Ablynx: DCF valuation of €431m

Ablynx’s (ABLYNX NV) investment case in the near term hinges on its ability to partner its IL-6R Nanobody, ALX-0061, using the final results from the Phase I/II study in rheumatoid arthritis (RA). The 24-week data suggests that ALX-0061 might have a superior efficacy and safety profile to Roche’s tocilizumab (Actemra, an IL-6R monoclonal antibody) and other IL-6 inhibitors in development. The partnering of ALX-0061 could still be challenging because of the competitive nature of RA, but Ablynx has raised €31.5m to maintain momentum in the programme. We value the company at €431m, which rises to €497m if ALX-0061 is out-licensed.

Final Phase I/II results promising
Ablynx has reported promising 24-week data from the Phase I/II study with intravenous ALX-0061 in RA. The 24 patients that received an unmodified dose of the Nanobody throughout the 24 weeks achieved ACR20, ACR50 and ACR70 scores of 83%, 71% and 58%; also 63% of patients entered remission based on DAS28 criteria. There were no significant differences between the different dosing schedules, including between four-weekly and eight-weekly dosing. The Nanobody was well tolerated throughout trial and no anti-drug antibodies were detected.

ALX-0061 possibly better than Actemra
The data from the study suggests that ALX-0061 might have a better efficacy and safety profile than tocilizumab and other IL-6 inhibitors in development. The level of ACR70 response and DAS28 remission achieved with ALX-0061 compares favourably with that published on other IL-6 inhibitors. The tolerability data also suggests that adverse events seen with the other therapies (changes in lipid levels, neutropenia) are not caused by the Nanobody. These characteristics should lead to interest from potential partners, however the RA field is highly competitive.

€31.5m raised to maintain momentum in ALX-0061
Ablynx has raised €31.5m, as part of a €45m placing. This will allow the company to continue with the ALX-0061 programme, while it looks for a partner. A Phase IIb study with the Nanobody might start by the end of 2013 and a sub-cutaneous formulation will be developed, so the programme is not delayed and its value is enhanced.

Valuation: DCF valuation of €431m
We have reduced our valuation of Ablynx by €90m to €431m, despite the progress with ALX-0061, as the company has been unable to partner ozoralizumab or ALX-0141. However, there appears to be no expectation in the market about these products. If ALX-0061 is partnered our valuation should rise to €497m.

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