IRLAB Therapeutics — Despite shift, mesdopetam still on track for Ph III

IRLAB Therapeutics (OMX: IRLAB-A)

Last close As at 18/06/2024

SEK13.50

0.20 (1.50%)

Market capitalisation

SEK700m

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Research: Healthcare

IRLAB Therapeutics — Despite shift, mesdopetam still on track for Ph III

IRLAB has secured full global rights ownership of mesdopetam, the company’s leading asset, which was previously out-licensed to Ipsen. All preclinical studies and Phase I, Ib, IIa and IIb trials were completed as part of this collaboration. Full ownership, including associated intangibles and materials, will return to IRLAB in exchange for future (low single-digit) royalties on future product sales. With Ipsen’s support, IRLAB is preparing for an end of Phase II meeting with the FDA, which we view as a key inflection point. Irlab believes mesdopetam is Phase III-ready and the revised arrangement with Ipsen may provide more flexibility to better leverage its ongoing Integrative Screening Process (ISP) platform. Ipsen has supported the preparation for Phase III, including upscale manufacturing, and three Phase III-preparatory Phase I studies: a pharmacokinetic, a drug-to-drug interaction and a mass balance study.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

DSF9408

Healthcare

IRLAB Therapeutics

Despite shift, mesdopetam still on track for Ph III

Operational update

Healthcare

22 August 2023

Price

SEK7.66

Market cap

SEK397m

Net cash (SEKm) at 31 March 2023
(ex-lease liabilities)

210.1

Shares in issue

51.8m

Free float

68%

Code

IRLABA

Primary exchange

Nasdaq Stockholm

Secondary exchange

N/A

Share price performance

Business description

Based in Sweden, IRLAB Therapeutics is 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

Soo Romanoff

+44 (0)20 3077 5700

Dr Arron Aatkar

+44 (0)20 3077 5700

IRLAB Therapeutics is a research client of Edison Investment Research Limited

IRLAB has secured full global rights ownership of mesdopetam, the company’s leading asset, which was previously out-licensed to Ipsen. All preclinical studies and Phase I, Ib, IIa and IIb trials were completed as part of this collaboration. Full ownership, including associated intangibles and materials, will return to IRLAB in exchange for future (low single-digit) royalties on future product sales. With Ipsen’s support, IRLAB is preparing for an end of Phase II meeting with the FDA, which we view as a key inflection point. Irlab believes mesdopetam is Phase III-ready and the revised arrangement with Ipsen may provide more flexibility to better leverage its ongoing Integrative Screening Process (ISP) platform. Ipsen has supported the preparation for Phase III, including upscale manufacturing, and three Phase III-preparatory Phase I studies: a pharmacokinetic, a drug-to-drug interaction and a mass balance study.

Year end

Revenue
(SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/21

207.9

91.1

1.76

0.0

N/A

N/A

12/22

61.3

(113.1)

(2.18)

0.0

N/A

N/A

12/23e

0.2

(208.4)

(4.02)

0.0

N/A

N/A

12/24e

0.2

(190.2)

(3.67)

0.0

N/A

N/A

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

As a reminder, mesdopetam is in clinical development for levodopa-induced dyskinesias (PD-LIDs); top-line data from the Phase IIb trial were released in January 2023. While the study did not meet its primary endpoint (change in daily hours of ‘ON time’ without troublesome dyskinesia versus placebo) with statistical significance, it did meet the secondary efficacy endpoint (demonstrating significant anti-dyskinetic effects measured by the Unified Dyskinesia Rating Scale, UDysRS).

IRLAB also shared a detailed analysis of the Phase IIb trial data, confirming that mesdopetam has a comparable safety and tolerability profile to placebo, and dose-dependent anti-dyskinetic and anti-parkinsonian effects, which may differentiate it from other symptomatic Parkinson’s disease treatments, in our view. We note that dose adjustment was allowed at one point in the study, and importantly, the analysis was conducted on both the actual doses that participants received (protocol-compliant adjusted dose set, PS), as well as the randomised dose assigned (full analysis set, FAS). While in the FAS, the effect of mesdopetam on good ‘ON time’ was not statistically significant, in the PS, a significant and clinically meaningful increase in good ‘ON time’ was observed in the highest tested dose (7.5mg twice daily). Further, the effect of mesdopetam based on UDysRS measurements was more significant in the PS than in the FAS. Collectively, we believe that these results support the further clinical development of mesdopetam. The analysis has enabled a more comprehensive understanding of dose dependency and corresponding treatment effects, as well as providing the basis for dose selection in Phase III.

We believe that the end of Phase II meeting with the FDA could be a major inflection point, as it will determine if the company is able to proceed with a Phase III clinical trial. We currently await communication on timelines for the meeting and anticipate an update during its data presentation and earnings call next week.

General disclaimer and copyright

This report has been commissioned by IRLAB Therapeutics and prepared and issued by Edison, in consideration of a fee payable by IRLAB Therapeutics. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by IRLAB Therapeutics and prepared and issued by Edison, in consideration of a fee payable by IRLAB Therapeutics. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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