Arecor Therapeutics: Trinity Delta
Analyst: Lala Gregorek | |
135.0p (£41.35m) | Tel: +44 20 3637 5043 |
| Novel diabetes drug-device deal inked with Medtronic |
▪ Arecor has signed a collaboration with Medtronic, a leading global insulin pump manufacturer, to develop a novel, high concentration, thermostable insulin for use with a next-generation implantable pump. While precise deal economics are not disclosed, Medtronic will fund the formulation and development of an Arestat-enabled insulin. This insulin will be designed specifically with the profile to be delivered via an implantable pump. ▪ The deal provides further important external validation of Arecor’s formulation and development expertise, particularly in this case in relation to novel insulins tailored to address specific patient needs. In addition, it demonstrates that, despite its size, larger players are aware of Arecor and recognise its ability to potentially add significant value to their products. ▪ Medtronic (NYSE: MDT) is a multinational healthcare technology company active in several market segments (cardiovascular, neuroscience, surgical, and diabetes), with its Diabetes business (FY23 sales: $2.26bn) identified as one of the highest growth prospects. In contrast to its peers, Medtronic is investing across a range of technologies, including Smart Dosing systems, eg smart MDI (multiple dose injection) pumps and patches, and AID (automated insulin delivery) devices. The aim is to provide differentiated treatment options for diabetes patients with intensive insulin needs. ▪ Current innovation in diabetes treatment options to improve clinical outcomes and/or quality of life for patients is most focused on enhanced insulin delivery, with development of next-generation, miniaturised, devices with longer-wear times. However, to fully capitalise on their benefits, these advances in delivery technologies require novel specialist insulins. ▪ Arecor’s diabetes franchise includes two proprietary clinical-stage programmes that fall in the category of specialist device-enabling insulins: ultra-rapid, ultra-concentrated (AT278) and ultra-rapid (AT247). These remain a core focus for investors given the upside potential, with an important catalyst on the horizon: top-line read out of the second Phase I study of AT278 in Type II diabetes patients during H124. Trinity Delta view: A deal with a major insulin device player such as Medtronic is undoubtedly a coup for Arecor, providing the opportunity to develop a closer relationship as well as broadening its existing diabetes franchise. This expanding franchise, centred on AT278 and AT247, now includes this novel implantable insulin-pump device combination with Medtronic (addressing an underserved niche patient population), an earlier co-development deal with TRx Biosciences to develop an oral GLP-1 (March 2024 Lighthouse), and the commercial product Ogluo, sold in the UK and Europe via Tetris Pharma. However, foremost in investor minds is the upcoming clinical readout from the AT278 Phase I trial, which should inform next steps for development and potentially stimulate interest from possible partners or collaborators. Ahead of data, our valuation remains £179m, equivalent to 583p per share. |
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