2023-07-04 04:57:46 ET
Summary
- Verve Therapeutics announced a partnership with Eli Lilly & Co., focusing on in-vivo gene editing technology, but investors remain concerned about the FDA's clinical hold on Verve's PCSK9 candidate VERVE-101.
- The partnership could provide Verve with financial stability through 2026, with the potential for an additional $465M based on achievements and sales-based royalties, but the company's valuation is primarily tied to the success of VERVE-101.
- Despite the partnership, the market's attention remains on the phase 1b study for VERVE-101, with many unpredictable risks.
- We maintain a hold rating until we see more clear updates around VERVE-101's clinical hold.
Key update: new exciting deal with Lily, but the bigger focus remains around the clinical hold.
Verve Therapeutics ( VERV ) publicized on June 15th , a crucial partnership with Eli Lilly & Co ( LLY ). Although the deal looked like extremely positive news for Verve on paper, the stock action did not reflect it, highlighting that investors are still more worried about the FDA's clinical hold.
Furthermore, we highlight that Verve has a short interest approaching ~25% according to seeking alpha's tracker, which shows that many institutional investors are taking enormous amounts of liquidity risk to short the stock, which gives us some degree of additional concerns around phase 1b study for Verve's PCSK9 candidate VERVE-101. Even with the approval, as we pointed out in our previous analysis , the commercial opportunity may not be attractive considering the saturated PCSK9 market landscape and also the expected high pricing of the gene therapy (vs. oral/injected PCSK9s priced in a couple of thousand dollar range).
PCSK9-targeting projects in development summary:
Project Company Description Note Phase 2 MK-0616 Merck & Co Once-daily oral Ph2 data at ACC 2023, ph3 planned in H2 2023 Phase 1 AZD0780 AstraZeneca Oral NCT05384262 in healthy volunteers; data due H2 2023 VERVE-101 Verve Therapeutics One-off in vivo gene editing Heart-1 enrolling in New Zealand & UK, first data due H2 2023; US IND on clinical hold Preclinical VXX-401 Vaxxinity "Long-acting" synthetic peptide vaccine; target 2-4 per year Preclinical data at ACC 2023 ; ph1 slated for H1 2023 CTX330 Crispr Therapeutics One-off in vivo gene editing STP135G Sirnaomics SC RNAi Fallen by the wayside ION449 (AZD8233) AstraZeneca/Ionis Once-monthly SC antisense Astra not taking into ph3 following ph2 Solano data NN6435/ NNC0385-0434 Novo Nordisk Oral Company had ph2 data in Q3 2022; no longer in pipeline PBGENE-PCSK9 Precision Biosciences/iECURE One-off in vivo gene editing Discontinued at preclinical stage Source: Evaluate Pharma & clinicaltrials.gov.
Lilly partnership overview
The alliance concentrates on constructing an in-vivo gene editing technology targeting Lp(a) for ASCVD with an upfront payment of $60M. The management indicated that this partnership bolsters Verve's financial stability through 2026, with the potential for receiving an additional $465M based on specified achievements and sales-based royalties.
As per the agreement : Verve will manage the research and phase 1 clinical development for an Lp(a) targeted in-vivo gene editing contender for ASCVD for an upfront payment of $60M. This amount includes $30M in cash and $30M as an investment in common stock by Lilly.
The potential downstream milestones could add up to $465M for R&D and commercial achievements, along with high single to low-double digit royalties on net sales.
In the case that Verve chooses to enact opt-in rights for the candidate, they can receive 40% of gross profits. The agreement also grants Lilly the right to choose an additional, pre-determined collaboration target with identical terms to the initial target.
We believe this collaboration reaffirms the potential of Verve’s unique gene editing platform (separate from the base editing technology they licensed from Beam) and its progress in in-vivo delivery. Furthermore, we believe the deal makes sense for Lilly, considering Lilly's renowned cardiometabolic expertise. Potential positive synergies should also be expected for Verve; the company can leverage Lilly's clinical and regulatory know-how to develop in-vivo gene editing candidates.
Risks
For further details see:
Verve: Exciting Deal With Eli Lilly, But Still Neutral (Reiterating Hold)