Annexin Q2 - No surprises

Annexin’s Q2 report did not offer any surprises, as expected for a pre-revenue biotech company. Operating expenses amounted to SEK-14.5m, which was more or less as expected. The cash position amounted to SEK37m, and the company mentions in the report that it has extended the cash runway to the end of Q1 2025, rather than the previously communicated Q4, as a few activities have been postponed. We have a positive interpretation of this decision as it should give the company some additional time for partnering discussions, which we expect will accelerate following the top-line readout. In line with previous communication, the company mentions that it aims for a global deal but also considers regional agreements. We have mainly focused on a regional deal (Japan) and that Annexin retains the rights in the rest of the world in our valuation. As RVO is a relatively small indication, we argue that there are several options to reach the market (regional agreements, in-house development and global license). However, the company would, in the end, need distribution. From a valuation perspective, a global licensing agreement (depending on terms) would not necessarily lead to a higher valuation, at least theoretically (more rights would be given away). Still, we think that a strong global deal with a partner with a strategic interest in RVO (and potentially oncology) would further derisk the case, especially the commercialization. As also mentioned in the CEO letter, Merck recently acquired EyeBio for up to USD3bn, including with a very significant upfront payment of USD1.3bn, to give some perspective on numbers. In the report, the company further writes that it has received increased attention, for example, at international congresses, and we again get the impression that Annexin has a strong standing amongst academics and specialists and that the results in RVO are well received so far.