The announcement of a partnership with Roche caused the value of Montreal biotech Thérapeutiques Repare to explode by nearly 45% on Thursday.
Updated yesterday at 4:18 p.m.
Investors are appreciating the transaction to the point of adding $175 million in market value to Repare in one day and thereby boosting the company’s valuation to over half a billion.
The license and collaboration agreement between the two companies covers the development and commercialization of the product camonsertib (also known as RP-3500) for the treatment of highly targeted tumors.
We talk about treatment because in general for drugs in oncology, it is a question of survival time or slowing the progression of the disease.
The agreement with Roche provides for an upfront payment of US$125 million to Repare. The Montreal company is also eligible to receive up to US$1.2 billion upon reaching various clinical, regulatory and commercial milestones.
Roche will assume the development of camonsertib with the possibility of expanding the development to other tumors and multiple combination studies.
The product is still in clinical trials. Its commercialization is not expected for several more years, and this is why the size of the market remains difficult to assess.
“When a product is marketed, the first specific disease that the product is approved for normally goes through something smaller before moving forward with broader indications,” said Steve Forte, chief financial officer, in an interview. Repair.
PHOTO PROVIDED BY REPARE
Steve Forte, CFO at Repair Therapeutics
The company recently presented preliminary data related to ovarian and prostate cancer, but there is greater potential for the product, says Steve Forte.
The value of partnering with Roche is the scale, resources and international reach that the pharmaceutical company brings to move the project forward effectively.
Steve Forte believes that this is great news for the industry in general, especially in Canada and Quebec. “We are doing cutting-edge research in a sub-niche of an already specialized niche. We are not only in oncology, but also in precision oncology. »
It’s a great transaction for Montreal to see that a global company like Roche is turning to Montreal.
Steve Forte, CFO at Repair Therapeutics
According to him, the agreement says a lot about the skills of researchers in Quebec, and in particular at Repare.
Analyst Opinion
Bloom Burton analyst David Martin argues that Repare is finally getting the respect it deserves. “This agreement validates the value of Repaire,” he underlines in a note sent to his clients.
The expert recalls that he had previously called camonsertib the “Rodney Dangerfield of oncology drugs” because he felt the market was not giving the product the respect it deserved. The situation was explained in particular, according to him, by exaggerated expectations and the general weakness observed in the sector.
At Guggenheim, analyst Charles Zhu believes that “lukewarm sentiment” among investors toward camonsertib has often been misaligned with clinician enthusiasm in the past even after promising data came out.
His colleague Joseph Catanzaro of Piper Sandler called the deal a “good deal” for Repare because it allows the “potential utility of the product to be fully explored” while offloading the costs of development and retaining the ability to participate in long-term potential.
“Furthermore,” he adds, “the agreement funds Repare through 2026 and allows it to aggressively move forward with the rest of its line of products in development in precision oncology. »
David Martin adds that this agreement is one of the largest licensing awards in the biopharmaceutical sector that he has seen in the last 18 months.
After initially pricing its stock at US$20 in its initial public offering in June 2020, Repare’s stock had breached the US$40 mark in January last year before falling as low as to $8 in May in a descent mirroring that of the stock market as a whole in connection with the macroeconomic context, inflationary fears and the rise in interest rates.
Repare was founded in 2016 by researchers and professors Daniel Durocher, Frank Sicheri and Agnel Sfeir.
As of early April, Repare’s cash position was just over US$300 million. The company suffered a net loss of 21 million during the first quarter of the year.
Of the 10 analysts with their eye on Repare, 9 recommend buying the stock.