In the space of a week, Targovax has reported the results from both its lead trials with ONCOS-102, an oncolytic virus. Data from the Phase I trial showed that 35% of anti-PD1 refractory patients with advanced, unresectable melanoma responded to ONCOS-102 plus Keytruda treatment. These data are Targovax’s most significant achievement to date and indicate ONCOS-102 was able to sensitise the refractory patients to anti-PD1 treatment again. The melanoma trial results were reported after an 18-month follow-up update from the second lead Phase I/II study with ONCOS-102 in mesothelioma. The median overall survival (mOS) has not been reached yet. In the ONCOS-102 arm, mOS will be 18.2 months or longer, while in the control arm (chemotherapy) mOS will be 14.2 months or less. Our updated valuation is NOK2.02bn or NOK23.3 per share.
Companies: Targovax ASA
An update from Targovax’s Phase I/II study in unresectable mesothelioma with OCOS-102 was the highlight of Q220 (described in our last note). Median over survival (OS) data are still not mature and the next update in expected by year-end. Another catalyst expected this year is the results of Part 2 from the Phase I melanoma trial in H220. The trial aims to show ONCOS-102 can activate the immune response in anti-PD1 refractory patients. Following the cost-reduction programme implemented in 2019, Targovax is now sharply focused on its oncolytic virus platform. However, after signing a string of new collaborations, the company is now involved in multiple projects, which significantly increase profit opportunities. Our valuation is unchanged at NOK1.65bn or NOK21.6/share.
With effect from today’s date we have discontinued our coverage of Targovax AS. Our last published recommendation, target price and estimates are no longer applicable.
On 22 June 2020 Targovax reported data from its Phase I/II study in unresectable mesothelioma (a follow up to the first data published in January 2020). There were no new safety issues and the efficacy signals seen in the first set of data were confirmed. Importantly, the immune and gene sequencing data provided strong support for ONCOS-102’s ability to activate the immune system and remodel the tumour microenvironment. Targovax reiterated its plans to explore ONCOS-102 in triple combination with a checkpoint inhibitor (CPI) and standard chemotherapy in first line. These plans are still at a preliminary stage, but there is potential for the study to become a registrational programme due to a high unmet need in mesothelioma. We increase the probability of success for ONCOS-102 and our updated valuation is NOK1.64bn or NOK21.6/share.
Targovax has announced that one of the trials with ONCOS-102, which is sponsored by Ludwig Institute for Cancer Research, will be in the spotlight at this year's ASCO meeting. This is an open-label Phase I/II trial that is exploring the combination of intraperitoneally delivered ONCOS-102 and systemically administered checkpoint inhibitor durvalumab (anti-PD-L1, Imfinzi, AstraZeneca) in patients with ovarian or colorectal cancers metastasised to the peritoneum. An abstract from the dose-escalation part of the trial will be presented at ASCO. Although Targovax is not sponsoring the trial, this may become a new opportunity for the company. Targovax's two lead trials with ONCOS-102 in melanoma and mesothelioma are on track to deliver data later this year. Our valuation is virtually unchanged at NOK1.52bn or NOK20.0 per share.
Minor Covid-19 effect on study progress
No information regarding partner in mesothelioma study
Cash position NOK 135m, will run into 2021
Peritoneal study in collaboration with AZ+Ludwig at ASCO end May
Targovax started 2020 with the first randomised data readout from its Phase I/II trial with oncolytic virus ONCOS-102 in unresectable mesothelioma. The company will present further data in H120. Interim results released in July 2019 from Part 1 of the Phase I trial with ONCOS-102 in refractory melanoma were the hallmark event last year. More data from this trial are also expected later this year (H220). We note that Targovax is a biotech company, therefore the ongoing turbulence in global markets has a limited effect on its long-term outlook, in our view. Moreover, Targovax completed a private placement earlier this year, which provides a cash runway. On Friday 20 March, the company issued a statement confirming that the key milestones should be achieved within planned timelines. Our valuation is NOK1.53bn or NOK20.1/share (vs NOK19.9/share previously).
Few important updates in the Q4 report
Several interesting read-outs coming up in 2020
Current cash positon should fund operation well into 2021
Triggers: New studies, read-out mesothelioma and melanoma trials
Together with the positive Phase I/II mesothelioma trial, Targovax has introduced a preliminary design for its next trial. The new study will explore ONCOS-102 in triple combination with a checkpoint inhibitor (CPI) and standard chemotherapy. Although plans for the next study are still at a preliminary stage, there is potential for it to become a pivotal programme due to a high unmet need in mesothelioma. The private placement completed on the back of the trial results provides confidence that preparations for advanced ONCOS-102 development in mesothelioma will continue at a strong pace. Consequently, we increase the probability of success and our updated valuation is NOK1.5bn or NOK19.9/share.
Today, Targovax reported randomised data from the Phase I/II study (n=31) in unresectable malignant pleural mesothelioma. The results confirmed a good ONCOS-102 safety profile. The key clinical response endpoint mPFS was 8.4 months (active arm) vs 6.8 months (control) and above the historical control of 5.7–7.3 months. mPFS results are still early, with many patients not included in the analysis (additional data will serve as a potential catalyst later in 2020). Overall, as we described in our last note, mesothelioma is one of the most difficult cancers to treat, with classic chemotherapy still being the standard of care. While the size of the study limited the analysis for statistical significance (the trial was not designed to check for a statistically significant clinical effect), the mPFS results and the fact that clinical outcomes correlate with a cancer-specific immune response are clearly positive signals. Targovax has presented preliminary plans for the next trial. Our valuation is under review, while we analyse the details of the trial results.
Both lead clinical trials with ONCOS-102 are expected to deliver results over the next few months, which will make H120 one the most eventful periods in Targovax’s history. Data from Phase I/II trial in mesothelioma are expected in January 2020, whereas data from the Phase I melanoma study are expected in H120 or ‘before summer’, according to Targovax. Clinical data readouts should be supplemented by preclinical studies with the second-generation oncolytic viruses, which Targovax introduced for the first time in the Q319 results presentation. Our valuation is almost unchanged at NOK1.18bn or NOK18.7/share (vs NOK18.6/share previously).
Two ONCOS-102 readouts are expected in the next 12 months: mesothelioma Phase I/II data around new year 2020, and data from the Phase I melanoma study in H120. Targovax is also conducting preclinical trials with its new oncolytic viruses, with first results likely to be released in H219. This will support its move to becoming a focused oncolytic virus company. In addition, it provided an update on the Phase I/II trial with ONCOS-102 + Imfinzi (durvalumab) in patients with advanced peritoneal malignancies in collaboration with the Ludwig Institute for Cancer Research, where the expansion part has now started. Our Targovax valuation is virtually unchanged at NOK1.18bn or NOK18.6/share (vs NOK18.9/share previously).
Targovax recently announced a strategic decision to focus on the clinical development of its ONCOS programmes and to discontinue clinical development of its TG platform, citing the need to reallocate resources as the main reason. The news was followed by the release of interim data from the Phase I melanoma study, which was encouraging. After the latest events we have removed TG02 colorectal cancer asset from our model, although out-licensing is still a possibility, and increased the likelihood of success from ONCOS-102 in melanoma. Our Targovax valuation is lower at NOK1.2bn or NOK18.9/share, vs NOK1.46bn or NOK27.7/share before. Our new, more detailed look into the investigator-led trials with ONCOS-102 reveals the potential for oncolytic virus platform expansion not yet reflected in our rNPV model.
Targovax’s Q418 presentation discussed highlights from the past year, focusing on the data readouts from the TG01 study in pancreatic cancer (PC) and the ONCOS-102 melanoma Phase I data. Management’s plan for 2019 is largely unchanged: data from the first cohort of the ONCOS-102 melanoma study will be published in H119, treatment of the second cohort is ongoing and early interim data from TG02 colorectal cancer study will be published in H119. Management will also present three-year survival data from the TG01 PC study in H119 and is confident in finding a partner for continued development of TG01 in PC. Cash reaches into 2020, while our valuation is marginally higher at NOK1.46bn or NOK27.7/share.
Targovax delivered a steady stream of newsflow in 2018 from R&D projects in its pipeline, and from the recent KOL event in New York and capital markets day in Oslo. Highlights include the announcement of interim data from the Phase I trial with ONCOS-102 (an oncolytic virus) and Keytruda combination in melanoma, and the full dataset from the Phase I/IIa trial with TG01 (a neoepitope cancer vaccine) with gemcitabine combination in resected pancreatic cancer. Our valuation is marginally higher at NOK1.41bn or NOK26.8/share.
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Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
Q4 trading has led sales to guidance being raised 8%. This has been driven by better than expected UK sales, incl. success with new customers like Wilko/Tesco. Some of the benefit is offset by a non-cash FX debit, but it still leads to an upgrade and higher net cash. As a result of successful trials in Tesco Express, W7 is also being rolled out to 469 more stores. This, and previously announced distribution gains, bodes well for incremental sales/PBT in 2021, and underlines the appeal of its value-for-money brands. On 11x 2019 cash-adjusted EV/EBITDA, valuation is undemanding, particularly with the added attraction of dividends/income.
Companies: Warpaint London PLC
Ongoing strength in the key China market has prompted a positive trading update, indicating FY21 revenues and EBITDA will be significantly ahead of (already upgraded) expectations. Demand for Aivlosin in China in particular has remained strong throughout Q3 and is expected to remain so in Q4. We upgrade our FY21 revenue forecasts by 12% to £91.9m, which flows through to a 30% PBT upgrade to £10.1m. Whilst there is some caution expressed over the sustainability of this demand, we now forecast a flat performance YoY in FY22, but this is still 10% ahead of our previous estimates at the PBT level. The shares remain suspended pending the publication of the delayed FY20 results, which will be released as soon as possible alongside the H1’21 interims.
Companies: ECO Animal Health Group plc
Synairgen (SNG.L): Completion of recruitment for at home trial | Sensyne Health (SENS.L): Research agreement with The Royal Wolverhampton NHS Trust
Companies: Synairgen plc (SNG:LON)Sensyne Health Plc (SENS:LON)
Foresight Group , the award-winning infrastructure and private equity investment manager to IPO on the Main Market (premium). The Offer will primarily comprise a sale of shares by existing shareholders (c.80% of the Offer) with a smaller offering of new shares (c.20% of the Offer) to be issued by the Company. Details TBA. Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: TYM W7L BEG CRPR EUZ IRR CMCL FARN KETL AUG
ANGLE raised £19.6m (gross) to capitalise on the first-mover advantage that the FDA clearance for Parsortix will create, catalysing ANGLE’s ability to exploit the emerging multi-billion dollar liquid biopsy market. It will enable ANGLE to pursue multiple parallel revenue streams: (i) as a service provider to the pharma industry particularly looking to improve on immunotherapy patient outcomes (companion diagnostics) and (ii) to develop a number of specific clinical applications. Not only does it strengthen the balance sheet ahead of partner discussions but it provides the resources to develop in parallel relevant laboratory developed tests and fund the necessary clinical utility studies that will accelerate clinical adoption. We re-introduce forecasts and raise our target price to 150p (c.£310m EV), which is supported by risk-adjusted DCF and peer group analyses.
Companies: ANGLE plc
Robust FY21 performance forecast, despite pandemic
Companies: SDI Group plc
Cambridge Cognition provided a positive FY 2020 trading update, with revenues (+34%), net losses and cash all ahead of expectations, and delivering an EBITDA-positive Q4. After a year of record order intake (£12.7m) and with a year-end order book of £11.2m (+96% on the prior year), the company is positioned to deliver another year of strong growth. This update provides further evidence of (i) the commercial focus that the CEO has instigated, (ii) the cross-selling opportunities for its newer digital solutions, and (iii) the prospect of a period of sustained strong growth in what are large (c.£1.2bn) and high growth (c.20%) addressable markets for digital solutions for clinical trials. We increase FY 2021 revenues by 18% to £8.5m, implying 26% growth and raise our target price 31% to 105p.
Companies: Cambridge Cognition Holdings Plc
Cambridge Cognition ("COG") has provided a trading update for the year ended 31 December 2020 that is ahead of our expectations. Group Revenues grew +34% to £6.7m (2019: £5.0m) and were +7% ahead of DCe of £6.3m. COG delivered significant revenue growth from digital solutions for clinical trials as it increased its focus on commercialisation. The strong beat in Revenue is due to an improved commercial execution across a wider portfolio of products as the Group has placed a key emphasis on crossselling CANTAB with newer electronic Clinical Outcome Assessment (eCOA) and digital solutions for frequent, remote testing of patients outside of the clinic setting. The Group's order intake for the year closed at a record £12.7m, up +158% on the previous year's order intake of £4.9m and maintaining the growth trajectory reported in the interim results. The Group experienced a mixed effect due to Covid-19 as some orders and revenue recognition was delayed in the year. However, the pandemic has provided an impetus for an industry shift towards evaluating virtual clinical trials, which opened new opportunities for the Group. We move our target price to 89p (from 80p).
Interim results were in line with the 28 October trading update, reflecting the impact of the pandemic, with sales down 27% and LBITDA of £1.3m. However, c.10% LFL growth for Health & Nutrition (HN) in October and November is encouraging and points to long-term growth. Together with confirmation that first shipments against the initial 1m order for AbC-19 rapid antibody tests have taken place as well as first shipments of VISITECT CD4 Advanced Diseases tests to Africa, we expect a strong H2 (c.75% of FY sales), with potential upside driven by a currently poorly visible, yet anticipated long-term opportunity from its three key value drivers: Food Detective in China, VISITECT CD4 and COVID-19 lateral flow devices (LFDs). We leave our forecasts unchanged until we have further clarity on the unfolding COVID-19 opportunities. Whilst this implies c.£9.4m sales in H2, this is still eminently achievable given that supply has the ability to generate in excess of £9m of sales in Q4 FY 2021, should the demand materialise.
Companies: Omega Diagnostics Group PLC
On 30th December 2020, RUA reported that shareholders had approved resolutions regarding the placing along with a strongly oversubscribed Open Offer. RUA now start 2021 with the resources and mandate to accelerate the development of its products, where we anticipate reports of progress during the year. We have slightly increased our R&D and CapEx spend for FY 2022 to reflect this investment and the cash utilization. RUA’s issued share capital now comprises 22,184,797 shares and the increases in FY 2022 investment in its products, modestly change our valuation by about £2.0m to £113.2m for the Company, equating to 510p per share.
Companies: RUA Life Sciences Plc
After an eventful 2020, ReNeuron released updated 12-month Phase ll data in January on its lead human retinal progenitor cell (hRPC) project. This continues to show a consistent and robust, sustained average gain in visual acuity in retinitis pigmentosa (RP). A continuation study in nine patients using two million cells is underway with three- and six-month data due over H2 CY21 and the first three patients treated. This will facilitate partnering negotiations. A pivotal hRPC study may start in 2022. Deals are possible in CY21 on the exosome genetic drug delivery platform, which could be very valuable. The valuation remains at £190m with strong cash.
Companies: ReNeuron Group plc
STX is a commercial-stage company delivering specialty products that address patients’ unmet medical needs, with an initial focus on treating iron deficiency (ID). Feraccru®/Accrufer® has been approved by the regulators in both Europe and the US. For various reasons, STX has been unable to secure a commercial partner for Accrufer in the US. Consequently, the board is now considering an STX-led launch option, thereby retaining all the US profits. Financial modelling shows the logic of this option, but it would necessitate financing the working capital requirements covering the next two years in the region of £25m-£30m.
Companies: Shield Therapeutics Plc
IXICO has reported its financial results to the end of September 2020. Over the period, revenues grew 26% to £9.5m while EBITDA of £1.3m was more than double FY19A's £0.5m (October Trading update: revs £9.5m, EBITDA ‘at least' £1.1m). The order book closed at £21.7m, a record high, and we note subsequent confirmed orders post the year end, indicating strong business development. IXICO has invested through the year and maintains a strong balance sheet to continue investing through FY21E. We have made minor adjustments to our FY21E expectations and maintain our Buy recommendation.
Companies: IXICO Plc
Whilst the H1 outturn reflected the difficulties caused by the pandemic, investors should not lose sight of the substantial strategic progress made in recent months. This has not only built resilience and agility within the business, allowing it to react to the extraordinary market conditions, but strengthened the medium term growth prospects. We make no change to our headline forecasts at this stage, but mindful of the substantial H2 weighting, provide an illustration of the mix changes and a bridge to our FY21 estimates in this note.
Companies: Yourgene Health Plc