Arix’s Artios Pharma enters global research collaboration with Novartis
(ARIX ) has told investors that its portfolio company, Artios Pharma, has entered into a global research collaboration with the global healthcare group, Novartis to discover and validate next generation DDR targets to enhance Novartis' Radio ligand Therapies (“RLT”).
Arix describes Artios as a leading DNA Damage Response (“DDR”) firm exploiting synthetic lethality to develop a broad pipeline of precision medicines for the treatment of cancer. Arix is the largest shareholder in Artios, with a 12.4% ownership stake on a fully diluted basis.
Today’s unveiled global research collaboration with Novartis will see both parties discover and validate next generation DDR targets to enhance Novartis' therapies.
The agreement is a three-year collaboration in which Artios and Novartis will perform target discovery and validation, and Novartis will select up to three exclusive DDR targets.
Novartis, which will receive worldwide rights on these targets to be utilised with its RLTs, will pay $20m upfront and provide near term research funding to support the collaboration.
Artios will be eligible to receive discovery, development, regulatory and sales-based milestones and royalty payments on net sales of products commercialised by Novartis.
The group said the collaboration does not include Artios' lead programmes, ART0380, which is currently in clinical development, and ART4215, a first-in-class Pol Theta inhibitor.
Commenting, Naseem Amin, Executive Chairman at Arix and Artios Board Director, said, "This collaboration will exploit Artios' innovative discovery technology to build a pipeline of RLT combination therapies that can change the current paradigm in cancer treatment.”
Amin added, “Following the recent multi-billion dollar deal with Merck, the collaboration with Novartis further strengthens Artios' leadership in the field of DDR. We are proud to continue supporting Artios as it becomes a clinical-stage precision medicine company.”
Artios stated back in February that it has undertaken preclinical work to characterise and differentiate the group’s lead candidates and that it expects to advance its two programs, ART0380 and ART4215, a first in class Pol theta inhibitor, into the clinic by end of 2021.
In its recently published FY20 results, Arix said it had seen its portfolio continue to mature over the past year, passing a number of key milestones. It said it has also increased its NAV by 62% to £328m, moving it ‘significantly closer’ to its year-end 2023 NAV target of £500m.
Shares in Arix have increased by nearly 80% in value since the beginning of 2021. The stock was trading 1.47% higher this morning at 190.76p following the announcement.
Reasons to ARIX
Arix Bioscience plc is a global venture capital company focused on investing in and building breakthrough biotech companies around cutting-edge advances in life sciences.
Hardman and Co. research said that last year’s “strong interim results, which saw the NAV rise 24% to £251.0m, highlighted the enormous disconnect between this and its share price. ARIX has prioritised 11 portfolio companies on which to focus its resources and expertise.”
The investment research firm highlighted that these portfolio companies have “a number of important value inflection points - mostly clinical events - over the next 12-18 months.”
Not only did results for 1H20 exceed market expectations, but as at 30 June 2020, ARIX had £44m of cash to support existing portfolio companies, early-stage companies, and operations.
Arix refocused and streamlined the business by significantly reducing net operating costs by over 35% to an annual run rate of around £5m by the end of 2021 down from £8m in 2019. Pre-tax profit therefore turned positive to £48.96m compared to a loss in 1H19 of £44.81m.
During the 1H20 period, Arix’s portfolio companies raised $392m of working capital, while since its inception, ARIX has deployed £149m into its portfolio, realised £13m through opportunistic divestments, and generated an IRR of 20% (realised and unrealised).
Arix’s portfolio continues to make ‘strong progress’, with a number of companies reaching important clinical milestones and completing further financing rounds at higher valuations.
‘With a number of upcoming clinical events, ARIX has set an aspirational target to make an annual IRR of 15%-25%, and produce an NAV of £500m by the end of 2023,’ said Hardman.
Looking ahead, Arix cited potential for M&A, strategic partnerships and other financing events which could significantly increase the value of its companies, and in turn its NAV.
‘Whilst the development of important new medicines always carries risk, over the next three years we expect to see at least two additional IPOs across the portfolio and at least two exits.’
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