In February, the technical committee of the Mexico Health Authority (COFEPRIS) issued a favorable opinion for Tesofensine, a drug candidate from Saniona that has been out licensed to Medix, a Mexican pharma company and regional leader within the field of obesity, for marketing in Mexico and Argentina since 2016. Medix reported strong phase III results (n=372) in treating obesity back in 2018, where a statistically- and clinically significant weight loss of on average 10% at 24 weeks was demonstrated, and filed for approval in Mexico in 2019. However, the regulatory process has been lengthy, with multiple rounds of review due to outstanding questions. Finally, in 2023, the committee issued a non-binding favorable opinion, which is typically followed by an approval by the Mexican Health Authority. Saniona has stated that it typically can take 6 months to get an approval after a favorable opinion, although it varies.

To our knowledge, Medix has not communicated further regarding the remaining path forward and its commercial strategy. Since our last valuation of the asset, we note that there has been some progress in the field, most notably the strong data and attention related to GLP-1 analogues such as liraglutide (Saxenda) and semaglutide (Ozempic/Wegovy) from Novo Nordisk. Although expensive, we understand that these drugs are priced significanly lower in Mexico and to some degree would be a competitor to Tesofensine. On the other hand, obesity is the country’s most pressing health problem with over 70% of the population being either overweight or obese, and cost remains an issue. Saniona has stated that it expects price to be competitive and we also would like to note that the efficacy of Tesofensine is at least on par with liraglutide and probably a bit lower than semaglutide (although there are no head-to-head trials available). Tesofensine also has the advantage of being a tablet which is more convenient – especially in an outpatient setting. We would expect Medix to position Tesofensine as a more affordable drug compared to the GLP-1 analogues, but likely as a premium product with better efficacy and safety compared to the more affordable (and not so effective) options.

Saniona mentions a market potential of USD150m, but that the market may have fallen back a bit post-covid. This market relates to a fraction of the addressable market in Mexico given its population of 127m (3.7 million treatment months at 40USD per treatment month). At this stage, we assume that Tesofensine in peak sales can take roughly 15-20% of this fraction of the market given Medix strong standing – and assume that sales will start in 2024 and peak 5 years later following the end of data-exclusivity period. We choose only to include Mexico at this stage as we want to know more about Medix’s plans and timeline in Argentina before including it in our valuation. We assume a royalty rate of 14% and a likelihood of approval of 80%. This assumption is a bit more conservative than the average assumptions for a US regulatory process – and relates to Mexico being a less predictable market and that we have less insight into the regulatory process.