Vator Securities: Xbrane Biopharma: Pop up on your boards – “the third wave” of biosimilars is rather a tsunami.

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Xbrane provides an exceptionally attractive exposure to the rapidly growing biosimilars market without the significant clinical and approval risk that is often present in biotech companies.

2019 proved to be a real tipping point with rapid uptake of the more recent biosimilar launches. It is nowadays  trivial to question the attractiveness of the biosimilar market opportunity; the interesting question is rather which players have the best fit to capture this opportunity. We believe that Xbrane stands well-positioned for this with Xlucane progressing through the low-risk pivotal phase III study and with well-reputed, established commercial partners covering Europe and North America targeting global launch in mid 2022.

With the recent progress, Xbrane has reinforced its ownership base with institutional investors and secured funding to take Xlucane to the market and accelerate development of the preclinical candidates that are biosimilars to Opdivo (Xdivane) and Cimzia (Xcimzane). Moreover, the exclusive licensing agreement with Bausch + Lomb – a global leader in eye health with a well-established sales infrastructure to leverage - for commercialization of Xlucane in the US and Canada is a significant de-risking factor that maximizes the likelihood of a successful launch and rapid market penetration. The competitors that will launch the two other Lucentis biosimilars in North America are far from having a comparable sales presence in ophthalmology.

We view the increasing focus on other pipeline candidates as an important step. We see Xdivane and Xcimzane as particularly interesting assets and expect the advancements of these to be key long-term value drivers for Xbrane, offering significant upside to our base case with Xlucane.

We maintain the Outperform rating and raise the target price to SEK 155 per share, corresponding to an equity value of SEK 3 billion non-diluted, derived from a project-based, risk-adjusted DCF valuation of the lead asset Xlucane with fairly conservative estimates; real-world data on biosimilars supports an even more bullish outlook. As the majority of development risk-reduction is achieved early on in biosimilar development, we will include Xdivane and Xcimzane in our model as Xbrane provides updates on preclinical progress and data packages

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