GOETZPARTNERS SECURITIES LIMITED Marinomed Biotech AG (MARI-AT): Budesolv hits key endpoints in Phase III allergy trial

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16/05/2019 15:03

goetzpartners securities Limited
Marinomed Biotech AG (MARI-AT): Budesolv hits key endpoints in Phase III allergy trial

16-May-2019 / 14:03 GMT/BST


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Published to the market and investors on 15th May 2019 @ 2.45pm (BST).


Marinomed Biotech AG (MARI-AT): Budesolv hits key endpoints in Phase III allergy trial
Recommendation: OUTPERFORM
Target Price: EUR103.00 (increased from EUR98.00)
Current Price: EUR76.50 (CoB on 14th May 2019)

KEY TAKEAWAY

Following the news on 23 April that Budesolv (dissolved budesonide) had met the primary endpoint of the pivotal Phase III trial in allergic rhinitis ("AR", hay fever), showing non-inferiority to reference product Rhinocort Aqua (budesonide suspension, marketed by J&J) after one week of treatment, Marinomed today announced that the trial had also met the secondary endpoint assessing faster onset of action, with Budesolv providing symptom relief after the first dose. This was not the case for Rhinocort. In our view, this is a very impressive result that has multiple implications, including: (1) Potential for Budesolv to achieve our peak sales forecast of c.EUR760m; (2) strong support for the original hypothesis that a steroid in solution has higher bioavailability and hence superior efficacy compared to the same steroid in suspension; (3) validation for the Marinosolv platform as a whole, including for Tacrosolv, the second most advanced asset and that is expected to enter a clinical trial in allergic conjunctivitis later this year. We increase our target price ("TP") to EUR103 (from EUR98) and reiterate our OUTPERFORM recommendation.

Secondary endpoint early onset of action met: symptom relief within 4 hours

Based on Marinomed's press release, the data from the pivotal, 75-patient Phase III trial shows that Budesolv achieved at least the same efficacy as Rhinocort Aqua at a dose of only 10ug per puff compared to 64ug for Rhinocort after one week of treatment. This timepoint for the primary endpoint was selected due to available data and experience with Rhinocort showing that it takes several days for the product to show an effect. Budesolv markedly improved the nasal symptoms of AR within four hours of patients receiving the first dose, which was not the case for Rhinocort. Importantly, this effect was also observed for allergic symptoms associated with asthma. Marinomed plans to disclose detailed data for the Budesolv Phase III trial either in a peer-reviewed journal or a medical conference.

Peak sales in excess of EUR700m within reach, in our view

In our opinion, the Phase III data strongly positions Budesolv to become a large product within the c.$13bn AR market, of which intranasal corticosteroids account for c.$5bn (c.5% annual growth). We forecast launch in 2021E and peak sales of c.EUR760m in 2036E, which assumes a market share of around 5%. To put this figure into context, we note that Rhinocort Aqua recorded sales of $250m in 2017 while market leader Flonase (marketed by GSK) had sales of c.$1.6bn in the same year. Marinomed intends to sell Budesolv as an OTC product. The company has been intensifying its partnership discussions for the commercialisation of Budesolv and all options are currently on the table. These include selling Budesolv through current distributors and finding a global partner.

Increasing TP to EUR103 per share, equating to nearly 30% upside

We increase our TP to EUR103 (from EUR98) on raising the probability of success for Budesolv in AR to 85% (from 75%) and reiterate our OUTPERFORM recommendation. Based on our forecasts, Budesolv is Marinomed's most valuable asset, accounting for 45% of our updated fair value. The marketed Carragelose products collectively account for 28% of our valuation, Tacrosolv in allergic conjunctivitis and dry eye disease for 22%, and net cash at YE2019E for the remainder.

Kind regards,


Brigitte de Lima, PhD, CFA | Research Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

T +44 (0) 203 859 7725 | brigitte.delima@goetzpartners.com / healthcareresearch@goetzpartners.com

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