Valuation
In-house programmes
Tedopi
We update our valuation of OSE to reflect the company’s recent strategic repositioning.
Tedopi remains the most advanced clinical candidate and a core value driver, underpinning
the majority of our risk-adjusted net present value (rNPV). While our core commercial
assumptions for Tedopi are largely unchanged, we now assume first market launch in
2029 (from 2028 previously), reflecting greater clarity on clinical timelines, with
top-line Phase III ARTEMIA data expected in Q128.
We maintain our peak market penetration assumption of 25%, but increase annual treatment
costs to $100k in the US (and $60k in Europe), from $70k previously. This is benchmarked
against immune checkpoint inhibitors (ICIs), which typically command list prices of
c $200k per annum, and assumes a 50% payer discount in the US. We retain a probability
of success of 67% for Tedopi in NSCLC.
Tedopi is also being evaluated in several investigator-sponsored Phase II studies,
including in NSCLC in combination with Opdivo, as well as in pancreatic cancer (in
combination with chemotherapy) and ovarian cancer (in combination with Keytruda).
These indications are not included in our current valuation and, hence, they represent
potential upside, should clinical progress continue to be positive.
Consistent with prior assumptions, we model a post-Phase III global licensing agreement
for Tedopi, with a total deal value of $715m and a flat royalty rate of 15%. This
results in a rNPV of €305.7m, equivalent to €13.6 per share.
Lusvertikimab
Lusvertikimab, OSE’s second in-house clinical candidate, is now anticipated to progress
in UC under an out-licensing partnership, using a subcutaneous formulation rather
than the existing IV formulation evaluated in the Phase II CoTikiS trial. We assume
completion of the subcutaneous formulation and generation of bioequivalence data versus
the IV formulation by 2027, leading us to push our assumed partnering transaction
to FY27 (from FY25 previously).
We see the strongest clinical and commercial potential in the biomarker-defined subpopulation
of patients with moderate-to-severe UC, representing approximately 30% of the overall
UC population. In this subgroup, Lusvertikimab achieved a clinical remission rate
of 59% in the CoTikiS study (n=22), comparing favourably with the c 25–30% therapeutic
ceiling observed with currently approved biologics and JAK inhibitors.
We assume the partner initiates a Phase IIb study in this selected population in 2027,
followed by Phase III development and commercial launch in 2029 and 2032, respectively.
Given the more targeted positioning, we model a peak penetration rate of 20% and annual
treatment costs of $40k in the US and $24k in Europe, translating into peak sales
potential of c $2.35bn in UC. However, reflecting the need for bioequivalence data
and an additional Phase IIb study (versus a direct progression to Phase III in our
prior model), we reduce our probability of success to 21%, from 35% previously.
For Lusvertikimab in UC, we assume a licensing transaction with a total deal value
of $650m and a flat royalty rate of 10%. Given the earlier stage of development relative
to Tedopi, we assume a more back-end-loaded structure, with c 70% of the value linked
to commercial milestones. This results in an rNPV of €62.6m, or €2.4 per share, which
we expect to increase as the programme advances clinically.
In addition, Pillar II of OSE’s updated strategy is to explore Lusvertikimab’s IV
formulation in one or two speciality or rare disease indications. Management has guided
that each Phase II study would require €10–15m of investment, with specific indications
to be disclosed in early 2026. These potential programmes are not yet reflected in
our valuation and could provide incremental upside once confirmed.
Partnered programmes
Given limited visibility on development timelines and partner commitment across OSE’s
early-stage partnered programmes (AbbVie, Boehringer Ingelheim (BI) and Veloxis),
we conservatively exclude these assets from our current valuation, in line with management
guidance. OSE recently announced an amendment to its collaboration with AbbVie, under
which OSE will conduct preclinical and Phase I development of ABBV-230, with AbbVie
retaining development and commercial rights following successful Phase I completion.
In the context of OSE’s focus on cash preservation and prioritisation of late-stage
in-house assets, we expect this programme to be de-prioritised in the near term.
Similarly, visibility remains limited on BI’s plans for BI 770371 and the cis-targeting
anti-PD-1/cytokine platform asset, although management has indicated that the associated
€17.5m milestone payment, linked to initiation of clinical activity, could be triggered
between FY26 and FY28. We will revisit our treatment of partnered programmes as further
clarity emerges.
Incorporating the above revisions and the updated net debt position, our rNPV-based
valuation for OSE declines to €371.3m or €16.5 per share, from €560.8m or €25.6 per
share previously. A detailed breakdown of our rNPV by programme is presented in Exhibit
1.
| Exhibit 1: OSE risk-adjusted net present value |
 |
| Source: Edison Investment Research |
