Idorsia: Structural restart

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  Christian Ingerl
  Redaktor

The pharmaceutical manufacturer Idorsia has achieved another success with its hypertension drug aprocitentan, and this comes at a time when the company’s history is undergoing a fundamental change. A new analysis shows that the drug not only lowers blood pressure in patients with kidney disease, but also reduces proteinuria, i.e. the excretion of protein in the urine, without placing additional strain on kidney function. The data from the phase 3 study are a strong signal that underpins the comeback of Idorsia.

Promising transformation

The Swiss biotech company has been back on the stock market stage in recent weeks. Not without reason, Idorsia finds itself in a new starting position. What burdened the mid-cap for years, a massive wall of debt and permanent refinancing fears, has largely disappeared from the equation this year. The management has reorganized the capital structure and thus also redefined the share story.

The core of the transformation is the outsourcing of the two large convertible bonds to a newly created special purpose entity. Three central late-stage assets are bundled in this unit: Tryvio, selatogrel and cenerimod. Repayments from these will be made exclusively from future payments, milestones and license fees from the three programs, without recourse to Idorsia’s operating business. This effectively eliminates the refinancing problem that has dominated the share for years. The operating business has been freed from legacy burdens and the company can concentrate on commercialization and implementation. Another positive aspect is that as soon as the special purpose entity has been repaid in full, all economic rights to the outsourced assets will revert to Idorsia – a long-term value that currently receives little attention. The restructuring was flanked by a new financing line and a capital increase in the fall. This means that the company is fully financed until 2028 and therefore beyond the expected break-even point. Idorsia is therefore ending the current year as a fundamentally different company: leaner and more financially robust.

Profitability in view

On the operational side, Quviviq is the backbone of Idorsia. After initial hesitation, the sleeping pill is now showing sustained growth momentum, particularly in Europe. China is now being added as a lever: Through the partnership with Simcere, Idorsia is tapping into a huge market without having to dig deep into its own pockets. Although business in the USA remains subdued, it is at least stable. A tailwind could be added if the active ingredient class of DORA drugs is deregulated overseas. This scenario has probably not yet been priced into the share price. With commercial profitability expected from 2026 onwards, Quviviq lays the foundation for profitability on a Group basis in 2027.

But the focus is also on Tryvio. As the only approved therapy to date specifically for resistant hypertension, the drug addresses a large market. A partnership for Tryvio could not only accelerate the deleveraging of the special purpose entity, but also catapult the company into new spheres. The sales potential in the USA and Europe is estimated at around CHF 3 billion. Idorsia has also adjusted its cost base. This year’s expenses are almost three times lower than in 2022.

Investment solutions

Idorsia is no longer a bet on the next refinancing, but a classic biotech share with clear catalysts: a strong product, successful drugs and financing that buys time. After years of headwinds, tailwinds could now become the theme again. If you want to play this scenario, you can switch to the individual share which, with a volatility of more than 60% this year, has enough speculative character.

In the event that the share takes a breather, the Barrier Reverse Convertible RIDABV from Bank Vontobel would be a suitable solution. The product offers the prospect of a sideways return of 7.2% p.a. with a reassuring buffer of 63%. The term of the BRC ends in July 2026.