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Published to the market and investors on 6th September 2018 @ 7am (London time).

 

Abivax SA (ABVX-FR): Remarkable data opens door to $15bn IBD market
Recommendation: OUTPERFORM
Target Price: EUR19.50
Current Price: EUR7.39 (COB on 4^th September 2018)

KEY TAKEAWAY

Phase 2a ulcerative colitis ("UC") data indicates real promise for the ABX-464 in the $15bn inflammatory bowel disease ("IBD") market. A small early stage trial, positive read-out on all key parameters suggests real benefits from this oral once a day drug for patients seeking to avoid repeated intravenous infusions or at worst surgical bowel removal. Already showing promise in the depletion of latent HIV reservoirs, these new data should significantly de-risk the drug's path to market potentially opening the door to an even larger opportunity in inflammatory disease. We reiterate both our OUTPERFORM recommendation and EUR19.50 target price.

Statistically significant benefits - Although still a limited duration (8 week) early trial performed in just 32 patients, the trial demonstrated statistically significant improvements over placebo in both mucosal healing (4.5x) as well as clinical status (3.2x) in patients' refractory to either steroids or second or third line infused biologic anti-TNF (tumour necrosis factor).

Outcomes compares well to current drugs - While one must exercise due caution extrapolating from small early trial results to late stage studies, the impact on healing and clinical outcomes compare well with and could exceed the benefits of marketed products particularly tofacitinib from Pfizer recently approved for used in steroid refractory patients.

Safe and well tolerated - This trial and those in HIV suggest that the drug is safe and well tolerated with no evidence of the infections frequently associated with the with anti-TNF antibodies or small molecule anti-inflammatory drugs like tofacitinib. While one patient in the current Phase 2b left the trial due to elevated liver enzymes, this is apparently common amongst patients with IBD and may not be linked to the drug.

Opportunity to meet unmet need in substantial market - While the combined ulcerative colitis and Crohn's disease amounts to around $15bn, significant numbers of patients are refractory to therapy. There is a substantial opportunity in IBD and potentially more broadly in the broad range of currently inadequately served inflammatory indications. Combining anti-inflammatory effects with viral reservoir depletion should also make the ABX-464 a more compelling proposition in HIV.

Further data and trials in prospect - First data showing a sustained response from the open extension element of the Phase 2a UC trial is due to report late October. A further dose ranging Phase 2b in UC is planned, as well as a trial in Crohn's disease.

Under-valued at current levels - Funded through Q1/2020E following a EUR20m debt financing secured in July 2018 and based on this encouraging study, the company looks well placed to generate significant additional data from the Phase 2b trials in UC and HIV. We reiterate both our OUTPERFORM recommendation and EUR19.50 target price.

Kind regards,

Chris Redhead | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

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