Comment on Pharma Equity Group’s Notification from the EPO Granting Their Patent for the Drug Candidate RNX-022

Pharma Equity Group (“PEG” or “the Company”) announced on Tuesday, March 5th, that the Company’s subsidiary Reponex Pharmaceuticals A/S (“Reponex”) has received notification from the European Patent Office (EPO) regarding the decision to grant their patent for drug compositions for promoting the healing of wounds (RNX-022).

The announcement signifies a milestone as the EPO has approved EP patent No. 3145533, encompassing Reponex’ innovative treatment method. This method consists of topically applying a hydrogel containing granulocyte-macrophage colony-stimulating factor (GM-CSF), sucralfate, and hyaluronan to accelerate wound healing. The combination helps stimulate the proliferation of cells related to the healing process and tissue regeneration.

Analyst Group’s view

“Analyst Group assesses that the granted patent application marks a milestone in PEG’s IP and out-licensing strategy, as it provides legal protection for the Company’s drug candidate and serves as an important asset during negotiations with potential licensing partners. The global chronic wound care market is estimated to witness steady growth in the coming years, as exemplified by a report from Fortune Business Insight, where they estimate that the global chronic wound market was valued at USD 12.5bn in 2022 and is expected to grow at a CAGR of 6.8%, reaching USD 21bn by 2030.1 The increasing prevalence of diverse chronic wounds worldwide creates a significant need for treatment products, leading to increased adoption of wound dressings, devices, and other related products. Moreover, the growing elderly population is anticipated to drive market growth, given that the senior demographic often experiences slower healing capabilities.

Analyst Group estimates a prevalence of 8.5m patients suffering from chronic wounds in PEG’s target markets by 2024, with the Company potentially reaching a peak market share of approximately 2.8% (2030-2034E). The figure below illustrates Analyst Group’s estimated pre-risk-adjusted royalties during the forecast period, where candidates targeting the indication area of chronic wounds serve as a significant part of the total potential royalties. It’s worth mentioning that PEG currently has three candidates addressing the chronic wound market (RNX-021-023), all in Phase II. Consequently, the potential royalties from RNX-022 are included in the potential royalties from Chronic Wounds. Another important aspect to mention is that the patent is valid until 2035 but has the option to be granted a Supplementary Protection Certificate (SPC), which would extend the validity for an additional five (5) years, lasting until 2040. This is accounted for in our Bull scenario. In summary, the indication area targeted by RNX-022 presents immense potential, offering PEG a substantial market share opportunity. A granted patent not only strengthens PEG’s IP portfolio but also opens doors to strategic partnerships, potential royalty streams, and consequently, potential cash flows.”

Analyst Group’s View of Pharma Equity Group:

Pharma Equity Group (“PEG” or “the Company”), through the Company’s subsidiary, Reponex, employs a drug repositioning strategy, which involves finding new uses for active substances used in previous recognized treatments, thus allowing the Company to circumvent phase I trials. PEG has a pipeline of six candidates in Phase II, targeting therapeutic areas such as Peritonitis, Chronic Wounds, IBD, and Colorectal Cancer, where there is currently no adequate treatment. The business strategy involves out-licensing the programs after Phase II to a pharma company capable of bringing the drugs to the market. PEG’s strategy enables a capital-light and highly scalable business model, offering a shorter route to market with equivalent upside potential, yet mitigating the typical risks associated with the pharmaceutical industry. Based on an rNPV-model, a potential present value per share of DKK 1.4 is derived in a Base scenario.

You can access our initial analysis of Pharma Equity Group here, and also watch a recent interview with the CEO, Thomas Kaas Selsø here.