Merrill 6-25-21 report says:
Cortexyme, Inc
Updating our atuzaginstat pricing
assumptions following Aduhelm approval
Reiterate Rating: NEUTRAL | PO: 58.00 USD | Price: 51.66 USD
Aduhelm sets a pricing precedent in AD
Following the recent approval of BIIB’s (covered by Geoff Meacham) amyloid betadirected antibody, Aduhelm (aducanumab), in Alzheimer’s disease (AD), we are revisiting
our CRTX model to update pricing assumptions for atuzaginstat (COR388) in AD to
directionally reflect how BIIB priced Aduhelm (~$56K/year for maintenance dosing). We
increase our pricing assumption for atuza’ to $30K from $15K in the US ($15K from
$7.5K ROW), based on conversations with mgmt, and assume no annual price increases
(prev. 5%) as BIIB has pledged not to raise prices near term. We note our price
assumption is lower than Aduhelm, as we acknowledge there is public pushback on
Aduhelm price given the large addressable population and lack of supportive functional
data. We are not updating our likelihood of success (LoS) for atuza’ in AD as we don’t
know, based on the approval of Aduhelm, if the FDA has changed their perspective on
regulatory requirements for AD. Also, atuza’s MOA of targeting gingipain (bacterial toxin)
is different from Aduhelm’s mechanism, thus we think there is little read through to
CRTX’s program. Recall atuzaginstat is currently in the ongoing phase 2/3 GAIN trial in
mild-to-moderate AD with topline data expected in 4Q (more below), and the open label
extension portion of the trial was placed on partial clinical hold following a review of
hepatic adverse events. We continue to view AD as an indication in high need of
disease-modifying therapies, but we await further validation of the gingipain mechanism
and clarity on the long-term safety profile to better evaluate atuzaginstat’s role in
treating the disease. In our DCF-based model we also we roll the qtr. Atuzaginstat in AD
is currently the primary driver in our model contributing $52/sh to our PO with
estimated risk-adj. peak sales of $1.7bn by 2035 under our 10% LoS and 15% US/ 10%
ROW peak market share assumptions. Our model changes result in a new PO of $58
(previous $40) as we reiterate our Neutral rating.
GAIN readout by YE is next major catalyst
Recall GAIN passed its interim futility analysis in December with the Data Monitoring
Committee’s decision to continue as planned with 643 subjects. The co-primary
endpoints are changes from baseline in ADAS-Cog11 and CDR-SB at wk 48, and topline
is expected in 4Q. GAIN also has a dental substudy (n=233) on pocket depth and clinical
attachment level that will potentially provide proof of concept in periodontal disease.
