Research note


Nuevolution: Q3 tell of progress

Nuevolution published their Q3 report this morning (FY Jul 1 - Jun 30). Net sales amounted to SEK 1.6 (6.0) million and operating costs was SEK -31.4 (-27.6) million, giving an EBIT of SEK -29.8 (-21.7) million. Net result for the period was SEK -29.0 (-20.9) million. The start of the year has seen progress across the board and the company seem to be well on track to expand their business. Of particular interest is the developments in the Almirall and Amgen collaborations, as well as the internal BET-inhibitor program, which all seem to progress according to plan.

For the first three quarters net sales amounts to SEK 114.4 (18.2) million, driven in large part by the upfront from Almirall. EBIT for Q1-Q3 stands at SEK 18.3 (-75.2) million and the net result is SEK 1.8 (-70.3) million, largely in line with our full-year estimates of SEK 118.2 million in net sales, EBIT of SEK -2.6 million, and a net result of SEK -13.0 million. Cash and cash equivalents amounted to SEK 200.9 (215.6) million at the end of the quarter, which we believe will keep Nuevolution operating at full capacity for almost two years, given no other revenue is received.

The start of the year has been busy for Nuevolution with advances for both Chemetics and the individual programs. In a collaboration with Dr Robert Lefkowitz at Duke University, the company showed that Chemetics can screen GPCRs as they identified a beta-blocker. This can play an important part for future research and open up the gates to a major therapeutic target class. Further, the company announced the completion of a 40 trillion molecule library, a milestone for the company.

The Amgen collaboration seem to progress well, with one collaboration-program having reached in vitro proof of concept. Another program, part of Nuevolution’s internal pipeline, have also been transferred to Amgen after having reached cell-based proof of concept and attracted interest. None of the targets are disclosed. In the Janssen agreement, one more target has been added, which triggered a SEK 5.45 million technology access fee during the quarter (received after Q3 close).

On the program side, the Almirall collaboration seems to be progressing according to plan. The technology transfer occurred at the beginning of the year. While no clear pathway forward has been communicated from Almirall’s side, we believe the project is set to enter Phase I trials by early 2018. Meanwhile, Nuevolution is advancing the compounds in the non-Almirall indications, showing positive results in animal models of IBD (e.g. Crohn’s and ulcerative colitis). Other indications driven by Th17 are of interest and the company plans to decide on a path forward by the end of 2017.

The BET-inhibitor program (NUE7770) has progressed, with an improved understanding of the mechanism and biological efficacy. Animal models of inflammatory diseases (fibrosis and lupus) have demonstrated efficacy before and more studies are ongoing. The toxicology profile is studied in detail and has shown good results so far. Mouse models are being studied in lupus, with results expected in Q4. After that, we expect the next steps for the program during 2017.

The RORyt agonist (note: not the Almirall program) is progressing with in vitro efficacy studies and is in preparation to be studied in vivo, after which more color on the program will be seen (update expected 2H-2017). The GRP78 cancer program (with CRT-ICR) is progressing to cell-based studies to assess the therapeutic relevance of the target in cancer. 

All-in-all, Q3 was a quarter with a lot of progress from Nuevolution, and Q4 seems to continue on that note. As the company works on setting up their pipeline for future business activities, we believe the chances of more deals in the coming years are good. 

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