Translation: Original published in Finnish on 12/21/2025 at 03:39 pm EET

Herantis Pharma is a drug development company focused on neurodegenerative diseases. Herantis currently has one candidate in the clinical Phase I, HER-096, which the company develops as a disease-modifying drug for Parkinson's disease. The risk level of the stock as an investment is very high, as the likelihood of successful drug development is still low due to the early development phase. As a counterbalance, the market for Parkinson’s disease is large and no disease-modifying drugs are available yet. Our DCF model suggests that the stock is attractively priced. Value creation can also materialize through a commercialization agreement or an acquisition. We reiterate our Accumulate recommendation and EUR 2.5 target price.

Drug candidate for Parkinson's disease in the pipeline

Herantis's Phase 1 clinical study has shown that HER-096 is well-tolerated in short-term use and that it passes the blood-brain barrier to the central nervous system. Next, the company faces the task of securing funding for the Phase 2 study, which it plans to initiate in H2'26. The upcoming study will investigate the safety and tolerability of HER-096 in longer-term (estimated 6–12 months) administration in patients with Parkinson's disease. The study, which we estimate will last for around 2 years, will also provide preliminary data on the efficacy of HER-096. If the results continue to support further development of the candidate, a pivotal Phase 3 study for marketing authorization will still be needed to confirm the candidate's efficacy and safety in larger patient populations with longer-term dosing. The company's current cash runway is sufficient until Q2’26. To secure further funding for R&D, Herantis has announced that it aims to enter into a commercialization agreement with a larger pharmaceutical company starting from Phase 2. We also believe that equity financing is a realistic possibility.

Significant market potential but the goal is still far away

In the absence of disease-modifying drugs, the need for new treatments for Parkinson's disease patients is high. The drug market for treating the disease is around 5.6 BUSD and is expected to grow steadily by about 4% per year. The overalll growth depends on the market entry of new drug treatments, but there are only a few noteworthy candidates in late-stage clinical development. We consider the Herantis candidate promising and the development risk has already been slightly reduced due to good tolerability and passing the blood-brain barrier. However, there is no evidence of the safety of long-term use of the candidate. In addition, no data on efficacy will be available until a possible Phase 2 study is sufficiently advanced in patient follow-up. If the development program is successful, we estimate that commercialization could begin in 2033 after the extensive Phase 3 study and the processing of the new drug application. In the longer term, indication expansion to other neurodegenerative diseases, such as Alzheimer's disease, may bring new opportunities for the company.

Risk-adjusted DCF modeling suggests that the stock is attractively priced considering the risks

Our risk-adjusted forecasts consider the significant risk of failure in drug development, which we estimate is around 85%. We expect royalty-based revenue to start in 2033 and peak in the late 2030s. Our DCF model suggests a value of EUR 2.5 per share indicating the attractive pricing of the stock. The value of the stock may also materialize through a partnership agreement or a bid. The investment profile is characterized by a high return potential with a low py and a high probability of loss of capital. In the short term, financing solutions are a key driver of the share price.