Biotech UCB’s Big Rally Has a Lot Riding on Rival’s Trial Result
(Bloomberg) — The next leg of a huge share-price rally for Belgium’s UCB SA — driven by the success of its Bimzelx skin disease medicine — hinges on key results for a rival drug.
The Belgian biotech’s stock could rise or fall as much as 10% depending on the outcome of MoonLake Immunotherapeutics’ late-stage trial results, according to KBC Securities analyst Jacob Mekhael. For MoonLake, there’s even more at stake, with Guggenheim Securities predicting the shares could double in value on a good outcome or drop as much as 60% in a negative scenario.
UCB shares have soared more than 160% since late 2023, when Bimzelx was approved in the US to treat psoriasis. Bimzelx has also received approval to treat a debilitating skin condition called hidradenitis suppurativa, or HS, which is the target of MoonLake’s experimental sonelokimab drug. The trial results are due around September, according to the company.
“The market is fretting about the potential for sonelokimab to become a challenger to Bimzelx” across dermatology — excluding psoriasis — and rheumatology, Intron Health analyst Naresh Chouhan wrote in a recent note.
The opportunity is big. The HS market could grow to $15 billion by 2035, from $2 billion currently, because there are a large number of untreated patients with the disease, according to an April presentation by MoonLake.
“HS is a severe and underserved disease with significant unmet need,” UCB said in emailed comments. “UCB welcomes additional further differentiated treatment options in HS. At present, there is no clinical data to support differentiation of sonelokimab to Bimzelx, since there are no head-to-head clinical studies.”
HS is a crucial growth area for UCB, with the disease making up 21% of Bimzelx’s global net sales in the first half. If the key data point for MoonLake’s drug — measured by a reduction in skin abscesses and inflammation — is numerically higher than Bimzelx, it could trigger a 5% to 10% drop for UCB shares, according to KBC’s Mekhael.
Meanwhile, the stock has a possible upside of as much as 10% if MoonLake’s candidate is considered less effective than Bimzelx. “In such a scenario, we do not see a viable route for this drug, and Bimzelx will have less competition in its path to capturing a meaningful share of the growing HS market,” said Mekhael, who has a buy-equivalent rating on UCB.
The stakes for Swiss-based MoonLake are considerably higher. The company currently has no approved drug, and shares have 60% downside if sonelokimab in HS is removed from MoonLake’s valuation, according to recent projections by Guggenheim analyst Yatin Suneja.
Still, Suneja puts “a high probability of success” on MoonLake’s results, citing conversations with management and experts, as well as analysis of clinical data. He projects 100% upside for the shares in a positive scenario.
MoonLake declined to comment on potential share price movements.
To be sure, the nascent HS market may mean there is space for both drugs. According to Intron’s Chouhan, while MoonLake’s drug’s efficacy is the “strongest potential pipeline competition for Bimzelx” in HS, the UCB drug “is just as compelling,” and perceived risks to UCB may be overblown.
Analysts tracked by Bloomberg are mostly positive on both stocks. More than two-thirds of UCB analysts rate the stock a buy or equivalent, while all but one firms covering MoonLake have a buy recommendation.
“We understand investor concern on potential headline risk, and potential volatility on the stock from sentiment,” UBS Group AG analyst Xian Deng wrote in a note last month, referring to UCB. “However, we remain confident” in Bimzelx’s overall strong profile and significant time advantage.
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