Redeye on Calliditas: 200% upside within 12-24 months

Calliditas is a commercial stage biopharmaceutical company based in Sweden. Its first product Tarpeyeo has been selling in the US and its sales are doubling every quarter. European sales should start in 2023 with EU partner Stada “becoming the first and only approved medication for IgA nephropathy in EU for patients with primary IgA with rapid disease progression” (see: https://www.calliditas.se/en/wp-content/uploads/sites/2/2022/11/calliditas-q3-2022-presentation.pdf

We bought into the story late last year with average price around SEK90. Current share price is around SEK100.

Redeye states in their research that the base case valuation of SEK280 should be reached within 12-24 months. Pareto Securities views Callidias as one of the most interesting companies in the Swedish pharma universe.

Redeye Research Summary:

Positive triggers ahead

Redeye updates its outlook on Calliditas, anticipating US launch support and the European launch over the next 12 months, along with long-term study support for Tarpeyo and feedback from the competition. We increase our Base Case to SEK290 (280) with a Bull Case of SEK500 (450) and a Bear Case of SEK95 (125). Current share price is SEK100

Support from the Tarpeyo launch
We expect Tarpeyo to reach SEK3,557m in sales in the US as early as 2024e. We are confident thanks to the supporting scientific evidence to date and its ability to secure a high degree of coverage and reimbursement less than nine months since launch. For 2023, we point towards the expanded specialist sales team, support from the long-term eGFR outcome, and the pending European launch (under trade name Kinpeygo).

Future competition needs to clear a high bar
Tarpeyo has already established the most important competitive advantages:
first-mover advantage, an expanding body of clinical specialist experience, a safe product, and solid efficacy. This puts it in a good position to extend its lead once the results from the NefIgArd Part B study are released in H1 2023.

Valuation
We point to 200% upside to our Base Case of SEK290, although the timing for this depends on the equity market, the emerging competition, and Tarpeyo launch support. In our view, Calliditas has the advantage of a favourable status quo, in which no news is good news.

Full research available below for free:

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Disclosure: 

The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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