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.
The company has announced that clinical development of the TG platform is being halted, including TG02 development in colorectal cancer. The company believes that despite the positive final three-year overall survival results from the Phase I/II study with TG01 in pancreatic cancer, the next step in this programme would be a large randomised; however, this is too costly for a small biotech company. Instead, Targovax will focus on its oncolytic virus platform, which it perceives to be in a leading position within mesothelioma and, overall, a programme with interesting data readouts in the near future. Recent M&A activity in the oncolytic virus space (Exhibit 2) suggests this could be the more attractive technology for partners
Targovax announced ORR and immune activation data from the Part 1 of the ONCOS-102 Phase I study with patients with advanced, unresectable melanoma, who progressed on anti-PD1 treatment. Patients received ONCOS-102 injections and were again treated with the anti-PD1 Keytruda. Three of nine patients demonstrated an ORR of 33%, while immunogenicity and tumour biopsy results showed that ONCOS-102 was capable of inducing a cancer-specific response and that the intratumoural injection can translate into a systemic response.
Our Targovax valuation is NOK1.20bn or NOK18.9/share compared to NOK1.46bn or NOK27.7/share. This was mainly the result of removing the TG02 colorectal cancer asset from our model, which was partially offset by the increased ONCOS-102 success probability in melanoma. The dilution from the recent fundraise results in a relatively larger decrease in our valuation per share.