Abivax SA (ABVX-FR): ABX464: sustained safety and benefit in inflammatory bowel

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Published to the market and investors on 11^th March 2019 @ 2.04pm (GMT).

Abivax SA (ABVX-FR): ABX464: sustained safety and benefit in inflammatory bowel
Recommendation: OUTPERFORM
Target Price: EUR28.80
Current Price: EUR8.93 (CoB on 8^th March 2019)

KEY TAKEAWAY

With Data presented at the ECCO (European Crohn's and Colitis Organisation) support the potential of Abivax's ABX464 in ulcerative colitis ("UC") While response to biologic therapies such as anti-TNF often wains with time and alternatives including JAK inhibitors are associated with serious safety issues, six month Phase 2a extension data indicate safety and progressive improvements from ABX464 in key UC disease markers, including Mayo Score and faecal calprotectin over the eight months since the original trial began. We are optimistic that clinical studies planned for 2019E should confirm the UC results and may suggest efficacy in Crohn's Disease and rheumatoid arthritis ("RA"). There appears a firm basis for a licensing / development deal expected during 2019E in a > $70bn market. We reiterate and maintain both our OUTPERFORM recommendation and EUR28.80 target price.

Anti-inflammatory benefits compare well to current drugs - Data from the original 2 month Phase 2a (Reviewed in our company update note - published on 22nd Jan 2019) indicated the impact on healing and clinical outcomes of ABX464 that already compare well with and could exceed the benefits of marketed products particularly other oral drugs like tofacitinib from Pfizer recently approved for used in steroid refractory patients. These new data confirm and extend these results. 19 of the 22 patients who joined the open extension trial are still opting to remain on the drug after an average of 10 months treatment; suggesting continued benefit.

Safe and well tolerated - This extended UC Phase 2a trial and those in HIV suggest that the drug is safe and well tolerated with no evidence of the infections and other serious issues associated with the anti-TNF antibodies or small molecule anti-inflammatory drugs like tofacitinib. The original 12-month extension study with the Phase 2a patients has now been extended to 24 months based on ABX464's continued safety and efficacy.

Large unmet need in substantial market - Although anti-TNF drugs have transformed inflammatory therapy, 30% - 40% of patients still fail or cease to respond. There is an absolute need for a safe effective orally available alternative.

Still potential in HIV - Although the major focus has shifted to inflammation, ABX464 still has potential in HIV where the drug has already shown potential in not only reducing the latent HIV reservoirs that are left untouched by current therapies, but also possibly the chronic inflammation with which these are associated. A high dose (150mg) 16-week study aims to confirm these effects during 2020E.

Further data and partnering expected - It is hoped that a dose-ranging Phase 2b trial planned in 232 patients will confirm the benefits of ABX464 in UC with PoC Phase 2a trials planned in Crohn's and RA all reporting 2020E. A licensing / development partnership is expected by Abivax during 2019E.

Under-valued at current levels - Currently funded through Q4/2019E, the company aims to secure long term funding through substantial upfront and development milestones though ABX464 partnering in 2019E. We are optimistic that this will be achieved based on the strength of the UC Phase 2a data. DCF analysis indicates a current valuation of EUR28.80 rising to > EUR50 / share with PoC in Crohn's and RA. We reiterate both our OUTPERFORM recommendation and EUR28.80 target price.

Kind regards,

Chris Redhead | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

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