa therapy. IRLAB estimates that it is four to five years ahead of the competition.

Mesdopetam has shown good safety and tolerability, as well as promising signs of clinical efficacy in Phase I and IIa studies, alleviating LIDs without compromising the therapeutic benefits of levodopa on motor function. Top-line data from the ongoing US/EU Phase IIb/III study expected in H122 will define the pivotal trials required for approval, and Ipsen is expected to initiate Phase III preparation activities in advance. Preclinical studies have highlighted mesdopetam’s potential in psychosis and procognitive effects at the same dose that it is administered for LIDs. We expect Ipsen to also pursue development in these additional indications.

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