This is another framework post and a fantasy, knowing THTX has a lot more to do before they’d remotely look like this. All the usual forward looking statements apply! I wanted to see what the revenue streams look like for ADC/PDC type drugs in indications like some of the ones THTX are going after in order to see what exactly is this option we all now have for free and what could it be worth over the next two years. In some ways, the financial model of Immunomedics may be a useful model to look at for THTX.
They are ADCs and have a TNBC drug just approved (Trodelvy) one in urothelial they’re about to launch and a few extensions of the TNBC one which may combine a different drug (a valuable option for these platforms if they work). As we know, Gilead swooped in and bought them for $21billion a few months ago. There may be a slight difference in the type of TNBC tumors THTX and Trodelvy are going for, but it’s instructive nonetheless. By way of comparison, normal chemo’s for TNBC have 10% response rate or less and stall progression 1.5 to 2.5 months. Trodelvy shrank tumors in 30% of responders and stalled outcome by 5.5 months. Sadly, that’s the definition of a blockbuster. It got Accelerated Approval after Phase 2 data in April 2020. Phase 1 was done in Feb 2019. THTX Phase 1 is about 2 years after that.
They are showing small revenues a year after the 2019 Phase 1. I suppose they got some compassionate use and it was approved toward the end of 2020. If we are optimistic, THTX is at most roughly 2.5-3 years behind where they are now if things go as planned. Perhaps that 2020 revenue for IMMU which corresponded to Trodelvy being past the Phase 1 and 2 and completing Phase 3 in 2020 (Sep 2020), is where they’d be in 2022. So in Phase 3 year they already had $168mil of revenue from the drug. Thus it appears you can monetize a bit after a Phase 2 if it’s effective (>10% ORR and adding 3-4 months longevity). I have to think that post any Phase 1 data showing safety and efficacy that the market will begin discounting this huge revenue stream pretty quickly. It did for IMMU — the share went up 4x after the Phase 2 data and had a market cap of around $8-9bil post the good Phase 2 data and prior to the Phase 3 data. They do have other products and a pipeline, but then again so does THTX.
I was interested in just seeing what the pattern of revenues looks like for these kind of indications and what they are worth in market cap. Here is the ramp of the brand new Trodelvy, Urothelial and other TNBC revenues according to Barclays. They attach another $2bil for the pipeline and research, but for this exercise I’m more interested in understanding what kind of revenue accrues to these programs like this and what the analyst would value it at in the market.
Here’s the Barclays revenues for Immunomedics ADCs.
| | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | PEAK | Mkt Cap Val Ascribed to Indication (mil) |
| Trodelvy TNBC | 168.9 | 325.6 | 498.5 | 688.9 | 898.0 | 1127.5 | | 3001.7 |
| Urothelial | 0 | 0 | 64.8 | 189.9 | 327.6 | 478.8 | | 1,847.2 |
| TNBC 2L | 0 | 0 | 0 | 265.2 | 565.3 | 904.4 | | 3002.0 |
| TOTAL Revs | 168.9 | 325.6 | 563.3 | 1144 | 1790.9 | 2510.7 | 4000.0 | 7850.9 |
These are large markets and appear to have a 7-8 year growth path to hit peak. The revenue potential is likely between $2bil and $1 bill per indication according to Barclays. You could say a really good TNBC drug is worth around $3bil. I would just guess that pancreas, ovarian, endometrial and colorectal would all be in that same range, so let's say on average $1.5bil each. So in this Phase 1 trial, if you can show effectiveness and safety in each of the 5 indications (or 4, but they list 5 in today's PR), you are looking at peak revenue potential of $8bil ($2bil for TNBC and $1.5bil for other 4) just for TH1902. It could hit the income statement in relative unison if the future trials also have the 4 indications in them and they move them all along at the same time.
If THTX developed like IMMU, it would look like this in super rough terms (using the Barclays numbers as reference). I put 2022 in there since Trodelvy has that level of revenue after being approved in something like Sep/Oct that year. If you want, you can push this all back one year. Obviously the biggest assumption is that things work in the trial and it goes smoothly just as they think and that the trials show numbers as good or better than Trodelvy (30% response, 6 months survival). Since they are hoping to keep the treatment window open a lot longer (low neutropenia, etc..) adding 6 months may be something well within their therapy range and allow for future chemo quicker if you relapse, which is a good thing.
| Theratech TH1902 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | PEAK (2029) | Mkt Cap Val Ascribed to Indication (mil) | Per Share (120mil shr) |
| mTNBC | $160 | $320 | $500 | $690 | $900 | $1,150 | $2,000 | $3,000 | $25.00 |
| Ovarian | $120 | $240 | $375 | $518 | $675 | $863 | $1,500 | $2,250 | $18.75 |
| Pancreatic | $120 | $240 | $375 | $518 | $675 | $863 | $1,500 | $2,250 | $18.75 |
| Colorectal | $120 | $240 | $375 | $518 | $675 | $863 | $1,500 | $2,250 | $18.75 |
| Endometrial | $120 | $240 | $375 | $518 | $675 | $863 | $1,500 | $2,250 | $18.75 |
| | $640 | $1,280 | $2,000 | $2,762 | $3,600 | $4,602 | $8,000 | $12,000 | $100.00 |
| Takeover @ 7.5 revenues | | | | | | | $60,000 | | |
That would say TH-1902 could be worth $100 per share on a DCF basis, $500 a share in a takeover. They could see 10x their revenue level in 2022 or 2023. There’s also TH-1901 with Taxel which may allow them a few more indications and different tumor types in the same indications above (like ovarian, etc..). We haven’t yet heard on lymphomas and melanoma and whatever else they go for. But there was a lot of pipeline value in the Gilead takeover. I think if this proves out, the SORT1+ platform would have a lot of upside value too. Of course, there’s still the HIV drugs and NASH.
Fantasy? Yes, it is completely. As JFM and SpaTrap reminds us Hard data in Humans is a huge hurdle and in front of THTX. There is no slam dunk in drug development. This should be totally put away until such time we see safety and efficacy in humans.
But my point was to show that given how many indications they are going after all at once, this is an entirely different type of “platform validation” trial that would blow away the typical one drug type of trial. This must be a rarity and if successful should not be treated like a one drug development success. It could be a 3-4-5 drug success which has enormous financial implications and that’s what I wanted to put out there. I would also guarantee you that if they even get 2 out of the 5 being successful it would be a stock everyone in the market knows about. If they get more than 2 in this trial, it will likely be the single best stock in the world that year. It also could be a whole lot quicker than what the market expects. The Phase 1 to Phase 2 led to revenues 12 months out for IMMU and the Phase 3 was the following year and brought the picture in to view for Immunomedics.
While just an exercise, it’s always useful for us to at least have some thoughts on what the value of this call option could be. This sort of shows you. It’s big. And all that for a few million in trial costs. If we ever get there, we should all mortgage the house and never show our wives the brokerage statements.