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Research: Healthcare
In March 2020, Ryvu announced its partner Menarini Group (via subsidiary Berlin-Chemie) has successfully completed the dose-escalation part (Phase I) of the ongoing Phase I/II study with SEL24/MEN1703, a dual PIM/FLT3 kinase inhibitor in a Phase I/II trial for acute myeloid leukaemia (AML). The recommended dose for the Phase II part of the study (cohort expansion) has been established. Ryvu is a pure biotech, so the ongoing turbulence in the global markets has a limited effect on the outlook of the company in our view. Moreover, Ryvu is financed until 2021, which positions it well to weather the volatility. Our valuation is unchanged at PLN1.08bn or PLN67.4/share.
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Ryvu Therapeutics |
Successful Phase I with SEL24/MEN1703 |
Company update |
Pharma & biotech |
23 March 2020 |
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Ryvu Therapeutics is a research client of Edison Investment Research Limited |
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In March 2020, Ryvu announced its partner Menarini Group (via subsidiary Berlin-Chemie) has successfully completed the dose-escalation part (Phase I) of the ongoing Phase I/II study with SEL24/MEN1703, a dual PIM/FLT3 kinase inhibitor in a Phase I/II trial for acute myeloid leukaemia (AML). The recommended dose for the Phase II part of the study (cohort expansion) has been established. Ryvu is a pure biotech, so the ongoing turbulence in the global markets has a limited effect on the outlook of the company in our view. Moreover, Ryvu is financed until 2021, which positions it well to weather the volatility. Our valuation is unchanged at PLN1.08bn or PLN67.4/share.
Revenue (PLNm) |
PBT (PLNm) |
EPS |
DPS |
P/E |
Yield |
|
09/18 |
24.2 |
9.2 |
0.33 |
N/A |
N/A |
N/A |
09/19 |
25.8 |
(34.1) |
(2.13) |
N/A |
N/A |
N/A |
Note: Ryvu (formerly Selvita) has published only segment financial information so far, with the Q319 report containing the first detailed accounts for 9M19 and 9M18.
Phase II with SEL24/MEN1703 ongoing
As Menarini is the sole sponsor of the ongoing Phase I/II trial, Ryvu only provided brief confirmation that Phase I part was successful, but the data should be presented at one of the upcoming conferences (not yet specified by Menarini). More importantly, the trial is progressing into Phase II, which, in addition to usual safety endpoints, will also evaluate the anti-leukaemia activity of SEL24/MEN1703, a potential key catalyst for Ryvu in the near term. Menarini has not yet guided to when it expects to finish the Phase II part of the study (we expect it will be in 2021), but in June 2019 it revealed plans to expand the trial to a larger number of centres in the US and Europe. This reassures us of Menarini’s commitment to complete the trial in a timely manner.
More to come from Ryvu’s pipeline in the near term
Another key catalyst for 2020 is Ryvu’s first clinical data with the wholly owned asset SEL120, a selective CDK8 kinase inhibitor, with interim results from the ongoing Phase Ib trial for AML and myelodysplastic syndrome. SEL120 has potential in many other cancers and Ryvu is evaluating it in other haematological malignancies, in solid tumours and in combinations with other anticancer treatments.
Valuation: PLN1.08bn or PLN67.4/share
Ryvu has been trading as a standalone company after its drug discovery services business was spun out in October 2019. Our valuation of Ryvu is unchanged at PLN1.08bn or PLN67.4/share. The last reported net cash of PLN85.6m is sufficient to fund R&D until at least 2021. The successful completion by Menarini Group of the Phase I part with SEL24/MEN1703 in AML triggered a €1.75m milestone payment to Ryvu. In addition, the company received a grant of PLN 32.8m (€7.6m) from the Polish National Centre for R&D to support the synthetic lethality programme, which further reinforces the financial position. We reviewed Ryvu’s R&D pipeline progress in more detail in our last report. As usual, we expect the company to provide an update on its pipeline in the upcoming Q419 report.
Newsflow over the next 12–18 months
In addition to the lead clinical-stage assets, Ryvu has developed a broad preclinical pipeline (Exhibit 1). The most advanced preclinical assets include a best-in-class dual A2A/B receptor antagonist, small molecule STING agonist for systemic administration, an HPK1 inhibitor and first-in-class SMARCA2 inhibitor for treating SMARCA4-mutated cancers. Ryvu also has several undisclosed projects at earlier stages and we expect these to ‘feed’ the preclinical and clinical pipeline.
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Exhibit 1: Ryvu R&D pipeline |
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Source: Ryvu |
Some of the expected catalysts for the share price over the next 12–18 months include:
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SEL24/MEN1703 data from the dose-escalation part (Part 1) of the ongoing Phase I/II study (timing and conference depends on the partner and sole trial sponsor Menarini).
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SEL120 interim data from the Phase Ib study (2020).
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Start of IND-enabling studies in A2A/A2B project in H220.
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New preclinical data publications from multiple projects, including preclinical in vivo proof-of-concept data.
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Potential licensing deal for one or more of the earlier projects.
Exhibit 2: Sum-of-the-parts Ryvu valuation
Product |
Launch |
Peak sales |
NPV |
NPV/share |
Probability |
rNPV |
rNPV/share (PLN) |
Innovation |
|||||||
SEL24 |
2023 |
750 |
901.6 |
56.5 |
15% |
172.3 |
10.8 |
SEL120 |
2025 |
1,500 |
1,782.2 |
111.6 |
15% |
273.8 |
17.1 |
A2A/A2B antagonist |
2030 |
1,000 |
923.7 |
57.8 |
5% |
182.6 |
11.4 |
SMARCA2 inhibitor |
2030 |
1,000 |
831.3 |
52.0 |
2% |
166.8 |
10.4 |
STING agonist |
2031 |
1,000 |
866.0 |
54.2 |
2% |
183.9 |
11.5 |
Merck collaborations |
2026 |
2,000 |
58.3 |
3.6 |
5% |
11.8 |
0.7 |
Net cash (last reported) |
100% |
85.6 |
5.4 |
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Valuation |
5,363.0 |
335.8 |
1,076.8 |
67.4 |
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Source: Edison Investment Research. Note: WACC = 12.5% for product valuations, WACC = 10% for the Services segment.
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Research: Healthcare
Targovax started 2020 with the first randomised data readout from its Phase I/II trial with oncolytic virus ONCOS-102 in unresectable mesothelioma. The company will present further data in H120. Interim results released in July 2019 from Part 1 of the Phase I trial with ONCOS-102 in refractory melanoma were the hallmark event last year. More data from this trial are also expected later this year (H220). We note that Targovax is a biotech company, therefore the ongoing turbulence in global markets has a limited effect on its long-term outlook, in our view. Moreover, Targovax completed a private placement earlier this year, which provides a cash runway. On Friday 20 March, the company issued a statement confirming that the key milestones should be achieved within planned timelines. Our valuation is NOK1.53bn or NOK20.1/share (vs NOK19.9/share previously).