Aptevo Therapeutics (APVO): Commercial Products Support R&D Spinout
By Edward Kim
May 23, 2017
•3 min read
We’ve been following a biotechnology company that is among the rare few at the microcap end of the spectrum that is generating revenue while developing the next generation of therapeutic products. Aptevo Therapeutics (NASDAQ: APVO) was spun out of Emergent
BioSolutions (NYSE: EBS)
Emergent shareholders clearly had little interest in their new Aptevo shares, and the bottom fell out of the stock in the first week of trading. Shares have drifted to the $2.00 level since then, and we believe the market may not fully appreciate the value in Aptevo. The company has four commercial products that have generated $36 million in trailing 12-month revenue through March 2017, $61 million in cash on the balance sheet as of March 2017 and a current market cap of less than $45 million.
Commercial Products
Aptevo has four commercial products in the areas of hematology and infectious diseases:
- WinRho SDF: Immune Thrombocytopenic Purpura
(ITP) and suppression of Rhesus (Rh)
isoimmunization - HepaGam B: Prevention of hepatitis B recurrence
following liver transplantation in HBsAg positive
patients and post exposure
prophylaxis after acute hepatitis B exposure - VARIZIG: Post-exposure prophylaxis of varicella
zoster in high risk individuals - IXINITY: Intravenous recombinant
human coagulation factor IX
therapeutic for use in patients
with Hemophilia B
The first three immunological products above are mature, well established products serving niche or ultra niche markets. They represent a stable, dependable revenue base of $25-$30 million annually, throwing off $10 million in annual cash flow. The IXINITY product for hemophilia B patients represents a growth market for the company.
Development Pipeline
Aptevo’s core technology is the ADAPTIR modular protein technology platform, a novel approach for the generation of immunotherapeutics. The company is developing immunooncology candidates that focus on redirected T-cell cytotoxicity (RTCC)
Source: Aptevo Therapeutics Investor Overview, May 2017
In pre-clinical studies, ADAPTIR candidates have been shown to possess:
- High potency, inducing target-dependent cytotoxicity at low concentrations
- Extended serum half-life that enables less frequent administration
- Reliable antibody-like manufacturing processes
Aptevo is currently in clinical trials with its ADAPTIR candidates for chronic lymphocytic leukemia (CLL) in combination with complementary drugs and for metastatic castration resistant prostate cancer (mCRPC).
Source: Aptevo Therapeutics Investor Overview, May 2017
Aptevo’s commercial revenue helps support its R&D efforts and, together with the cash on the balance sheet, provides runway into 2018. Investors should anticipate additional capital being raised by then, but the current valuation still seems attractive. At less than $45 million in market cap, you’re almost getting a free call on the entire clinical and preclinical portfolio.
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