NASDAQ:RANI
READ THE FULL RANI RESEARCH REPORT
We are initiating coverage of Rani Therapeutics Holdings, Inc. (NASDAQ:RANI) with a target price of $12.00 per share. This value is based on our forecasts for the successful development and commercialization of the RaniPill (RP) technology platform for osteoporosis, psoriasis and psoriatic arthritis. The two clinical programs have completed Phase I studies and are continuing development with future regulatory milestones and anticipated submission to the FDA. The osteoporosis program, designated RT-102 will evaluate teriparatide delivery while the psoriasis program, designated RT-111, will assess delivery of an ustekinumab biosimilar. The adalimumab biosimilar program, RT-105, is in preclinical development. Rani’s first approved program is expected to validate the technology platform, clearing the way for broader application of oral delivery for biologics. While there are a few approved methods of oral delivery of biologics, these approaches have limitations related to drug absorption. Biologics represent a $300 to $400 billion market for a class of drug with impressive efficacy but inconvenient administration. Biologics frequently require a trip to the clinic, administration by a provider, pain via injection and the risk of infection. The RP’s ability to provide an effective method of oral administration for this class could sidestep these hurdles and dramatically improve convenience and compliance as well as improve efficacy for the fast-growing segment.
The RP technology consists of a robotic pill that can deliver biologics orally. There are two configurations of the RP: RP GO and RP high capacity (HC). RP GO is designed to deliver a dissolvable microneedle containing a solid dose of approximately 3 mg of drug. RP HC is designed to deliver a liquid dose of 20 mg or more of drug. Each has a proprietary coating that protects the capsule in the stomach environment. In the higher pH of the small intestine, the coating dissolves, a balloon inflates to deliver the drug into the intestinal wall or surrounding tissue where it disperses systemically. The non-dissolvable remnants of the RP are excreted normally through the GI tract.
Rani’s two clinical programs have both recently completed Phase I work and are on track to begin follow-on clinical development. A Phase II study for RT-102 is expected to begin in the next few months followed by a pivotal trial and biologic license application (BLA) followed by approval and commercialization in 2028. RT-111 has generated Phase I data and is sharing the results with partner Celltrion who will negotiate further development efforts. Next steps include the identification of a combination dose and a Phase II study, followed by pivotal work over the next two years. BLA submission and subsequent approval are forecasted for 2027. Depending on the emergence of development relationships, we could see the RT-111 program receive funding from a partner, thereby freeing up resources to advance RT-105.
Rani has conducted substantial preclinical and clinical work on its RP platform and is actively evaluating safety, tolerability and pharmacokinetic data. Rani has tested 16 molecules preclinically and three clinically on the RP platform. This includes eight antibodies, six peptides and one large protein. >3,500 RP capsules have been tested in vitro and >3,000 in vivo. Healthy subjects have been evaluated measuring the success rate and reliability of drug delivery. Bioavailability has been better, on average, compared with subcutaneous injection of the same molecule.
Three Phase I studies have been completed demonstrating good safety, tolerability and bioavailability comparable to subcutaneous injections in healthy subjects. RP has been well tolerated with no serious adverse events and all devices have passed through the GI tract without complications. Device effectiveness has not been impacted by the presence of food. Furthermore, no RP related effects were identified in clinical pathology test results including no changes in C-reactive protein or other biomarkers of subclinical inflammation.
Additional clinical trials are planned to further validate the safety and efficacy of already-approved biosimilars in combination with the RP. Foreto has been off patent since 2019 and is available as a biosimilar teriparatide. Ustekinumab lost its patent protection in 2023 and is open to biosimilar competition. Partner Celltrion has submitted a BLA for ustekinumab and is awaiting an FDA response. Celltrion has granted Rani a license and entered into a drug supply agreement in support of RT-111. There are nine biosimilars for adalimumab approved and proposed including one from partner Celltrion and one classified as interchangeable.
Rani’s two clinical programs are pursuing biologics that have generated near $14 billion in revenues at their peak. Teriparatide and ustekinumab are both available as biosimilars, providing an opening for Rani to partner with a biosimilar manufacturer and differentiate its product in a space where price is normally the contrasting feature. We anticipate that Rani can gain significant market share into related indications through the efforts of a commercialization partner. We estimate that the novelty, ease and convenience of oral delivery of biologics should allow Rani to capture about half of the economic value of the product recognized through upfronts, milestones and royalties.
Rani raised a material amount of capital in 2021 with its initial public offering (IPO) and in 2022 with Avenue Capital. It holds over $60 million of cash on its balance sheet as of September 2023. The agreement with Avenue Capital provided $30 million of funds in 2022 and the possibility for $15 million more if certain milestones are met. Based on our cash burn estimates following the restructuring announcement announced in November, we see sufficient cash on the balance sheet to support operations until 2025. As data comes from the initial clinical trials, there is a high likelihood that a deal is signed that includes upfronts from either Celltrion or another partner.
Key reasons to own Rani Therapeutics shares:
➢ Offers oral delivery platform for biologics and large molecules
o Provides improved convenience and compliance vs. parenteral administration
o Allows for improved biologic pharmacokinetics and pharmacodynamics
o Can be used for oral delivery of hundreds of biologics
➢ RaniPill pipeline programs
o RT-111: ustekinumab for psoriasis
o RT-102: PTH for osteoporosis
o RT-105: adalimumab for psoriatic arthritis
o RaniPill High Capacity (HC)
▪ 20 mg+ capacity
▪ Materially increases number of potential drug candidate partners
➢ Strategic partnership with Celltrion for biosimilars
➢ Supportive safety, tolerability and pharmacokinetic data for proof of concept trials
o Well tolerated & no serious adverse events in three Phase I studies
➢ Global rights to intellectual property
This report provides background on the drug delivery space, reviewing methods used, robotic pill technology and a brief history of ingestible devices. Our focus narrows with a description and discussion of the technology and utility behind the RP. Next, is a review of Rani’s preclinical work, clinical trials and pipeline highlighting key PK data for RP compared with standard of care. We review the biologics to be used with RP, including teriparatide, ustekinumab and adalimumab followed by a discussion of prevalence, causes, epidemiology, symptoms, diagnosis and treatment of the associated indication. Peers and competitors are reviewed in the drug delivery and ingestible device spaces as is Rani’s historical background followed by a summary of recent operational and financial results.
We introduce key senior management and summarize the risks specific to life sciences companies and Rani. The initiation report winds down with valuation work and a discussion of the assumptions supporting our model. The target price assumes revenues and royalties for the RT-102, RT-111 and RT-105 programs around the globe. The final section summarizes our report findings and reiterates our valuation and target price of $12.00 per share for Rani Therapeutics, Inc.
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1. Provided courtesy of Rani Therapeutics.
