Shares of uniQure (QURE) are under pressure on Thursday after the company announced it has entered into a licensing agreement with CSL Behring, providing the latter with exclusive global rights to etranacogene dezaparvovec, uniQure's investigational gene therapy for patients with hemophilia B. Following the news, both Wells Fargo and Mizuho downgraded the stock to Neutral-equivalent ratings, while Stifel analyst Paul Matteis cut his price target for uniQure as the partnership will be viewed as taking M&A off the table for now.
LICENSE DEAL FOR HEMOPHILIA B GENE THERAPY: uniQure and CSL Behring have entered into a licensing agreement providing CSL Behring with exclusive global rights to etranacogene dezaparvovec, uniQure's investigational gene therapy for patients with hemophilia B. Etranacogene dezaparvovec consists of an AAV5 viral vector carrying a gene cassette with the patent-protected Padua variant of Factor IX, or FIX-Padua. Under the terms of the agreement, uniQure will receive a $450M upfront cash payment and be eligible to receive up to $1.6B in payments based on regulatory and commercial milestones. uniQure will also be eligible to receive tiered double-digit royalties in a range of up to a low-twenties percentage of net product sales arising from the collaboration.
uniQure expects that the agreement will provide additional capital to accelerate and expand its pipeline of gene therapies, including advancing the Phase I/II study of AMT-130 in Huntington's disease, initiating IND-enabling studies of AMT-150 in spinocerebellar ataxia type 3, selecting a lead candidate in Fabry disease and progressing other current and new candidates for central nervous system disorders and rare liver-directed diseases. uniQure plans to strengthen its proprietary gene therapy platform by expanding its manufacturing capacity to support a broad pipeline, including product candidates for diseases with larger prevalence, as well as investing further in new technologies to improve the efficacy, safety and applicability of its gene therapies to patients. uniQure also plans to de-prioritize its research program of AMT-180 for patients with hemophilia A.
MOVING TO THE SIDELINES: Wells Fargo analyst Jim Birchenough downgraded uniQure to Equal Weight from Overweight with a price target of $56, down from $90, following the global licensing deal with CSL Behring for hemophilia B gene therapy etranacogene dezaparvovec. While the deal provides significant commercial expertise and global reach in the hemophilia category, the analyst believes it also highlights the heavy lifting required for gene therapy success in a category described as having low unmet need and that is well served and could suggest slower uptake than previously assumed.
Mizuho analyst Difei Yang also downgraded uniQure to Neutral from Buy with a price target of $61, down from $90, following the announcement of the $2B licensing agreement with CSL Behring for commercialization rights to AMT-061 for hemophilia B. The deal fairly values AMT-061, said Yang, who also likes the deal from a strategic standpoint. The analyst believes the Huntington's program now becomes the key value driver for uniQure and upcoming initial safety and efficacy data are likely to be important potential catalysts for the shares.
M&A LIKELY SEEN OFF THE TABLE FOR NOW: Stifel analyst Paul Matteis lowered the firm's price target on uniQure to $78 from $86, while keeping a Buy rating on the shares after the company outlicensed AMT-061, its AAV5 gene therapy program in hemophilia B, to CSL Behring. Calling it “a surprising transaction,” the analyst argues that the deal "will inevitably be seen as a mixed bag by investors." Matteis thinks a hemophilia B partnership will be viewed as taking M&A off the table for now and has removed some M&A credit from his valuation. Nonetheless, the analyst’s Buy thesis remains unchanged as the monetization of AMT-061 offers "pretty compelling value," while the deal also validates uniQure's platform and the probability of success of AMT-061.
Keeping a Buy rating on the shares, H.C. Wainwright analyst Debjit Chattopadhyay also lowered the firm's price target on uniQure to $64 from $73. Licensing lead asset AMT-061 to CSL Behring puts the takeover thesis on the back burner, which implies a churn in the shareholder base, Chattopadhyay told investors in a research note of his own. However, associating the right M&A value to the company was unlikely until proof of concept data from AMT-130 became available during the first half of 2021, the analyst added. Hence, Chattopadhyay acknowledged that licensing AMT-061 to an established hematology franchise "was the next best alternative, and the overall deal structure appears compelling."
Also commenting on the news, Guggenheim analyst Whitney Ijem said she was "caught a bit off guard" by uniQure's announcement of a hemophilia B licensing deal with CSL, which was "not the M&A some investors were hoping for." AMT-061, which previously represented about $27 of her fair value estimate, decreases to $8 post deal, although this is partially offset by the $7 increase in cash per share, the analyst said. She keeps a Neutral rating on uniQure shares as she thinks current levels reflect the AAV5 platform, wholly owned manufacturing and the pre-clinical Huntington's disease value. However, Ijem pointed out that she could be more constructive on the shares post any selloff on this transaction.
PRICE ACTION: In afternoon trading, shares of uniQure have dropped about 21.5% to $49.40.
