Industry Trend Analysis - Takeda Investment Highlights Growing Confidence In TiGenix - MAR 2017


BMI View: Takeda's equity investment in TiGenix, coinciding with a recent US IPO, highlights a growing confidence in TiGenix and its lead product, Cx601, for treating complex perianal fistulas in Crohn's disease. Although Cx601 has yet to be commercialised, and TiGenix has yet to make a profit, development of the drug is progressing smoothly. Should Cx601 be approved and launched in the US and the EU, it will be poised to become a blockbuster drug filling an underserved niche.

Takeda has exercised the option granted under a licensing agreement between it and TiGenix to make a EUR10mn (USD10.4mn) equity investment in TiGenix. Takeda Pharmaceuticals International will be subscribing some 11.7mn new ordinary shares at an issue price of EUR0.858 (USD0.895) per new share. The issue price is equal to the average closing price of TiGenix' share on Euronext Brussels over the 30 day period preceding the date on which the issuance of the New Shares commenced and represents a 23% premium over that day's closing price on Euronext Brussels. The issuance of the new shares is anticipated to commence by the end of the first week in January 2017.

On July 4 2016, Takeda and TiGenix entered into an exclusive ex-US licence, development and commercialisation agreement for Cx601 for the treatment of complex perianal fistulas in patients with Crohn's disease (CD). The licensing agreement also provided for Takeda to make an equity investment of EUR10mn in the share capital of TiGenix within the 12 months following the date of the licensing agreement. TiGenix commented that the additional funds from Takeda will allow it to remain fully focused on progressing with the MAA for Cx601 in the EU, the launch of its Phase III trial to register Cx601 in the US and advancing with other clinical assets in its pipeline.

Cx601 is a suspension of allogeneic expanded adipose-derived stem cells injected intralesionally. It is being developed for the treatment of complex perianal fistulas in CD patients. In 2009, the EC granted Cx601 orphan designation for the treatment of anal fistulas, recognising the debilitating nature of the disease and the lack of treatment options; this will give the product ten years' market exclusivity from the date of marketing authorisation.

TiGenix: Timeline Of Cx601 Events
Year Event
Source: TiGenix
2012 Cx601 European Phase III trial initiated
2014 Cx601 European Phase III trial completion of patient recruitment
Submission of US trial design for Cx601 to the FDA for Special Protocol Assessment
2015 Exclusive agreement with Lonza for the manufacturing of Cx601 in the US
Cx601 start of MAA process
Cx601 Phase III registration trial in the US obtains FDA agreement through Special Protocol Assessment
Cx601 European Phase III trial meets primary endpoint
2016 MAA submitted to EMA for Cx601 in Q116
Takeda and TiGenix enter exclusive ex-US licence, development and commercialisation agreement for Cx601
2017 Pivotal Phase III trial for Cx601 for treatment of complex perianal fistulas anticipated to be initiated in US by H117
Launch of Cx601 in Europe anticipated in H217

TiGenix has previously noted that complex perianal fistulas in CD patients tend to occur in individuals between the ages of 20 and 40, though 10-15% of patients are diagnosed before adulthood. For CD patients with complex perianal fistulas, treatments of choice are antibiotics and azathioprine or 6-mercaptopurine, as first-line therapy, and infliximab as second-line therapy; this is currently the only approved biologic for fistulising CD. However, TiGenix noted, both offer limited long-term efficacy and can have notable side effects. Around 120,000 adult patients in the US and Europe are affected by the condition.

Takeda Funds Coincide With IPO

In December 2015, TiGenix filed a registration statement with the US Securities and Exchange Commission (SEC) for a proposed initial public offering (IPO) of its American Depository Shares (ADSs) to be listed on the NASDAQ Global Market in the US. The company's ordinary shares are listed on Euronext Brussels. A year later, TiGenix announced that it intended to offer and sell, subject to market and other conditions, 2.75mn ADSs, representing 55mn ordinary shares in the IPO. The IPO closed on December 20 2016. TiGenix reported that the firm raised gross proceeds of USD35.65mn from the sale of 2.3mn ADSs, representing 46mn ordinary shares, at a price to the public of USD15.50 per ADS.

TiGenix was incorporated in 2000; Cx601 is the firm's most advanced product, but as yet it has not launched any products. This is reflected in the firm's financial results. TiGenix reported total revenues for FY15 worth EUR2.2mn (USD2.5mn), compared to revenues of EUR6.3mn a year earlier. Royalties accounted for EUR0.5mn (USD0.6mn) of this in FY15, up from the EUR0.3mn reported for FY14. However, grants and other operating income fell from EUR5.9mn in FY14 to EUR1.7mn (USD1.9mn) in FY15. Overall, TiGenix made a loss for the year in FY15 of EUR35.1mn (USD38.mn), compared to a net loss of EUR13.0mn a year earlier.

TiGenix Not Yet Profitable
TiGenix' Top-Line Financial Results (EUR000s)
Source: TiGenix

Clearly the financial assistance from Takeda will be welcome for TiGenix. However, that, coupled with the successful IPO, reflect confidence in TiGenix' pipeline and research abilities, and the potential rewards of Cx601 and other products under development.

TiGenix has estimated that CD affects around 180 people per 100,000 in the EU, and around 190 per 100,000 in the US. This gives a total prevalence in these markets of around 1.5mn people with CD, of which 93%, or 1.4mn are adults. Complex perianal fistulas tend to occur in individuals between the ages of 20 and 40; around 11% of CD patients will develop a perianal fistula, or around 158,000 of the 1.4mn adults. Of the 158,000, around 118,000, or 75%, will develop complex perianal fistulas.

TiGenix noted in its most recent annual report that the burden of perianal fistulas in CD is high, both to the individual patient and to the healthcare provider. In 2010, the firm commissioned a study by IMS that concluded that the total median cost of treatment of a patient with complex perianal fistulas resulting from CD was around EUR34,000 (USD37,441) per patient, of which around EUR20,000 (USD22,025) was spent on pharmaceutical treatment. With a target population of around 50,000 in Europe and 50,000 in the US, and assuming a sales price roughly equivalent to the median cost of pharmaceutical treatment used to treat fistulising CD, TiGenix estimates that Cx601's target market is around EUR2bn (USD2.2bn) for Europe and the US combined. Whilst there are other products in development that will compete with Cx601, should the drug candidate reach the market ahead of competitors, it will corner a blockbuster opportunity.