Last close As at 05/08/2026
SEK1.39
▲ −0.01 (−0.43%)
Market capitalisation
SEK197m
Research: Healthcare
While IRLAB Therapeutics’ immediate focus is on advancing mesdopetam in levodopa-induced dyskinesia (PD-LID) following the recent green light from the FDA for its Phase III trial design, we expect the Parkinson’s disease-psychosis (PD-P) programme to be revived as the lead programme progresses towards commercialisation. We continue to see label expansion opportunities in this indication for IRLAB as we model a 2032 PD-P launch with a 20% probability of success (PoS). PD-P is a common occurrence, affecting 20–70% of PD patients. While the precise pathophysiology underlying PD-P is not yet fully understood, dementia, delirium and medication side effects are believed to be key contributors. Levodopa-induced changes in dopamine and D1-D3 receptor crosstalk have been linked to the condition, strengthening the case for D3 receptor antagonists, such as mesdopetam, as a potential treatment.
Written by
IRLAB Therapeutics |
Beyond PD-LID, a closer look at PD-psychosis |
R&D update |
Pharma and biotech |
8 April 2024 |
Share price performance
Business description
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Analysts
IRLAB Therapeutics is a research client of Edison Investment Research Limited |
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While IRLAB Therapeutics’ immediate focus is on advancing mesdopetam in levodopa-induced dyskinesia (PD-LID) following the recent green light from the FDA for its Phase III trial design, we expect the Parkinson’s disease-psychosis (PD-P) programme to be revived as the lead programme progresses towards the commercialisation objective. We continue to see label expansion opportunities in this indication for IRLAB as we model a 2032 PD-P launch with a 20% probability of success (PoS) in PD-P. PD-P is a common occurrence, affecting 20–70% of PD patients. While the precise pathophysiology underlying PD-P is not yet fully understood, dementia, delirium and medication side effects are believed to be key contributors. Levodopa-induced changes in dopamine and D1-D3 receptor crosstalk have been linked to the condition, strengthening the case for D3 receptor antagonists, such as mesdopetam, as a potential treatment.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
61.3 |
(113.1) |
(2.18) |
0.0 |
N/A |
N/A |
12/23 |
5.7 |
(177.8) |
(3.43) |
0.0 |
N/A |
N/A |
12/24e |
0.0 |
(191.3) |
(3.69) |
0.0 |
N/A |
N/A |
12/25e |
0.0 |
(189.7) |
(3.66) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Psychosis, a debilitating co-morbidity in PD
PD-P is characterised by hallucinations and delusions, and is believed to affect 20–40% of earlier-stage PD patients and up to 70% of advanced-stage patients. These symptoms can be a result of both the underlying disease and a side effect of PD medications, which can lead to treatment discontinuation. While antipsychotics are widely prescribed off-label, the only FDA approved treatment for PD-P is Acadia Pharmaceuticals’ pimavanserin (Nuplazid), which comes with a black box warning for increased mortality in elderly patients.
Preclinical data support mesdopetam in PD-P
Mesdopetam’s utility in PD-P was tested in an animal model, which studied the efficacy of the drug in comparison with antipsychotics clozapine and pimavanserin, and another investigative dopamine D3 receptor antagonist, SB277011-A. Mesdopetam demonstrated antipsychotic efficacy, supporting its potential application as a novel treatment option for the condition. Given that traditional antipsychotic usage in PD-P is challenged by their alleged role in increasing ‘parkinsonism’, mesdopetam’s dual anti-dyskinetic and antipsychotic benefits, if proven, may offer a potential solution to this predicament, in our view.
Valuation: Unchanged for now
While IRLAB’s immediate focus is on advancing mesdopetam in its lead indication PD-LID following the recent green light from the FDA for its Phase III trial design (we have an unchanged PoS of 40% currently for this indication), we expect the PD-P programme to be revived as the lead programme progresses towards its commercialisation goal. We continue to assume peak sales potential of >$700m in PDP, with a 20% PoS and a 2032 PD-P launch. Our valuation of IRLAB remains unchanged at SEK4.04bn or SEK77.9 per share.
PD-P: Seeking an optimal solution
Commonly considered a movement disorder, PD is also associated with non-motor symptoms, of which PD-P remains a key co-morbidity. PD-P is characterised by severe confusion (disordered thinking, hallucinations, delusions) and affects 20–40% of early-stage PD patients and up to 70% of late-stage cases. While the underlying reasons for PD patients developing psychosis are still being elucidated, the symptoms are believed to originate either from the disease biology of PD itself or as a side effect of dopamine therapy (led by standard-of-care levodopa), a mainstay of PD treatment. While increased dopamine levels can help improve motor symptoms, they can also cause biochemical changes in the brain, leading to psychosis symptoms.
Behavioural changes related to psychosis have a significant impact on patients’ quality of life (treatment compliance can be affected) and tend to increase the healthcare burden. Despite this, the treatment landscape for PD-P remains restricted to select antipsychotics:
■
Pimavanserin (brand name Nuplazid) – a 5-HT2A antagonist and the only approved treatment for PD-P (approved by the FDA in 2016). Unlike other antipsychotics, the drug is not a dopamine receptor antagonist, and instead targets the serotonin receptors. We note that the drug carries a class-wide black box warning for increased mortality in elderly patients (over the age of 65). Moreover, long-term efficacy remains questionable.
■
Clozapine – the first FDA-approved atypical (second-generation) antipsychotic. Clozapine has demonstrated desirable efficacy in PD-P, however the drug’s prescription is limited due to serious side effects (reduction in white blood cells, requiring prescribed patients to take weekly blood tests).
■
Quetiapine (Seroquel) – this drug has a benign side effect profile, although its efficacy is limited.
While effective in some cases, the use of antipsychotics as a treatment of PD-P has been challenged by off-target effects on worsening motor symptoms in PD patients. Moreover, usage of antipsychotics has also been associated with risks of adverse effects such as falls and deterioration in cognitive function and cardiovascular effects, highlighting the need for improved therapeutic options, in our view.
Mesdopetam’s potential in PD-P shown in preclinical models
Long-term treatment with levodopa (the current standard of care for PD) has been associated with increased expression of the dopamine D3 receptor, which has been implicated in the incidence of psychosis in PD patients. Inhibition of these receptors (such as by mesdopetam, a D3 receptor antagonist) is therefore believed to hold the potential to ameliorate PD-P symptoms.
IRLAB’s programme in PD-P is Phase II-ready, but has been temporarily put on hold as the company focuses on advancing mesdopetam in its lead indication, PD-LIDs. Data from a preclinical study evaluating mesdopetam’s efficacy in PD-P in a rodent model demonstrated that the drug was able to reverse features of psychosis, which were comparable to the leading antipsychotics currently used to treat the condition.
In these preclinical studies, parkinsonian and psychosis-like symptoms were induced in rats using 6-hydroxydopamine (6-OHDA) hydrochloride injection, followed by levodopa treatment to mimic advanced stage PD. The subjects were then injected with the NMDA receptor antagonist, MK-801, to induce psychosis-like symptoms. A total of eight subjects were then treated with either clozapine, pimavanserin, mesdopetam or another investigational dopamine D3 receptor antagonist, SB277011-A. Following this, behaviour and neurophysiological changes in brain activity were mapped to study the effect of these treatments on psychosis symptoms. The results demonstrated that mesdopetam reversed the symptoms of psychosis, as characterised by abnormal high-frequency oscillation and abnormal synchronisation between brain regions. These results were comparable to those seen with the two antipsychotics, highlighting the drug’s potential antipsychotic properties. Mesdopetam has already demonstrated anti-dyskinetic properties and an excellent safety and tolerability profile in Phase II studies in PD-LIDs. If the preclinical findings in PD-P are reproduced in larger clinical trials, and in consideration of the excellent clinical safety profile, mesdopetam holds the potential to usher in a shift in the treatment paradigm of PD-P.
Valuation
Our valuation remains unchanged at SEK4.04bn or SEK77.9/share. While we believe that IRLAB will continue to focus its efforts on advancing mesdopetam in its lead indication PD-LIDs in the near-term (we currently model a 40% PoS for this indication), we expect activity in PD-P to be reinstated as the lead programme progresses. We continue to assume peak sales potential of >$700m in PD-P with a 20% PoS, and a 2032 launch (refer to Exhibit 1 for the detailed breakdown).
Exhibit 1: IRLAB sum-of-the parts valuation
Product |
Indication |
Launch |
Peak |
Peak sales ($m) |
Value |
Probability |
rNPV |
rNPV/share (SEK) |
Mesdopetam |
PD-LIDs |
2028 |
2034 |
1,268.5 |
4,733.5 |
40% |
1,899.3 |
36.6 |
Mesdopetam |
PD-Psychosis |
2032 |
2038 |
726.5 |
1,157.0 |
20% |
218.7 |
4.2 |
Pirepemat |
PD-Falls (postural hypotension) |
2029 |
2035 |
1,057.2 |
6,139.0 |
30% |
1,835.1 |
35.4 |
Net cash at 31 December 2023 |
|
|
|
86.8 |
100% |
86.8 |
1.7 |
|
Valuation |
|
|
|
12,116.3 |
4,039.8 |
77.9 |
Source: Edison Investment Research
Exhibit 2: Financial summary
Accounts: IFRS, year-end: 31 December, SEK’000s |
|
|
2021 |
2022 |
2023 |
2024e |
2025e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
207,906 |
61,277 |
5,720 |
0 |
0 |
Cost of sales |
|
|
0 |
0 |
0 |
0 |
0 |
Gross profit |
|
|
207,906 |
61,277 |
5,720 |
0 |
0 |
Total operating expenses |
|
|
(155,330) |
(174,386) |
(186,486) |
(188,965) |
(176,204) |
Research and development expenses |
|
|
(129,748) |
(146,178) |
(151,312) |
(151,172) |
(140,000) |
EBITDA (reported) |
|
|
56,050 |
(108,330) |
(176,450) |
(185,527) |
(173,615) |
Operating income (reported) |
|
|
52,576 |
(113,109) |
(180,766) |
(188,965) |
(176,204) |
Operating margin % |
|
|
N/A |
N/A |
N/A |
N/A |
N/A |
Finance income/(expense) |
|
|
(795) |
(297) |
2,926 |
(2,318) |
(13,520) |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
0 |
Profit before tax (reported) |
|
|
51,781 |
(113,406) |
(177,840) |
(191,284) |
(189,724) |
Profit before tax (normalised) |
|
|
91,131 |
(113,147) |
(177,840) |
(191,284) |
(189,724) |
Income tax expense (includes exceptionals) |
|
|
0 |
0 |
0 |
0 |
0 |
Net income (reported) |
|
|
51,781 |
(113,406) |
(177,840) |
(191,284) |
(189,724) |
Net income (normalised) |
|
|
91,131 |
(113,147) |
(177,840) |
(191,284) |
(189,724) |
Basic average number of shares, m |
|
|
51.7 |
51.8 |
51.9 |
51.9 |
51.9 |
Basic EPS (SEK) |
|
|
1.00 |
(2.19) |
(3.43) |
(3.69) |
(3.66) |
Adjusted EPS (SEK) |
|
|
1.76 |
(2.18) |
(3.43) |
(3.69) |
(3.66) |
Dividend per share (SEK) |
|
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
BALANCE SHEET |
|
|
|
|
|
|
|
Tangible assets |
|
|
8,348 |
8,009 |
6,672 |
3,533 |
1,244 |
Intangible assets |
|
|
42,661 |
46,862 |
46,862 |
46,862 |
46,862 |
Other non-current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current assets |
|
|
51,009 |
54,871 |
53,534 |
50,395 |
48,106 |
Cash and equivalents |
|
|
401,897 |
252,776 |
111,309 |
145,109 |
102,674 |
Inventories |
|
|
0 |
0 |
0 |
0 |
0 |
Trade and other receivables |
|
|
19,543 |
15,908 |
12,278 |
12,278 |
12,278 |
Other current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Total current assets |
|
|
421,440 |
268,684 |
123,587 |
157,387 |
114,952 |
Non-current loans and borrowings |
|
|
0 |
0 |
24,511 |
249,511 |
394,511 |
Non-current lease liabilities |
|
|
3,566 |
381 |
115 |
0 |
0 |
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current liabilities |
|
|
3,566 |
381 |
24,626 |
249,511 |
394,511 |
Accounts payable |
|
|
4,634 |
0 |
0 |
0 |
0 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
Current lease liabilities |
|
|
3,034 |
3,595 |
2,940 |
0 |
0 |
Deferred Income |
|
|
42,576 |
0 |
0 |
0 |
0 |
Other current liabilities |
|
|
19,158 |
28,748 |
33,792 |
33,792 |
33,792 |
Total current liabilities |
|
|
69,402 |
32,343 |
36,732 |
33,792 |
33,792 |
Equity attributable to company |
|
|
399,481 |
290,830 |
115,764 |
(75,520) |
(265,244) |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Operating income |
|
|
52,576 |
(113,109) |
(180,766) |
(188,965) |
(176,204) |
Depreciation and amortisation |
|
|
3,474 |
4,779 |
4,316 |
3,439 |
2,589 |
Share based payments |
|
|
0 |
0 |
0 |
0 |
0 |
Other adjustments |
|
|
38,295 |
(297) |
2,963 |
(2,318) |
(13,520) |
Movements in working capital |
|
|
34,296 |
(33,985) |
8,627 |
0 |
0 |
Cash from operations (CFO) |
|
|
128,641 |
(142,612) |
(164,860) |
(187,845) |
(187,135) |
Capex |
|
|
(708) |
(2,876) |
(293) |
(300) |
(300) |
Acquisitions & disposals net |
|
|
0 |
(500) |
0 |
0 |
0 |
Other investing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(708) |
(3,376) |
(293) |
(300) |
(300) |
Net proceeds from issue of shares |
|
|
(180) |
0 |
0 |
0 |
0 |
Movements in debt |
|
|
(2,865) |
(3,134) |
20,915 |
221,945 |
145,000 |
Other financing activities |
|
|
0 |
0 |
2,771 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
(3,045) |
(3,134) |
23,686 |
221,945 |
145,000 |
Cash and equivalents at beginning of period |
|
|
277,009 |
401,897 |
252,775 |
111,309 |
145,109 |
Increase/(decrease) in cash and equivalents |
|
|
124,888 |
(149,122) |
(141,467) |
33,800 |
(42,435) |
Effect of FX on cash and equivalents |
|
|
0 |
0 |
1 |
0 |
0 |
Cash and equivalents at end of period |
|
|
401,897 |
252,775 |
111,309 |
145,109 |
102,674 |
Net (debt)/cash |
|
|
401,897 |
252,776 |
86,798 |
(104,402) |
(291,837) |
Source: Edison Investment Research; IRLAB company account
|
|
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