In a Sept. 5 research note, analyst Douglas Loe with Echelon Wealth Partners reported that Antibe Therapeutics Inc. (ATE:TSX.V; ATBPG:OTCQX) signed a $14.3 million licensing agreement with a South Korean company the same day for ATB-346, its Phase 2 naproxen analog drug, for knee osteoarthritis. "We continue to endorse today's deal as highlighting ATB-346's prospects," added Loe.
As for the terms of the arrangement, Kwang Dong Pharmaceutical will pay Antibe $1.3 million up front along with $13 million in milestone payments and royalties "for what we assume is likely to be a 10–15% range," Loe indicated. "Deal terms are incrementally more lucrative than for Antibe's prior regional partnership with Laboratories Acbel."
As for Kwang Dong, it has been involved in the development and manufacture of numerous health care products and therapies and has extensive experience with executing licensing agreements similar to this new one with Antibe, described Loe. The company sells various anti-inflammatory agents and "targets a distinct arthritis pain market." Its total revenue in 2017 was CA$1.34 billion.
Loe noted that although Echelon remains bullish on the potential for Antibe's ATB-346, it did not revise its forecasts for the drug or the company's stock based on the transaction's economics. In part, its estimates concentrate more on the company's North American and European prospects.
With respect to Antibe's ATB-346, Loe relayed, it is expected to increasingly generate royalty revenue, starting at an estimated $70.9 million in fiscal year 2024 (FY24), more than doubling to $172.9 million in FY25 and rising to $249.8 million in FY26.
Next for the drug candidate are two trials expected to start "in the coming weeks," Loe wrote. One is the Phase 2, 200-patient knee osteoarthritis pain study and the other, the 25-patient pharmacokinetic/metabolite identification trial. Data from both are tentatively scheduled for release in mid-2019.
Echelon has a Speculative Buy rating and a CA$1.40 per share target price on Antibe, whose share price is currently around CA$0.26.
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Disclosures from Echelon Wealth Partners, Antibe Therapeutics Inc., Sept. 5, 2018
Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.
I, Doug Loe, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.
Is this an issuer related or industry related publication? Issuer.
Does the Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer? Yes. If Yes: 1) Is it a long or short position? Long Position; and, 2) What type of security is it? Common Shares & Share Purchase Warrants.
Does the Analyst or household member serve as a Director or Officer or Advisory Board Member of the issuer? No
Does Echelon Wealth Partners Inc. or the Analyst have any actual material conflicts of interest with the issuer? No
Does Echelon Wealth Partners Inc. and/or one or more entities affiliated with Echelon Wealth Partners Inc. beneficially own common shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer? No
During the last 12 months, has Echelon Wealth Partners Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public offering, or private placement of securities of this issuer? Yes
During the last 12 months, has Echelon Wealth Partners Inc. received compensation for having provided investment banking or related services to this Issuer? Yes
Has the Analyst had an onsite visit with the Issuer within the last 12 months? Yes. Toronto, Company Head Quarters, March 22nd 2018
Has the Analyst or any Partner, Director or Officer been compensated for travel expenses incurred as a result of an onsite visit with the Issuer within the last 12 months? No
Has the Analyst received any compensation from the subject company in the past 12 months? No
Is Echelon Wealth Partners Inc. a market maker in the issuer’s securities at the date of this report? No