Antibe Therapeutics has a 192 per cent upside, Echelon Wealth says

In a coverage launch on Thursday, Echelon Wealth Partners analyst Douglas Loe says clinical stage drug developer Antibe Therapeutics (Antibe Therapeutics Stock Quote, Chart, News: TSXV:ATE) has positive Phase II data on a drug that could benefit patients with chronic pain who take non-steroid anti-inflammatory drugs (NSAIDs).

Loe rates Antibe a “Speculative Buy” with a one-year target price of $1.40, implying a projected return of 192 per cent.

Formally incorporated in May of 2009, Antibe went public on the TSX Venture in June of 2013.

The company’s lead pain drug, ATB-346, is a patented hydrogen sulfide-releasing derivative of the NSAID naproxen, which was genericized by the FDA in 1994. As the analyst explains, hydrogen sulfide, the rotten egg-smelling colourless, flammable and water-soluble gas, can be fatal if inhaled at moderate concentrations, but at much lower levels, it can act as an anti-inflammatory, cytoprotective and pro-healing drug for the gastrointestinal tract, potentially mitigating the gastro-duodenal ulcers and bleeding that can arise from chronic NSAID use.

“[Hydrogen sulfide’s] activity has long been known and is well-characterized in the medical literature, but the challenge until recently has been how to design hydrogen sulfide-releasing analogs of pharmacologically active agents that actually release hydrogen sulfide, that do so in a way that confers measurable and not just theoretical impact on disease processes, and that preserve the core activity of the agent being modified,” says Loe. “We now have strong Phase II data showing that ATB- 346 embodies all three elements, enhancing naproxen’s medical utility in the process.”

The highest profile naproxen is currently Bayer’s consumer brand Aleve, which the analyst reports had annual sales in F2017 of C$586 million, which provides a “solid foundation onto which a superior formulation like ATB-346 could be layered,” he says.

Currently, the company has just one revenue-generating division, from Citagenix, which specializes in the sale of dental medical therapies and instruments. Loe’s revenue forecasts are split between growth for the Citagenix franchise and projections for Antibe’s ATB-346.

For Citagenix, the analyst forecasts annual revenue growth of five per cent, which turns into annual sales of $13.7 million by F2028 at 55 per cent gross margin. For ATB-346, Loe puts the conservative approval date at FH1 of 2024, with the launch in FH2 of 2024.

“We do expect that by time of approval, Antibe would have identified suitable distribution partners and so derive royalty revenue from ATB-346 at a rate of 30 per cent, an aggressive but achievable royalty rate, in our view, if cash-contributing partners are identified during Phase III testing,” says the analyst. “In the first year of approval, F2024, we project ATB-346 to achieve royalty revenue of $70.9 million, then increasing to $166.6 million in F2024, and up to $239.6 million in F2026; F2025 is the reference year in our EBITDA/EPS- based valuation methods.”