June 11, 2019 - 1:41pm EST by
2019 2020
Price: 18.40 EPS NA NA
Shares Out. (in M): 17 P/E NA NA
Market Cap (in $M): 317 P/FCF NA NA
Net Debt (in $M): -111 EBIT 0 0

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KALV is a company that is focused an acute (versus prophactic) treatment for a very rare disease called hereditary angioedema.

What is hereditary angioedema (HAE)?

HAE is a rare inherited disease that can cause attacks of swelling, and often pain, in specific parts of the body, including the abdomen, face, and throat.

What happens during an HAE attack?

During an attack, abdominal, facial, and laryngeal swelling often gets worse over a period of 12 hours to a day, then gradually resolves over the following 2–5 days. Unlike allergic reactions, there is no itching or redness with HAE. In addition to abdominal swelling and pain, people often experience nausea, which can be accompanied by vomiting. Attacks of HAE in the throat are the most dangerous because swelling that closes off the airway may be life threatening. Abdominal attacks cause acute pain in the abdomen, and sometimes also cause nausea, vomiting, and diarrhea.

What are current treatments for HAE?

On-demand (acute treatment) segment is the largest market opportunity even though prophylactic treatment is the mainstay.

Oral treatment option represents a significant advancement for patients as all current treatments are injections (subcutaneous or IV).  Patients on prophylaxis still require therapy for breakthrough attacks.  In fact, WAO/EAACI 2017 revision and update for management of HAE recommends all patients carry medication for on-demand treatment of two attacks, at all times.

What is the TAM for HAE?

On the acute side, firazyr (owned by Shire) has annual sales of ~$700M.  Berinert, another acute treatment for HAE, has sales of ~$350M.

Another way to think about TAM is acquisition value.  Shire acquired a prophlactic (not acute) HAE company called Dyax for $6.5B in 2015.  Shire also acquired HAE company called ViroPharma for $4B+ in 2013.  As a benchmark, KALV is a $300M+ mkt cap company today.

How do you call the study outcome?

While it is calling a science project at the end of the day and things can go wrong that are unexpected, the likelihood of success is high-ish because of the dataset shown so far.  HAE is an indication where the mechanism of action is very well known and to that end, specific markers are highly indicative of how the drug works (efficacy) in humans.  The most important is how much the drug inhibits the plasma kallikrein (pkal) biomarker.  KALV's drug (KVD900) inhibits pkal to a greater degree and faster than berinert, an approved acute treatment for HAE.

This primary datapoint provides some comfort that the drug should be active and as an oral drug for acute treatment, common pushback is "well, if a sympton of HAE is swelling of the throat, why would an oral ever be commercially viable?"

The reason is because HAE swelling doesn't happen immediately--it takes time.  Patients know generally when it's starting to happen.  Thus, patients can quickly take their oral therapy once they feel it coming on, before throat swelling happens.

The other side is safety.  While the n is small, in 45 patients, there were no serious side effects and no changes in labs, vitals, EKG, etc.

What can KALV be worth.  If one dreams the dream, it can be worth a 5x multiple to the acute treatment of firazyr, which sells $700M = $3.5B mkt cap.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


KVD900 data at YE19/early 2020

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