Close customer relationships provide unique advantages
Genovese with just under 20 employees already has an impressive customer list. It has managed to attract and retain pharmaceutical giants such as Pfizer, Merck, Roche, Genentech, Johnson & Johnson etc., which in itself is a strong indication that Genovis delivers high quality in both products and customer support. This is also confirmed in the form of steadily increasing sales across the entire product line. One of Genovis' main strengths as a small, fast-moving company is that it builds a close relationship with its customers. Through fast and competent global customer support 24/7, customer relationships are further strengthened, while at the same time gaining deep insight into customers' future needs and being able to develop new products based on concrete demand. In practice, this means that even new products that are launched in a clear way contribute to growth, right from the start of sales.
Continued strong growth through new product launches
On Tuesday, Genovis announced that it is now launching the new product GlyCLICK, which is based on a technology platform where the company's unique enzyme GLYCINATOR combined with SiteClicktechnology (which is licensed from Life Technologies). This means creating the conditions for continued strong sales growth and achieving the stated goal of positive cash flow in 2017. At the same time, the foundation is being laid for what may ultimately prove to be crucial for the possibilities of a cooperation agreement with – or acquisition of – one of the major players currently on the customer list.
Antibody development – a hot field of activity
With GlyKLICK, Genovis is targeting an expansive market with multiple applications in antibody development and preclinical imaging. BioStock sees opportunities for exciting development – not least in the longer term – in the area with the product launch. Antibody Drug Conjugates (ADC). Roughly simplified, ADC is a type of targeted cancer treatment where antibodies that seek out and bind to specific antigens or receptors on tumor cells are “armed” with and transport cytotoxic drugs directly to the cancer cell. When the antibody finds and attaches to the cell, the cytotoxic drug is released and kills the tumor cell, without harming surrounding cells.
GlyKLICK is a unique and more accurate technology
As a concept, ADC is relatively easy to understand, but designing and synthesizing fully functional and effective antibody conjugates is a difficult challenge that requires highly specialized development teams and development methods. Here, Genovis can offer customers precise and specific labeling of antibodies with its GlyCLICK technology. Current technologies on the market mean that the label can partially attach randomly to different locations on the antibody and in many cases negatively affect the function of the antibody. In addition, the position of the label varies depending on which antibody is labeled. With GlyCLICK, the label always attaches to the exact same location, which provides both high predictability and reproducibility – two properties that are very valuable in several different aspects of drug development.
Interesting reference deal as Seattle Genetics strengthens its ADC pipeline
ADC is currently an explosively fast-growing area with continued significant growth potential. In this context, it is interesting to look at benchmark deals in the industry, as they provide clear indicators of the willingness of the larger pharmaceutical companies – and thus Genovis' customer base – to advance in the ADC market.
Recently completed Seattle Genetics a giant deal that clearly validates that ADC technology is truly here to stay. Seattle Genetics, which has its own expertise in ADC, has chosen to invest heavily to strengthen its portfolio after encountering clinical problems with its own candidates. The deal clearly indicates that despite its own setbacks, it is still confident of success with this type of drug. The counterparty immunomedics received $250 million upfront from Seattle Genetics in the deal, which is worth a total of approximately $1,7 billion including customary milestone payments and double-digit royalties on future sales. The current deal was for the drug Sacituzumab govitecan against solid tumors in certain cancers.
In addition to the above-mentioned deal, Seattle Genetics also has several ADC agreements with companies such as AbbVie, Bayer, GSK, Pfizer etc. which have so far generated more than 325 million dollars in licensing revenue, and which, according to Seattle Genetics themselves, have the potential to generate many billions of dollars more in future milestone payments.
Genovis' strategy for ADC
Initially, Genovis has chosen to focus on customers operating in preclinical analysis, since that is where the company currently has the majority of its customer base. In this way, it can work on its existing customer group, primarily with a focus on the preclinical imaging market – a market that is valued at approximately 500 million dollars globally, according to the analysis firm Markets and Markets. The strategy is to first create acceptance for the GlyCLICK technology in preclinical development, and then advance together with customers into the clinical phase. This would, to use Genovis’ CEO Fredrik Olsson own words, would be “hugely big for Genovis” if the company's ADC technology were also used in the clinic.
Rapid growth in ADC after decades of cautious progress
After half a century of research and an initially slow approval of only a small handful of antibody-based drugs, the field is now in the midst of a number of ongoing clinical trials in various disease indications. After relatively limited success with the first generation of ADCs developed in the early 2000s, development is now starting to pick up speed, and a search in Clinical Trials The database on antibody drug conjugates yields 689 hits, and 149 if you only search for open studies.
BioStock's comment:
Genovis' smart enzymes are used in the analysis, evaluation and development of new biological drugs. Customers use the products in small quantities in a large number of samples to divide their drug candidates into smaller fragments that are then analyzed. All products are also very efficient in the production of larger quantities of antibody fragments, which is required in a number of different studies in the preclinical development of new drugs. The key to the really large sales revenues for Genovis, however, lies in the possibility that the company's technology will be included in the clinical development of customers in the future, especially if the drug in question goes all the way to market approval.
With its GlyCLICK technology, Genovis has positioned itself well for the increasingly rapid development that is now taking place in antibody-based drugs and is well positioned to fill a large need with its highly specialized technology platform – a need that is unlikely to decrease in the foreseeable future. The fact that it also has some of the world's largest pharmaceutical companies as customers is a solid foundation for the company's continued expansion, both in the form of expanded collaborations with existing customers and as a solid reference pool for prospective new customers. If the company's technology can be inoculated in clinical studies, there is also a very large commercial interest beyond pure product sales. We do not see it as unlikely that a larger player will decide to secure exclusive access to Genovis' uniquely specific GlyCLICK technology for the development of antibody-based drugs through acquisition.
The content of Biostock's news and analysis is independent, but Biostock's operations are to some extent financed by companies in the industry. This post refers to a company from which BioStock has received funding.
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