OSE Immunotherapeutics (OSE) is a drug developer that focuses on both oncology and immune disorders, with an R&D pipeline diversified across different indications and mechanisms of action. Long-term collaborations with top research institutions enable the company to identify novel targets in a cost-effective and time-efficient manner, and develop products for R&D and out-licensing. The success of this model is demonstrated by several commercial partnerships, including a deal with Boehringer Ingelheim (BI) in April 2018 for a total value of €1.1bn plus royalties. OSE’s most advanced internal programme is Tedopi for NSCLC (Phase III), with results expected in 2021. We value OSE at €171m or €11.7/share.
OSE has commercial deals in place with Boehringer Ingelheim (OSE-172, SIRP⍺ antagonist, late preclinical) and Servier (OSE-127, IL-7R antagonist, Phase I). A €15m milestone payment is expected from BI in H119 on the initiation of Phase I in multiple solid tumours with OSE-172, and a €12m fee could be received from Servier in H119 if it exercises its option to proceed to a Phase II trial with OSE-127. The combined value of the deals is €1.37bn in milestones plus royalties, so there is potential for significant licensing income over the next few years. OSE had a deal with Janssen Biotech for FR104 (CD28 antagonist, Phase II ready), but in November 2018 Janssen returned the rights due to reprioritizing its pipeline. OSE is now considering development options including re-partnering.
OSE is conducting its own Phase III study (Atalante 1) with off-the-shelf cancer vaccine Tedopi in advanced NSCLC patients in 2L/3L. Atalante 1 is the only trial currently fully financed by OSE. Following a pause in recruitment in June 2017, the trial design was modified (with a narrower patient population to meet the changing standard of care), and is on track for interim data readout in H219 and final readout in 2021. This and the initiation of the Phase I studies with partnered products represent key near-term catalysts, which should be reached with no external fundraising if both milestone payments are received (cash runway into early 2021).
We value OSE at €171m or €11.7/share (estimated net cash of €7.5m at end 2018). We currently value four assets in four indications, but further additions are possible depending on a future strategic decision from OSE. The company’s value drivers are diversified, with Tedopi accounting for 31% of our rNPV. Overall, we see OSE’s R&D programmes as cost-effective due to low out-of-pocket R&D costs, and well diversified, with different mechanisms of action and specific indications.