Last Friday, it was announced that Egetis had outlicensed the Emcitate rights to the company Fujimoto in Japan. According to the release, Fujimoto has “a long track record of bringing therapeutic medicines for CNS diseases, Blood diseases, and Orphan diseases to patients in Japan”.  The deal structure features a relatively modest milestone value of SEK 45 million but instead grants Egetis approximately one-third of the future revenue stream. Furthermore, Fujimoto will stand for the regulatory interactions and the remaining development program, which likely will be a relatively small clinical study in Japanese patients, similar to the ReTRIAc trial in the US, we guess. Overall, we think this is a relatively well-balanced deal for Egetis as the company does not need to handle the regulatory interactions or conduct the remaining trial but retains a good portion of the revenues compared to many other regional peer deals amongst Swedish companies, which is more important at this stage given that Egetis now is well capitalized following the recent private placement and loan agreement. We think that the share price reaction has been too modest so far given the increased potential, but believe that investors likely are focused on EU and US progress at this stage.

Looking at the market opportunity, Egetis also mentions in the recent release that “Iwayama et al. (Ref. 1) have reviewed the literature of MCT8 deficiency in Japan, and identified 36 already published cases. Kubota et al. (Ref. 2) in turn have conducted a nationwide survey of MCT8 deficiency and estimated there are over 60 cases with the disease in Japan, although this survey mainly asked questions to pediatric hospital facilities and did not survey adult departments.” The prevalence assumption for MCT8 deficiency is typically one male in every 70,000, leading to an estimated 900 patients in Japan. This suggests a diagnosis rate of under 10%, aligning with figures seen in both the US and EU. We argue that disease awareness and improving the diagnosis of MCT8 deficiency will be a key part of the commercialization of MTC8, and we thus think that it's good to have local presence in Japan that can prepare the market. Currently, Egetis states that no patient is treated with Emcitate in Japan, in contrast to 25 other countries where patients are treated in compassionate use programs.

We know less about the regulatory path in Japan, but Egetis mentions that a local study is likely needed for regulatory approval. We think that this could mainly relate to a demand to study the drug candidate in a Japanese population, and likely that it could be similar in size to the now ongoing ReTRIACt trial in the US and look at T3 levels. We expect to learn more once further regulatory interactions have been conducted. In our initial assumptions, we estimate that a trial could be finalized sometime in 2025 and that an approval could be communicated in early/mid-2026. We have previously only included the US and EU in our market model but now see a good rationale to include Japan, following that a credible commercialization partner is in place. Given that we know less about the remaining regulatory path, we set a likelihood of approval at 60% currently compared to 85%/75% in the EU/US. We assume a price in line with our average EU price assumption of USD165000 per year. With these assumptions, we estimate a peak sale of some USD50m when assuming a peak diagnostics rate of 65% (same in US/EU) and that Emcitate takes around 45% of this patient population. This could very well be on the conservative side if all goes well, but we will adjust these assumptions more once we know more about the strategy and regulatory path for Japan. Overall, this leads to a raised base case to SEK17.5 (16) per share). We hope to dig a bit deeper into the market potential in Japan soon.