Tuesday, May 06 2014 by Edison Investment Research .
Pivotal Partner Presentation at ASCOThe first of two pivotal Yondelis clinical trials has read out positively. Data from the Phase II study in soft tissue sarcoma (STS) will be presented at the American Society of Clinical Oncology (ASCO) meeting (30 May to 3 June) by Zeltia’s partner for Japan, Taiho Pharmaceuticals. An NDA (new drug application) will also be submitted by Taiho to the Japanese regulator in 2014. FDA filing of Yondelis is possible in 2015 but is contingent on positive results from Janssen’s fully recruited Phase III study in L-sarcoma later this year. Separately, Q114 results saw the highest quarterly sales of Yondelis ex-US ex-Japan of €19.7m, up 18% on Q113.
Yondelis in focus at ASCO
No data from the pivotal Phase II STS study have been disclosed ahead of presentation at ASCO, although Taiho has confirmed results were positive and supportive of NDA filing.
ASCO abstract(s), available on 14 May, will provide headline data and notification of the timing of the Taiho presentation.
Potential for further Yondelis revenue growth
Record quarterly sales of Yondelis underpin Zeltia’s profitability, with an expectation of continued growth in the >75 countries where it is already approved for advanced STS or relapsed platinum-sensitive ovarian cancer.
Potential Japan and US approvals in 2015 would boost revenues through royalty receipts from respective partners. In addition, c $30m of near-term milestones may be received: Japanese approval would trigger an approval milestone from Taiho, and $20m is potentially due from Janssen ($10m development; $10m on approval).
Financials: Yondelis sales boost profit
Net revenue increased across both business segments: biopharma sales grew 16% year-on-year to €21m (of which €19.7m related to Yondelis) with consumer chemicals up 5% to €13.4. Q114 EBITDA was €19.4m (+10%) and net margin continued to benefit from the greater contribution of the biopharma segment (in particular PharmaMar) and ongoing cost controls. Growth in net profit (+6.8% to €16.8m) and operating cash flow of €8.1m resulted in an 11% reduction in net debt.
Valuation: Catalysts to crystallise upside
Despite solid share price appreciation over the last year, potential upside remains from near-term clinical/regulatory catalysts and the prospect of licensing. Potential Yondelis approvals in 2015 could significantly boost revenue, and full Phase II data for PM01183 in ovarian cancer could form the basis of a lucrative licensing deal.
Business description
Zeltia is a Spanish biopharmaceutical group with a core focus on the development of marine-based drugs for cancer. Its only marketed product, Yondelis, is approved in the EU and partnered with Janssen (J&J) in the US. The group also has subsidiaries active in consumer chemicals, molecular diagnostics and RNAi technology.