17 januari, deel 2
The pipeline of Ablynx
Caplacizumab
The bids came after positive results from the Phase III HERCULES study with caplacizumab, Ablynx's nanobody for the treatment of acquired thrombotic thrombocytopenic purpura (or aTTP). It is a disease that forms blood clots form in blood vessels. One out of five patients dies from this disease, and there is no treatment yet. Therefore, it has an FDA fast-track status. The estimated market opportunity comes at €800M or almost $1B.
Vobarilizumab
But Ablynx has more in its pipeline than just caplacizumab. Vobarilizumab is in Phase II and looks even more promising. It targets RA or rheumatoid arthritis, the same disease as AbbVie's Humira, which is the drug with the highest sales worldwide. I think that it is no coincidence that AbbVie works with Ablynx here. The company has experience in this area, and it can also nip competition for Humira in the bud, if necessary. Humira's sales are expected to aggregate to an astounding $21B in 2020. The problem for AbbVie is of course threatened by Humira's patent expiration date. The company says it could at least hold the patent until 2022, but it is even targeting 2034 for some applications. The question is if this will hold. Now, of course, Ablynx cannot fight against the biggest biotech companies, such as AbbVie, even if its product would be better. A network of sales people is indispensable and that is of course what AbbVie has. AbbVie has an opt-in agreement with Ablynx for Vobarilizumab, and if the results keep being positive, it is almost certain that AbbVie will be interested to take over Ablynx as a whole too.
Vobarilizumab is also in Phase II for SLE or systemic lupus erythematosus. It is an autoimmune disease, in which the immune system attacks healthy parts of the body. This too is a disease, like aTTP, that has no real specific treatment yet. Anti-inflammatory drugs and even malaria pills are used to treat patients. So, Vobarilizumab could address a multi-billion market opportunity too. The market is estimated to reach $2.2B by 2025. The results of the Phase II study of Vobarilizumab in SLE are expected to be announced in the first half of 2018.
ALX-0171
Another very promising program in Ablynx's pipeline is ALX-0171, which targets RSV. That is a viral respiratory infection. It is most known in infants. Some of your children might have had it. Ours has, but was luckily strong enough to fight it off. More than three million babies per year are hospitalized because of this disease, and ALX-0171 could be a first-in-class treatment.
But what may be lesser known is that RSV also occurs in elderly patients and HSCT patients. In the US alone, there are 177,000 elderly who are hospitalized every year with RSV. 14,000 do not make it and pass away. HSCT stands for haematopoietic stem cell transplant. HSCT cells are often taken from bone marrow and mostly used to treat patients with blood cancers like leukemia, but it is also used for some auto-immune diseases. About 12% of the patients become infected with RSV within 1 year, and 40% of those develop pneumonia and lower respiratory tract infection (LRTI). 20-30% of these patients do not make it. Let's hope that ALX-0171 can prevent death in those cases.
Just as caplacizumab, ALX-0171 is fully owned by Ablynx, without collaboration. It has a market opportunity of at least $1B. The results of Phase II are expected to be announced in the second half of this year.
The rest
Ozoralizumab is in Phase II in Japan in cooperation with Taisho (OTC:TAISF). It targets clinical problems associated with auto-immune disorders such as rheumatoid arthritis, ankylosing spondylitis, inflammatory bowel disease, and psoriasis. But Ablynx hasn't really reported about it that much after the deal with Taisho in 2015. In 2014, there had already been a deal with Eddingpharm in China, but the program there is still pre-clinical. I don't expect much from it, and the company neither, I suspect, since it has not found a partner outside of China and Japan, and it doesn't talk about it that much anymore.
In total, there are 45 programs for 7 nanobodies, among which 17 programs in immuno-oncology and 8 in immuno-inflammation; both are huge markets. There are some partners in these pre-clinical stages, one of which is Novo Nordisk. Most of these programs are long shots, since most are pre-clinical. There are three products in Phase I: ALX-0761/M1095 (the M shows it is in collaboration with Merck) for psoriasis. BI 836880 is developed by Boehringer Ingelheim, but Ablynx already got $67M in milestones payments from BI for this product and still has the co-promotion rights to it in Europe. Boehringer Ingelheim has also started a Phase I study in BI 655088, which again triggered $8M in a milestone payment.
Of course, there is a lot of value in the combination of these programs and nanobodies too. Ablynx has proven to have a valuable platform and competent scientists.
Conclusion
If you look at the programs in Phase III (Caplacizumab) and Phase II (Vobarilizumab and ALX-0171), there is a huge addressable market for Ablynx, especially because it has the complete rights for two of the three completely, so without any partners. If Novo Nordisk wants to grow by making acquisitions, it cannot play the cheapskate and let the others run away with its prey. Since Ablynx looks very promising and has a huge addressable market with its products, Novo Nordisk should understand that Ablynx thinks the $3.1B offer is too low.
An extra lesson for the wise: I think that despite the huge rise, Ablynx's shares could go up quite a lot more, from a bidding contest or even, over the long term, on its own. If the results of this year of Vobarilizumab in SLE (which will be announced in the next months) and ALX-0171 for RSV (which are expected in the second half of the year) are good, the stock could surge more.
Disclosure: I am/we are long ABLX, NVO.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.