Marinomed Biotech AG (MARI-AT): Budesolv succeeds in pivotal Phase III trial
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Marinomed reported that Budesolv met the primary endpoint of the pivotal Phase III trial in allergic rhinitis ("AR"), demonstrating non-inferiority to marketed product Rhinocort Aqua. Importantly, this was achieved at about one-sixth of the budesonide dose and with a preservative-free formulation. The positive outcome allows Marinomed to proceed with the regulatory process, and we therefore continue to expect approval in Europe in Q4/2020E or Q1/2021E depending on the availability of production slots for validation batches. Our fair value remains unchanged at EUR95 per share (c.20% upside) pending detail trial data later in Q2/2019E, which should also clarify whether Budesolv met the secondary endpoint designed to show a faster onset of action. We see this as a key differentiating factor for Budesolv to meet our c.EUR760m peak sales forecast (<4% market share). Marinomed intends to sell Budesolv as an OTC product, offering the opportunity to leverage the existing global network of partners used for its marketed product portfolio. Maintain OUTPERFORM. Budesolv met the primary endpoint of non-inferiority vs. J&J's Rhinocort Aqua Budesolv contains the glucocorticoid budesonide commonly used for allergy and autoimmune diseases, reformulated based on the proprietary Marinosolv platform. This increases the solubility, thus allowing for the administration of a much lower dose. The European Phase III trial (which enrolled 84 patients, of whom 75 were eligible for the primary endpoint analysis) tested Budesolv as a nasal spray for AR, an inflammation of the nasal mucous membranes that affects up to 30% of people. The primary endpoint was non-inferiority vs. Rhinocort Aqua (budesonide suspension), Johnson & Johnson's ("J&J") successful OTC product with 2017 retail sales of $250m in the >$12bn AR market. Top-line data suggests that this endpoint was met. Secondary endpoint designed to show faster onset of action still outstanding Marinomed had planned to differentiate Budesolv through the inclusion of a secondary endpoint focused on showing faster onset of relief of minutes rather than days. We understand that the company does not yet have sufficient data to provide feedback on this endpoint and we therefore look forward to further details once the full data is published at the end of Q2/2019E. Valuation unchanged pending detailed data later in Q2/2019E As highlighted in our recent initiation of coverage report, a positive outcome for the Budesolv Phase III trial would lead us to increase the probability of success in AR to 85% (from 75%). Since the outcome also provides validation for the Marinosolv platform overall, we also intend to increase the probability of success for the second Marinosolv asset Tacrosolv (based on tacrolimus), specifically, to 20% (from 15%) in allergic conjunctivitis and to 15% (from 10%) in dry eye disease. In aggregate, these changes would lift our fair value to EUR107 per share. Kind regards,
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 www.goetzpartnerssecurities.com goetzpartners securities LinkedIn page Registered in England No. 04684144. Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.
Equity Research Analysts - Martin Brunninger, Brigitte de Lima, Chris Redhead, Martin Piehlmeier and Kieron Banerjee. Marketing Sales - Erland Sternby.
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