In its Q2/2019 financial report, Vicore confirmed that lead asset VP01 (C21) remains on track to enter two Phase IIa trials in H2/2019E, one in idiopathic pulmonary fibrosis ("IPF") and the other in diffuse systemic sclerosis ("dSSc"). The advancement of the pipeline is reflected in a significant increase in R&D costs, which together with expenses incurred in connection with the planned listing on the Stockholm main market widened the operating loss in Q2/2019 vs. both Q1/2019 and the prior year. That said, Vicore should have sufficient funds through to key inflection points in 2021E, with cash and cash equivalents amounting to SEK193.5m at 30 June 2019. We maintain and reiterate both our OUTPERFORM recommendation and target price ("TP") of SEK42 per share, based on the significant market opportunities of Vicore's maturing pipeline assets in underserved fibrotic indications.
Vicore reported a Q2/2019 operating loss of SEK24.8m, up from SEK16.1m in Q1/2019 and SEK9.6m in Q2/2018, due largely to a substantial increase in R&D expenditure (including other costs that are attributed to R&D expenses) to SEK17.6m (vs. SEK6.2m in Q2/2018) related to the VP01 Phase I trial and formulation work. There were also significant increases in personnel costs and other operating expenses, due largely to the hiring of key personnel and costs incurred in connection with the planned listing on the main market later this year.
The angiotensin II type 2 receptor ("AT2R") agonist VP01 is undergoing a dose-scaling Phase I study to identify the highest safe dose to be used in two Phase IIa studies expected to start later this year: (1) a proof-of-concept trial in IPF to assess safety and lung function and (2) a mechanistic study in dSSc. The next step would be a pivotal Phase IIb / III trial in IPF. We currently forecast launch in 2026E and peak sales of >$1.5bn in the US and Europe, based on VP01's differentiated profile compared to marketed IPF drugs and those in late-stage clinical development, and assume that Vicore markets the drug on its own. Despite their limited efficacy and poor safety profiles, the two marketed IPF drugs, Esbriet (pirfenidone) and Ofev (nintedanib) posted combined sales of c.$2.3bn in 2018, underscoring the high unmet need in this indication. We have not yet finalised our sales forecasts and net present value ("NPV") for dSSc, but plan to do so in due course.
VP02 is a reformulated version of an existing immunomodulatory ("IMiD") drug that has shown promising efficacy in IPF cough, the most debilitating symptom associated with IPF. Vicore is developing formulations in collaboration with Nanologica for targeted dosing to the lung through local delivery. Once these activities have been completed, VP02 will undergo toxicology tests prior to entering a Phase I trial in 2020E. Despite being at an earlier stage than VP01, its shorter development timelines mean that VP02 could reach the market earlier than VP01. We forecast launch in 2025E and peak sales in IPF cough of >$700m. Vicore is also considering developing VP02 for IPF and potentially pulmonary sarcoidosis. We await further clarity prior to adding sales and associated R&D expenses into our forecasts.
Our sum-of-the-parts ("SoTP")-derived fair value for Vicore of SEK42 per share consists of risk-adjusted net present values ("rNPVs") for VP01 in IPF (c.70% of our fair value) and VP02 in IPF cough (c.22%), plus net cash at YE2019E. Considering the current share price, we see ample room for upside from current levels as VP01 progresses into Phase IIa clinical studies and VP02 enters Phase I. We also expect the pending up-listing to the Nasdaq Stockholm main market to aid share price appreciation due to increased visibility among the investor community.