Novartis deal for Chinook makes kidney-treatment competitors more attractive, analysts say

By Eleanor Laise

Travere Therapeutics and Vera Therapeutics are also developing treatments for rare kidney disease

In light of a Novartis (NOVN.EB)deal to acquire Chinook Therapeutics Inc. (KDNY), which is developing treatments for a rare kidney disease, two other companies focused on the same disease look even more attractive, analysts said Monday.

Novartis said earlier Monday that it would acquire Chinook in a deal worth up to $3.5 billion. Chinook has two treatments in late-stage development for immunoglobulin A nephropathy, also known as Berger's disease or IgAN, a rare disease that most often affects people in their teens to late 30s and causes inflammation and kidney damage due to protein buildup in the kidneys.

The deal values the biopharma company at $40 a share, a 67% premium to its closing price Friday, sending Chinook shares up 58% on Monday.

That valuation has implications for two Chinook competitors, Travere Therapeutics Inc. (TVTX) and Vera Therapeutics Inc. (VERA), which are also developing IgAN treatments, Evercore ISI analysts Liisa Bayko and Jingming Chen wrote in a research note Monday. Before the Novartis deal, the valuations of Travere and Vera together were roughly equal to Chinook's valuation, the analysts wrote. "We thought the valuations were compelling then," they wrote. Given the price Novartis is paying for Chinook, they wrote, "these valuations just became even more compelling."

Travere's Filspari received U.S. Food and Drug Administration accelerated approval in February for IgAN patients at risk of rapid progression. Additional trial data to be released in the fourth quarter could support full approval for Filspari in a broader population late next year, the Evercore analysts wrote. The analysts' price target for Travere stock is $30. The stock is down 19% in the year to date, while the S&P 500 has gained 12.5%.

Travere was formerly known as Retrophin Inc., which was founded in 2011 by Martin Shkreli -- the former hedge-fund manager convicted of securities fraud in 2017. The company, which had already cut ties with Shkreli, rebranded itself in 2020.

Vera, meanwhile, last week announced the start of the pivotal Phase 3 clinical trial of atacicept for treatment of IgAN. "Our Phase 2 results have shown that atacicept targets the source of IgA nephropathy and improves kidney function," as measured by reductions in proteinuria, or high levels of protein in the urine, Vera CEO Dr. Marshall Fordyce said in a statement. If Vera can repeat similar efficacy and safety results in Phase 3 trials, "we believe atacicept will be approved," the Evercore analysts wrote Monday. Their price target for Vera's stock is $20. The stock is down 54% in the year to date.

-Eleanor Laise

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06-13-23 0758ET

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