AC Immune & Eli Lilly Modify Agreement For Tau Small Molecule

AC Immune announced that the company received a second milestone payment of CHF10M (swiss franc) from partner Eli Lilly.  This milestone was related to development of ACI-3024, an anti-tau small molecule.

Note: 1 CHF is equivalent to $1.02 USD

The two companies initiated a Phase 1 trial in July 2019, and the first milestone from Eli Lilly was CHF30M in September 2019. Initially, the agreement included a second milestone payment of another CHF30M by Q1 2020. This second milestone payment was modified to CHF10M (instead of the CHF30) and AC Immune will now be eligible for a new additional milestone payment of CHF60 million after dosing Phase 2.

Eli Lilly wanted to see Phase 1 data before committing more funding. Data from the study is expected 2H 2020, at the discretion of Lilly. We don’t view this modified deal as a positive. However, Phase 1 has proven to be a low hurdle in Alzheimer’s, as long as molecule is showing safety and promising pharmacokinetics.

ACIU cash balance at the end of 2019 was CHF 288.6M, enough to fund operations until Q1 2024. In USD, this is equivalent to $300M (1CHF = $1.04USD). Burn for 2020 will range between CHF 65‒80M. Using this guidance, pro-forma March 31 cash is ~CHF 270M (~$280M USD). Company has about $3.90/share and trades at $7/share.

5 clinical catalysts expected in 2020:

  1. Q2 2020: Semorinemab, an anti-Tau antibody partnered with Genentech, will report Phase 2 in prodromal/mild Alzheimer’s Disease. This will be the first Phase 2 readout of an anti-Tau antibody in AD.
     
  2. Q2 2020: ACI-35.030, an anti-Tau vaccine partnered with Janssen, will report Phase 1b/2a interim data in AD.
     
  3. 2H 2020: ACI-24, anti-Amyloid beta vaccine, reporting Phase 1b in AD-Down syndrome.
     
  4. 2H 2020: ACI-3024, a small molecule Tau inhibitor partnered with Eli Lilly, will report Phase 1 results. Data will be disclosed at discretion of Eli Lilly.
     
  5. 2H 2020: ACI-24, an anti-beta amyloid, will report interim 12-month Phase 2 data in AD.

ACIU has an EV of $250M, cash until 2024 and catalysts spread through remainder of 2020. Remember, Biogen is submitting their NDA for aducanumab in “early 2020”, which we think will have a spillover effect for ACIU (read thesis here). The company’s own noteworthy catalyst in Q2 will be data with Genentech using their anti-tau antibody. Positive results would position ACIU as the leader in the up-and-coming tau approach for AD. With a data hit, ACIU would be moving to late stage studies and warrant a valuation at least double it's current market cap. 

PropThink contributors are LONG ACIU

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