Some facts on Prometheus...
Merck paid a 75% premium to acquire Prometheus. The share price consequently rose from US$114 to US$193 – a rise of 70%.
A bigger lift in share price was seen in early December when Prometheus announced highly successful efficacy and safety results for one of its drugs in Phase 2 clinical trials of the two most common types of IBD – ulcerative colitis and the other in Crohn’s disease. The share price consequently rose from US$36 to US$117 over 2 days – a rise of 325%.
The same drug (PRA023, an anti-TL1A monoclonal antibody) is also being tested in a 100 patient Phase 2 trial in systemic sclerosis associated with interstitial lung disease. That trial is due for completion in 12 months.
A second drug is being tested in a 190 patient Phase 1 trial in IBD, with results due in Q4 this year.
Prometheus has a further 3 preclinical drugs in the pipeline.
Beyond IBD, Prometheus’ potential target diseases includes autoimmune disorders such as rheumatoid arthritis, atopic dermatitis and psoriasis.
Prior to the PRA023 Phase 2 results in December 2022, Prometheus had a market cap of US$1.6bn. At IPO in March 2021, the market cap was US$707m. Company spend in 2022 was US$123m. With Phase 2 results, Prometheus also announced a capital raise for US$500m. At year end, the company had ~US$700m of cash and securities.
While there are some existing treatments for ulcerative colitis and Crohn’s disease, many patients don’t respond and the treatments also pose long term safety concerns. None of the current treatments cure the disease and patients often require life-long treatment.
The addressable market population for IBD is large. Ulcerative colitis and Crohn’s disease together are estimated to affect over 5 million people globally. The IBD market is worth approximately US$18 billion globally and is estimated to grow to approximately US $49 billion globally by 2030.
Other than its clinical and preclinical assets, which address highly lucrative markets, Prometheus has a highly valuable discovery engine platform. This includes an extensive clinical database and associated biobank which is one of the world’s largest collections of biospecimens from patients suffering from IBD and other GI disorders. The database and biobank is exclusively licensed from Cedars-Sinai Medical Center and includes more than 200,000 samples linked to extensive clinical data from over 20,000 patients collected over more than 20 years.
Prometheus has promoted the fact that utilizing genetics-based precision medicine increases its probability of success. Its Prometheus360 platform enables the company to both select drug targets genetically associated with diseases and to develop genetic-based diagnostics designed to identify patients more likely to respond favourably to the therapies they are developing.
Merck is now in a race with Pfizer, which teamed up with Roivant mid last year to form Priovant Therapeutics. Successful results for Priovant’s own anti-TL1A antibody in a Phase 2 trial in ulcerative colitis, announced in January this year, will see both companies soon enter large Phase 3 trial in ulcerative colitis.
My observations…
With 2 completed Phase 2 trials, 1 ongoing Phase 2 trial, one large Phase 1 trial due to report this year and a further 3 preclinical drugs in development, Prometheus is well advanced on PYC.
Big indications = big trials = big money. Note the A$183 m costs for Prometheus last year and the A$745m recent cap raise. Just not possible for a clinical stage biotech in Australia.
Big indications = big attention + big competition. Autoimmune disease and inflammation are currently hot areas of interest for pharma, especially big pharma. That means red-hot competition between multiple well-resourced pharmas. As well as competing in late stage trials in ulcerative colitis against Roivant (Pfizer), Merck will also be up against AbbVie and Eli Lilly. Then there are the ~ 20 assets in clinical development for ulcerative colitis, including ones being developed by Amgen, Astra Zeneca, Bristol Myer Squibb, Boehringer, Gilead, J & J, and Novartis. While PYC’s smaller market indications may draw little initial attention, they also attract little competition. There is no current competition in RP11, PYC’s lead indication.
Don’t underestimate the importance and potential value of discovery engine platforms. Merck certainly didn’t. Once the first asset to come out of that platform is proven in clinical trials, the value of the entire pipeline is rerated.
As Prometheus was keen to promote, utilizing genetics-based precision medicine increases the probability of success. Where have I heard that before?
In summary, PYC is still a long way from the US$10bn league and doesn’t have the kind of blockbuster indications that attract investor and pharma attention. Nor is it likely to ever have the kind of funds needed to compete in the blockbuster indication space.
But PYC cleverly leverages what resources it does have to maximum effect. It is focusing first on monogenic orphan diseases (to contain costs and increase probability of success). It is playing to its strengths (a proprietary library, mined for cell-penetrating peptides that offer superior drug delivery; Prof. Sue Fletcher, a world-class scientific leader in PPMO antisense development; access to both the world- class expertise in retinal disease at the Lions Eye Institute and the Australian Inherited Retinal Diseases Registry and DNA databank which was established almost 40 years ago.)
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