With its FY15 results, Probiodrug provided an update on the lead Phase IIa SAPHIR trial, which is well underway. R&D expenses were up year-on-year reflecting increased activities related to the study. The six-month delay was mainly a result of enrolment difficulties, which is not uncommon in Alzheimer’s disease (AD) studies due to increasing competition for the same early patient population. Importantly, measures taken by the company addressed this issue well, in our view. The final results are likely in late Q117 or early Q217 which, if positive, should enable Probiodrug to seek a partnership deal.
While 2015 R&D costs were up by 27% year-on-year to €10.2m (in line with our expectations) reflecting the initiation of the Phase IIa SAPHIR study, G&A expenses were kept under control and stayed flat. Probiodrug has indicated that the net loss for 2016 may be larger than that incurred in 2015 due to additional costs related to SAPHIR. Based on our updated forecasts we believe Probiodrug is funded until readout following the private placement, which raised €13.5m in November 2015.
SAPHIR is Probiodrug’s lead Phase IIa project with PQ912 targeting early stage AD. The goal is to recruit 110 patients across several European countries and the first patient was recruited in March 2015. According to Probiodrug’s newest enrolment estimates, the first data should be announced around the end of 2016 (mid-2016 previously) with the final results due three to four months later. Patient recruitment problems are not uncommon in AD trials and projection of full recruitment is difficult, as a large AD patient population does not necessarily imply a large accessible patient pool for a specific study (see page 2). As SAPHIR is in full swing, we believe the company has better visibility of the timelines now than it did at the start of the trial.
Our rNPV-based valuation is increased from €234.7m (€31.5m/share) to €242.3m (€32.6/share) due to rolling the model forward in time, which more than offsets the increase in R&D costs. We previously assumed a partnership deal in 2017, which we continue to include despite the delay. We believe that PQ912 is a highly visible project among the players in the AD field and that the potential deal could happen shortly after the data are released, assuming the results are positive.