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ABIVAX Abivax SA (ABVX-FR): Getting a brake in inflammation

Directive transparence : information réglementée

22/01/2019 15:58

goetzpartners securities Limited
Abivax SA (ABVX-FR): Getting a brake in inflammation

22-Jan-2019 / 14:58 GMT/BST


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Published to the market and investors on 22nd January 2019 @ 12.31pm (GMT).


Abivax SA (ABVX-FR): Getting a brake in inflammation
Recommendation: OUTPERFORM
Target Price: EUR28.80 (increased from EUR19.50)
Current Price: EUR10.02 (CoB on 21st January 2019)

KEY TAKEAWAY

With proof-of-concept trials in ulcerative colitis ("UC") suggesting efficacy on a par Abivax's ABX464 looks a real alternative to approved therapies. A new class of oral drug releasing a natural inflammatory brake, ABX464 could alleviate the treatment failures and possibly safety issues of existing drugs. This would open a significant opportunity in a > $70bn market. We are optimistic that clinical studies planned for 2019E should confirm the UC results and may suggest efficacy in Crohn's Disease and rheumatoid arthritis ("RA"). There appears a firm basis for a licensing / development deal expected during 2019E. We reiterate our OUTPERFORM recommendation and increase our target price ("TP") to EUR28.80 (from EUR19.50 / share).

Anti-inflammatory benefits compare well to current drugs - While one must exercise due caution extrapolating from small early trial results to late stage studies, the impact on healing and clinical outcomes of ABX464 compare well with and could exceed the benefits of marketed products particularly other oral drugs like tofacitinib from Pfizer recently approved for used in steroid refractory patients.

Safe and well tolerated - The UC Phase 2a trial and those in HIV suggest that the drug is safe and well tolerated with no evidence of the infections and other serious issues associated with the anti-TNF antibodies or small molecule anti-inflammatory drugs like tofacitinib. A 12-month extension study with the Phase 2a patients has been approved based on ABX464's continued safety and efficacy.

Large unmet need in substantial market - Although anti-TNF drugs have transformed inflammatory therapy, 30% - 40% of patients still fail or cease to respond. There is an absolute need for a safe effective orally available alternative.

Still potential in HIV - Although the major focus has shifted to inflammation, ABX464 still has potential in HIV where the drug has already shown potential in not only reducing the latent HIV reservoirs that are left untouched by current therapies, but also possibly the chronic inflammation with which these are associated. A high dose (150mg) 16-week study aims to confirm these effects during 2020E.

Further data and partnering expected - It is hoped that a dose-ranging Phase 2b trial will confirm the benefits of ABX464 in UC with PoC Phase 2a trials planned in Crohn's and RA all reporting 2020E. A licensing / development partnership is expected by Abivax during 2019E. Under-valued at current levels - Currently funded through Q4/2019E, the company aims to secure long term funding through substantial upfront and development milestones though ABX464 partnering in 2019E. We are optimistic that this will be achieved based on the strength of the UC Phase 2a data. DCF analysis indicates a current valuation of EUR28.80 rising to > EUR50 / share with PoC in Crohn's and RA. We reiterate our OUTPERFORM recommendation and increase our TP to EUR28.80 (from EUR19.50).

Kind regards,


Chris Redhead | 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 | chris.redhead@goetzpartners.com / healthcareresearch@goetzpartners.com

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