ThromboGenics today confirmed what was widely suspected: a buyout is not about to happen. Plan B is to secure a US partner for its struggling eye drug Jetrea, but with the company weakened by the failure of its strategic review it will be negotiating from a difficult position.
The Belgian group does at least have a relatively strong cash balance – analysts reckon it could fund itself for another two and a half years. But ThromboGenics has made it clear that it needs help to get Jetrea off the ground, and the sooner this arrives the better.
An 11% drop in ThromboGenics’ shares yesterday forced a statement confirming that the company would now be pursuing an independent future. Unsourced media reports back in April claimed that six suitors were interested and put a $1.3bn price tag on the company, so this was clearly not the expected outcome; shares plunged another 29% today to €10, a five-year low valuing the company at €363m ($494m).
Novartis’s Alcon unit, which bought European rights to Jetrea back in 2012, was always the logical buyer. Given their insider knowledge the decision to turn down full rights via a takeout is not an encouraging sign, and probably goes a long way to explain today’s share price reaction.
Jetrea, which has been on the market since early last year in both the US and Europe, is approved to treat vitreomacular adhesion (VMA), an eye condition that can eventually cause vision loss. The intravitreal injection has struggled for a number of reasons, but mainly because the surgical procedure to treat VMA is almost always successful. Pivotal studies showed that Jetrea only worked in around 30% of cases.
ThromboGenics argues that selecting the right patients can lift the success rate to 50-70%, and that by targeting patients with earlier stages of the disease its one-off injection carries a number of benefits. The product’s success in winning reimbursement in the UK and Germany – two countries known for rigorous cost-benefit analyses – suggests the product has a place.
But sales have disappointed. Last year ThromboGenics reported US revenue of $27m and Novartis $5m – and the Belgian company acknowledges that the product needs a big investment in physician education to improve the situation.
As part of its efforts to reinvigorate sales, ThromobGenics recently started a phase IV postmarketing study called Orbit, seeking to recruit 1,500 patients. The study is designed to demonstrate that more specific patient selection can improve outcomes, as well as confirm the product’s safety. An interim update could arrive at the end of this year, before the full readout in mid-2016.
Even if this is positive the benefits will not be felt for some time. So with much to prove it is perhaps not surprising that Alcon or any other ophthalmic player was unwilling to place a bet in the form of a bid for the whole company at this stage.
ThromboGenics might have more luck finding a partner, but the terms are unlikely to be anything close to what Alcon paid for ex-US rights – the deal included €75m up front. Again Alcon is the obvious choice, and again any lack of interest on its part could be interpreted negatively.
With €157m in cash at the end of the first quarter, ThromboGenics does not immediately need a deal. But unless Jetrea sales pick up its bank account will drain.
In the wake of a failed sale attempt it is already negotiating from a position of weakness. And, as time goes by and cash dwindles, that position will only grow weaker.