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Teva Pharmaceutical Industries Ltd.’s
TEVA,
new collaboration with Sanofi
SNY,
on an inflammatory bowel disease treatment “will pay dividends” from a commercial perspective, Evercore ISI analysts wrote in a note Wednesday, as the companies team up on a therapy that’s drawing growing investor interest.
Teva and Sanofi said Wednesday that they would jointly develop and commercialize TEV ‘574, an anti-TL1A therapy designed to treat ulcerative colitis and Crohn’s disease. TL1A inhibitors are seen as “highly promising” and expected to gain 10% to 15% market share in moderate to severe ulcerative colitis within three years of launch, TD Cowen analysts wrote in a note Thursday.
Industry interest in this class of therapies was underscored earlier this year, when Merck & Co. Inc.
MRK,
acquired Prometheus Biosciences, whose lead candidate is an anti-TL1A therapy, for about $10.8 billion.
Under terms of the agreement announced Wednesday, Teva will get an upfront payment of $500 million and up to $1 billion in development and launch milestone payments. The companies said in a release that they will equally split the global development costs and net profits and losses in major markets.
Given the price Merck paid for Prometheus, Evercore ISI analyst Umer Raffat in a note Wednesday questioned whether Teva got a fair price. But Prometheus had phase 2 data on its asset, while Teva does not, so “there was always going to be a discount,” Raffat wrote.
Meanwhile, Teva landed as a partner “the biggest immunology player,” positioning the therapy to potentially generate $4 to $5 billion in sales, Raffat wrote.
Teva’s American depositary receipts gained 1.3% premarket on Wednesday and are up 5.3% in the year to date, while Sanofi’s ADR gained 0.8% premarket and is up 10.6% so far this year.
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