PhillipCapital analyst Paul Chew maintains “buy” rating on iX Biopharma with an increased target price to 35.5 cents from 33.5 cents, as the analyst incorporates a higher upfront fee of $12.1 million and raised expected development income.
iX Biopharma has signed an outlicensing agreement for its Wafermine drug worth more than $300 million (excluding royalties) with Nasdaq-listed Seelos Therapeutics. Seelos provides the regulatory, clinical development and local USA market knowledge to register and commercialise Wafermine and other ketamine-related products.
“Seelos will fund future development, manufacturing and commercialisation of Wafermine and related drugs. iX Biopharma will receive an upfront payment, development milestone, sales milestone and royalties,” says Chew.
See: iX Biopharma inks exclusive agreement with Seelos worth up US$239 mil
With this agreement, iX Biopharma will receive three forms of revenue-- a US$9 million upfront payment to be satisfied in cash and shares; US$239 million in development and product sales thresholds milestones; and double-digit percentage royalties on future net sales of any licensed products, according to Chew.
According to the Chew, Seelos was likely chosen by iX Biopharma for this agreement as it has the clinical expertise to complete Wafermine’s phase 3 programme and regulatory ability to secure FDA approval. The management team of Seelos are industry veterans who combined have more than 20 new drug approvals in the field of central nervous systems (CNS) from the FDA.
“[Seelos also has] experience in developing ketamine as a drug and the desire to build a ketamine franchise,” Chew added. “Seelos is currently developing an intranasal ketamine drug (called SLS-002) to treat suicidal depression which is in an advanced registration stage with the FDA.
Seelos was also listed on Nasdaq in January 2019, giving it access to a deep pool of liquidity or funds focused on biotechnology on NASDAQ. Its current market cap is US$189 million with net cash of around US$77 million (prior to its recent $50 million fundraising). It has progressively raised more than US$150 million in funds in the last 12 months to fund its various clinical programmes. It is also based in the USA, giving it good local US knowledge and market access to potential distributors.
“Once approved the major revenue streams will be through sales milestones and royalty from the sale of the drug (FY2026 onwards),” Chew says. “Due to the addressable markets for pain and depression, sales of the drugs when registered are expected to be sizeable.”
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“Royalty payments could be larger than the combined milestone payments and provide a strong recurring revenue stream to iX Biopharma,” he added.
At 4:05pm, shares in iX Biopharma are trading 0.05 cents higher or 2.22% up at 23 cents.
