Jetrea: A Winning Drug, A Losing Start

ThromboGenics is a Belgian biotechnology company focused on ophthalmology. The lead product, Jetrea, for treatment of back-of-the-eye disorders (VMA) has been approved and launched in the US and EU. Jetrea is partnered for commercialisation with Alcon excluding US.

Bull

n Jetrea RoW approval process de-risked.
n Cost effective comparing to its only alternative: vitrectomy surgery ($3,950 vs. $8,000-10,000).
n ORBIT to provide further clinical support to Jetrea effectiveness, results due by end of 2014.

Bear

n Permanent J-code (quicker reimbursement, available from January 2014) helps less than expected.
n Initial negative experience could lead to slower than expect uptake.
n Further US commercialization costs put pressure on R&D.THR

2015 outlook

2014 was a tough year for ThromboGenics, price falling 65% driven by a failed launch in the US. Further doubt was raised after 2014 interim update which showed no sign of pick up.  However, sales progression takes time and the updates from EU and RoW could offer more visibility. Being the only alternative to surgery treating VMA and having a further structured commercialization strategy in the US, if used in the right patient pool, Jetrea could provide upside of the long-term value.

All efforts on Jetrea US: the only focus

H114 US sales dipped to €5m against €103m in H113 (€90m milestone payments). While the outlook bleak, the strategic changes to support US commercialization need to be considered: (1) strengthened US commercial capability with the appointments of Ed Kessig as US Head of Commercial. (2) increased number of medical science liaison managers to 12 from 10. (3) recruitment of a US marketing partner is in discussion. Jetrea sales may look up once the “watch and wait” strategy (adopted by 75% retina physicians) currently used in the mild-moderate patient population (200,000, ~80% of the eligible US population) can be overcome.

In the right eyes, Jetrea could be powerful

Despite the not-strong-enough sales force, Jetrea’s not-strong-enough combined phase III studies (26.5% VMA resolution vs. 11% spontaneous resolution, against a 90% resolution with surgery) may also invite scepticism. However, some subgroups have much more significant resolution rates (35-58%) which suggests looking for the right subgroups and performing clinical trial in this setting could potentially help drive penetration of this market.

EU sales to provide further clarity

Launch in EU had been strong given reimbursement secured in the UK, Germany, France and Spain, and a partnership with Alcon who excels in commercial expertise and network within ophthalmology. Details to be released will provide a reference for growth potential and align with the marketing strategy in the US.

Valuation: EV €162m

End June cash of €149m suggests an EV of €162m. Further RoW approval and launch could provide near-term uptick. A positive partnership potential in the US is likely to dictate share price performance.

Consensus estimates (Source: Reuters Fundamentals)

Year endRevenue (€m)PBT (€m)EPS (€)DPS (€)P/E (x)Yield (%)
12/1275.130.40.870.026.0N/A
12/13112.826.40.710.0N/AN/A
12/14e36.1(1.3)0.0N/AN/A
12/15e75.2(0.4)0.0N/AN/A

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