Yuanta Securities Investment Consulting Co (元大投顧) yesterday downgraded its rating on TaiMed Biologics Inc (中裕新藥) to “hold” from “buy,” citing concerns over the company’s choice of distribution partner for its new HIV/AIDS drug TMB355.
TaiMed on Friday last week announced that it has signed a 12 year exclusive collaboration agreement with Montreal-based Theratechnologies Inc to market and distribute TMB355 in the US and Canada.
However, the market was expecting TaiMed to partner with GlaxoSmithKline PLC and Pfizer Inc, which jointly established ViiV Healthcare in 2009 — a company specializing in in the development of HIV therapies — Yuanta analyst Peggy Lee (李珮菁) said in a note published yesterday.
“We feel that the choice of partner represents the best balance between operating scale and payment obligation terms,” Lee said.
Under the deal with Theratechnologies, TaiMed is to be paid US$1 million in cash and US$2 million in the Canadian company’s stocks this year, Lee said.
For next year, the Canadian company is to pay US$1 million in stocks and an extra US$5.5 million in cash, while TaiMed is to receive 52 percent of the drug’s net sales.
That compares with a previous expectation of US$15 million upon signing and an additional US$5 million upon regulatory approval this year, as well as US$25 million in milestone cash payments and 50 percent of net profits of the drug for the next year.
Due to TaiMed’s distribution partner selection, expected earnings per share (EPS) has been slashed from NT$1.25 to a loss of NT$0.67 per share for this year and from an EPS of NT$1.95 to a loss of NT$0.39 for next year, Lee said.
The Canadian company reported sales of C$30 million (US$22.97 million) for last year and its market capitalization stood at around US$93 million dollars, Lee said, adding that Theratechnologies’ scale might be too small.
“We will be watching if Theratechnologies bundles the TMB355 with EGRIFTA, a treatment for HIV-associated abdominal lipohypertrophy, and whether it will transfer the package to larger international pharmaceutical players,” Lee said.
Despite the outcome, Lee said that the partnership has set a roadmap toward the drug’s commercialization once TMB355, also known as Ibalizumab, receives regulatory approval.
Meanwhile, TaiMed president and chief executive officer James Chang (張念原) said that he is upbeat on the more favorable percentage of sales terms offered by the Canadian, compared with other sector giants.
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