Conseil KBC securities: Buy. Objectif de cours 60 €
News:
UCB and Sanofi announced scientific and strategic collaboration for the discovery and development of innovative anti-inflammatory small molecules which have the potential to treat a wide range of immune-mediated diseases in areas such as gastroenterology and arthritis. No impact on valuation.
Our View:
UCB’ NewMedicines have used a new approach to identify small molecules modulators of a biological pathway, for which biologic therapies (which traditionally need to be injected) have proven highly efficacious in patients.
A dedicated team of scientists will be formed under the leadership of Sanofi and UCB, who will join forces in discovery and development efforts to characterize and identify new potential therapies.
Under the terms of the agreement, Sanofi and UCB will share costs and profits on a 50/50 basis. UCB will be entitled to initial upfront, preclinical and clinical development milestone payments from Sanofi, potentially exceeding € 100m.
The deal is constructed as a typical co-discovery/co-development ‘biotech- platform’ deal: whereas UCB before would fully pay partners or share costs to discover and develop new products, it now shares the costs, but also gets upfront and development milestone payments for it. We believe this deal construction proofs that UCB has unique technology and knowhow in house for which partners are willing to pay to get access to. On the other hand, it also shows UCB is cost conscious and wants to limit its exposure to early- R&D risk by sharing it partners.
Conclusion:
UCB is continuing to broaden its network to get access to novel therapies in its core areas of expertise. Of interest is that this collaboration is built on UCB’s capability of identifying small molecule modulators (typically to be administered orally) for biological pathways for which previously biological products (typically to be administered via injection) have proven to be efficacious. Target price and rating unchanged.


