Research feature image - Immutep - 02072019 - JPG

AIPAC Phase IIb starts randomised component

Prima BioMed 15 February 2017 Outlook

Prima BioMed

AIPAC Phase IIb starts randomised component

Clinical update

Pharma & biotech

 

15 February 2017

Price

A$0.035

Market cap

A$73m

US$0.76/A$

Gross cash (A$m) at 30 December 2016

16.6

Shares in issue

2,073.1m

Free float

93%

Code

PRR

Primary exchange

ASX

Secondary exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

(2.8)

0.0

(14.6)

Rel (local)

(3.3)

(6.7)

(29.2)

52-week high/low

A$0.1

A$0.0

Business description

Prima BioMed is an ASX-listed biotechnology company focused on cancer immunotherapy. Its pipeline is based on three products using a LAG-3 immune control system: IMP321 for cancer chemo-immunotherapy and partnered products IMP731 (GSK) and IMP701 (Novartis).

Next events

AIPAC immune monitoring and activity data from run-in phase

Mid 2017

TACTI-mel dose escalation safety and activity data

2017

IMP761 preclinical data

2017

Analysts

Dennis Hulme

+61 (0)2 9258 1161

Lala Gregorek

+44 (0)20 3681 2527

Prima BioMed is a research client of Edison Investment Research Limited

Prima BioMed maintains its leadership in LAG-3 immunotherapies with the initiation of the randomised Phase IIb component of the AIPAC trial of IMP321 in breast cancer. In addition, the TACTI-Mel study of IMP321 combined with Keytruda in melanoma is expected to complete recruitment and report safety data in mid-2017, while the pipeline now includes a first-in-class Lag-3 agonist antibody. Initial efficacy data on the first 15 patients in AIPAC is also expected mid-year. We have revised development timelines for in-house and partnered LAG-3 programmes, which sees our valuation decrease to A$252m or A$0.12/share (vs A$282m or A$0.14/share).

Year end

Revenue (A$m)

PBT* (A$m)

EPS* (c)

DPS* (c)

P/E (x)

Yield (%)

06/15

1.3

(12.9)

(0.9)

0.0

N/A

N/A

06/16

1.9

(13.7)

(0.6)

0.0

N/A

N/A

06/17e

1.3

(12.7)

(0.6)

0.0

N/A

N/A

06/18e

10.6

(4.0)

(0.2)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Randomised AIPAC Phase IIb underway

In January Prima dosed the first of 226 patients in the randomised Phase IIb component of the AIPAC trial in metastatic breast cancer (mBC). Patients will receive either 30mg of the IMP321 APC activator or placebo, in combination with paclitaxel. The 30mg dose is 5x higher than the dose that delivered a 50% response rate in an earlier study, and was well tolerated in the safety run-in study.

TACTI-mel expected to fully recruit by mid-2017

Recruitment commenced in January in the second cohort in the Phase I trial of IMP321 combined with the immune checkpoint inhibitor Keytruda (pembrolizumab) in melanoma; the final cohort is expected to complete recruitment mid-year. IMP321 is being used to enhance immune responses in melanoma patients who have had sub-optimal responses to initial treatment with Keytruda.

Pipeline expands, out-licensed programmes progress

Prima has expanded its LAG-3 pipeline with the addition of IMP761, a first-in-class LAG-3 agonist antibody in preclinical development. IMP761 could potentially help treat autoimmune diseases by temporarily switching off activated LAG-3+ T cells. Partners Novartis and GSK are both conducting clinical trials of LAG-3 antibody programmes licensed from Prima designed to either stimulate (Novartis) or inhibit (GSK) immune responses, with both trials scheduled to be completed in 2018.

Valuation trimmed to A$252m, 12c per share

Our valuation decreases to A$252m (vs A$282m). After reviewing probable development time lines we have delayed forecast market launch dates for each pipeline product by 12 months. Furthermore, we have removed CVac from our valuation model until partner Sydys raises funds to complete development. Our valuation is equal to 12c per share on an undiluted basis (vs 14c) or 8c per share after accounting for dilution from options, warrants and convertible notes (vs 9c).

Investment summary
Company description: LAG-3 immunotherapy programmes

Prima BioMed is an ASX-listed immunotherapy company headquartered in Sydney, Australia, which is focused on developing products based on the LAG-3 pathway, following the acquisition of the private French immunotherapy company Immutep in December 2014. Its lead product IMP321 is in Phase II in breast cancer and in Phase I in combination with the checkpoint inhibitor Keytruda – Prima retains all the product rights except for China (partnered with Eddingpharm). IMP731 is in Phase I with GSK for autoimmune diseases, while IMP701 is in Phase I for solid tumours with Novartis. Prima previously conducted Phase II trials for the dendritic cell vaccine CVac in ovarian and pancreatic cancer, but has out-licensed the programme to Sydys Corporation. The company has facilities in Paris, France; Leipzig and Berlin, Germany; and its headquarters are in Sydney, Australia.

Valuation: DCF valuation of A$252m, 12c/share

Our DCF valuation is A$252m or 12c/share (8c/share fully diluted). The fully diluted value per share is based on potential dilution from the 1.3bn options, warrants and convertible notes that would be in the money at the undiluted valuation of 12c/share, including an assumption that the A$13.75m Ridgeback Capital convertible note is converted to 688m shares at 2c/share. There would be further upside if the LAG-3 products progress and if studies indicate broader potential in new indications. GSK has indicated that it expects to progress the IMP731 programme into Phase II, which would provide upside to our current valuation. The next catalysts include efficacy data from the 15 patients in the two dose-finding cohorts in the Phase II study of IMP321 in metastatic breast cancer (MBC) in mid-2017. We also anticipate newsflow from the ongoing Phase I trial of IMP701 with Novartis.

Financials: Cash position of A$16.6m

The gross cash position at the end of December 2016 was A$16.6m. Operating cash burn in H117 was A$4.1m, 39% lower than the corresponding period in the previous year. This has led us to modestly reduce forecast total expenditure in FY17, although we still forecast cash burn to more than double in the second half of FY17 as the randomised Phase IIb component of the AIPAC trial gets underway. The lower expenditure sees our forecast FY17 EBITDA loss contract by 5% to A$14.4m (vs A$15.0m). Our forecasts assume that Prima receives a risk-adjusted US$7m (A$9.2m) milestone payment from GSK in FY18 under the IMP731 licence agreement. If no milestone payments are received in the period we estimate that an extra A$5m will be needed to fund operations until end FY18.

Sensitivities: Relying on LAG-3

Prima is exposed to clinical, regulatory and commercialisation risks typical of all biotech companies. The key sensitivity is clinical progress of its pipeline of LAG-3 candidates, primarily the internally funded IMP321. While Prima has funds to initiate the randomisation stage of the IMP321 Phase II study in MBC, it would require a partnership, milestone payments or alternative forms of funding to complete the study and advance IMP321 further. Existing partnerships with big pharma reduce the financial and execution risk for IMP701 and IMP731; in addition, if the Phase I study of IMP701 reveals evidence of efficacy, this could lead GSK to extend the study to additional indications including rheumatoid arthritis and multiple sclerosis, which could increase the potential peak sales and therefore the value of the product. Separately, progress with CVac depends on partner Sydys raising sufficient funds to progress development.

Focused on LAG-3 immunotherapies

In December 2014 Prima BioMed completed the acquisition of French private immunotherapy company Immutep for a total consideration of A$26.3m. Immutep had a pipeline of three products, two of which are partnered, based on pathways in the Lymphocyte Activation Gene 3 (LAG-3) immune control mechanism. Subsequently, Prima took the strategic decision to prioritise the development of its lead LAG-3 product IMP321, a first-in-class fusion protein over its previous sole product CVac (a dendritic cell therapy), which it out-licensed to Sydys Corporation in May 2016.

The Immutep acquisition brought established relationships with Eddingpharm, GSK and Novartis, together with potential milestones of over US$100m plus royalties. Immutep’s founder, Professor Frédéric Triebel, a leading expert on LAG-3, joined Prima BioMed as CMO/CSO.

Exhibit 1: Prima BioMed pipeline

Product /Partner

Indication

Status

Notes

IMP321/Eddingpharm, (China)

Metastatic breast cancer + chemotherapy; melanoma + Keytruda; metastatic renal cancer

Phase IIb/ Phase I Phase IIa ready

Clinical trials underway as an antigen-presenting cell (APC) activator combined with chemotherapy or immune checkpoint inhibitor.

WuXi AppTec China produces IMP321 under terms of partnership with Eddingpharm, to US European and Chinese GMP standards.

GSK2831781/IMP731/GSK (worldwide)

Autoimmune disease/plaque psoriasis

Phase I

Depleting anti-LAG-3 antibody, depletes activated T-cells.

Phase I trial in healthy subjects and patients with plaque psoriasis started January 2015, data in 2017/2018. Potential milestone payments of up to US$100m + royalties.

IMP701/Novartis (worldwide)

Cancer and chronic infectious disease

Phase I

Antagonist anti-LAG-3 antibody, activates T-cell proliferation, immune checkpoint blocker. Phase I trial started June 2015, expanded to 416 pts (vs 240) June 2016.

IMP761

Autoimmune disease

Preclinical

First in class LAG-3 agonist antibody. Preclinical studies to investigate potential applications to help treat autoimmune disease by temporarily switching off activated LAG-3+ T cells.

CVac/Sydys (worldwide except Israel), Neopharm (Israel)

Second remission ovarian cancer, pancreatic cancer

Phase II terminated

Prima terminated a Phase IIb study in second remission ovarian cancer, CAN-004B, and a Phase IIa study in pancreatic cancer, CAN-301, to focus its resources on IMP321. Out-licensed to Sydys Corporation in May 2016. Potential milestone payments of US$293m + low single-digit royalties.

Source: Prima BioMed

IMP321 uses soluble LAG-3 to activate APCs

Prima BioMed’s lead product IMP321 is a LAG-3 Ig fusion protein that is based on the soluble form of LAG-3 and can activate antigen presenting cells (APCs). These activated APCs process tumour antigens, including those released from cells killed by chemotherapy, transport the antigens to lymph nodes and present the tumour antigens to T lymphocytes, thus activating and amplifying the immune response.

Randomised AIPAC breast cancer Phase IIb underway

Prima announced on 20 January 2017 that the first patient has been dosed in the randomised Phase IIb component of its AIPAC Phase IIb chemo-immunotherapy trial of IMP321 soluble LAG-3 fusion protein in mBC. The randomised double blind phase will enrol 226 patients, with half receiving standard paclitaxel chemotherapy on days 1, 8 and 15, plus 30mg of IMP321 on days 2 and 16 of each four-week cycle; the other half will receive Paclitaxel plus placebo. According to the record on clinicaltrials.gov (NCT02614833), the final data for the progression free survival (PFS) primary endpoint is expected to be collected in June 2019. Depending on the recruitment rate and PFS observed, we estimate that top line PFS data could mature sometime between late 2018 and mid-2019. The details of the trial are summarised in Exhibit 2. The European regulator (EMA) has indicated that this trial could be sufficient to support a marketing authorisation if it achieves certain (undisclosed) clinical endpoints.

The trial is recruiting women with hormone receptor positive mBC who are eligible for first line treatment with paclitaxel. Many of these women would have been previously treated with hormone therapy. Women with HER2 positive tumours who are eligible for treatment with trastuzumab (Herceptin) are excluded from the trial.

Exhibit 2: Overview of AIPAC Phase IIb trial from recent company presentation

Source: Company presentation, January 2017

The initiation of the randomised component of the trial follows the release in December 2016 of data from the 15 patients treated at two doses (6mg and 30mg) in the safety run-in phase of the trial, which found that IMP321 was well tolerated at both dosage levels. Immune monitoring data demonstrated immune activation and increased levels of blood monocytes, dendritic cells and effector T cells.

Initial data on tumour response rates in the first 15 patients are expected mid-year. The response rate in these patients will give an initial indication of activity of the combination therapy. The response rate was 50% in a 30-patient Phase I trial of IMP321 (dosed at 0.25-6.25mg) plus paclitaxel that was conducted by Immutep in mBC compared to 25% in a historical control group.

TACTI-mel expected to fully recruit mid-year

In January Prima began recruiting patients in the second of three planned dose cohorts in the Phase I TACTI-mel (Two ACTive Immunotherapies in melanoma) trial, after the Database Safety Monitoring Board confirmed that the 1mg dose of IMP321 used in the first cohort was safe and well tolerated. This study will test three doses of IMP321 in combination with the anti-PD-1 immune checkpoint inhibitor (ICI) Keytruda (pembrolizumab, Merck) in 18 patients with advanced melanoma, as shown in Exhibit 3.

The trial is investigating IMP321 in subjects who have had a suboptimal response to initial cycles of treatment with Keytruda. Subjects are assessed after they have undergone three cycles to treatment with Keytruda; patients with stable disease or slow progression not requiring urgent intervention are eligible to participate in the IMP321 trial. This strategy eliminates early responders to Keytruda as well as patients with rapidly progressive disease after initiation of ICI treatment who generally do not respond to further ICI therapy.

The TACTI-mel study will evaluate anti-tumour activity and the nature of the immune response at the three doses, in addition to safety, pharmacokinetics and pharmacodynamics. We expect some of the immune response data collected from the first dose cohort to be presented at scientific conferences in H1 CY17.

Exhibit 3: Overview of TACTI-mel Phase I trial

Source: Company presentation, January 2017

The TACTI-mel study combines the APC activation properties of IMP321, which helps to initiate an immune response, with an ICI which ‘releases the brakes’ on the immune effector cells, enabling a stronger immune response. Prima has shown in preclinical studies that combining IMP321 with immune checkpoint inhibitors increased the strength of an anti-cancer immune response and the speed and level of tumour regression.

Exhibit 4 shows that combining IMP321 with a PD-1 blocking antibody increased the activation of lymphocytes when human white blood cells (peripheral blood mononuclear cells) were stimulated in vitro. Similarly, in a mouse model of colon cancer, combination therapy with the mouse analogue of IMP321 (mLAG-3Ig) plus a PD-L1 blocking antibody inhibited tumour growth to a greater degree than either treatment on its own.

Exhibit 4: Combining IMP321 with anti-PD-1 antibodies produces stronger immune responses and greater anti-tumour efficacy in preclinical studies

Source: Prima Biomed presentation to Society for Immunotherapy of Cancer (SITC) conference

Exhibit 4: Combining IMP321 with anti-PD-1 antibodies produces stronger immune responses and greater anti-tumour efficacy in preclinical studies

Source: Prima Biomed presentation to Society for Immunotherapy of Cancer (SITC) conference

Incyte/Calithera Biosciences deal highlights IO deal values

In January Incyte paid US$45m upfront (plus buying US$8m shares) to enter a global collaboration and licence agreement with Calithera Biosciences to jointly develop Calithera’s CB-1158 small molecule arginase inhibitor. CB-1158 blocks the arginase enzyme which depletes the amino acid arginase in the tumour microenvironment and thereby prevents activation of cytotoxic T cells and natural killer (NK) cells. This activity of CB-1158 is expected to complement PD-1/PD-L1 ICI drugs and lead to stronger overall anti-tumour immune responses.

In addition to US$53m upfront, deal terms included up to US$430m in development, regulatory and commercialisation milestones. Calithera will receive a 40% share of US profits and tiered royalty ranging from low to mid-teens on ex-US sales. Incyte will fund 70% of global development and Calithera the remaining 30%. If Calithera opts out of its co-funding obligations it would receive the same low to mid-teens royalty on US sales and the potential milestones will increase to US$750m.

This transaction highlights that immuno-oncology transactions can involve substantial deal values and suggests that the US$50m upfront and US$175m in development and approval milestones that we model for an IMP321 licence deal could turn out to be conservative estimates.

IMP761: First in class LAG-3 agonist antibody

Prima has expanded its LAG-3 pipeline with the addition of IMP761, a first-in-class LAG-3 agonist which was developed in its laboratories in France. The antibody is an early stage product candidate that could potentially help in the treatment of autoimmune diseases by temporarily switching off activated LAG-3+ T cells that are creating an inflammatory response. IMP761 is undergoing preclinical development to better understand its potential applications.

 

LAG525 Phase I/II scheduled for late 2018 completion

IMP701, which is partnered with Novartis, is an antagonist mAb, which blocks the LAG-3-mediated inhibitory signal given to tumour-infiltrating T-cells and thus activates T-cell proliferation. LAG525 is Novartis’s humanised version of IMP701, which it has taken into clinical development.

Novartis is conducting a 416-patient Phase I/II trial of LAG525 under its collaboration and licensing agreement with Prima. The trial (clinicaltrials.gov identifier: NCT02460224) is testing LAG525 as a single agent, as well as in combination with Novartis’s in-development anti-PD-1 immune checkpoint inhibitor PDR001, in patients with melanoma, NSCLC and renal cancers. The trial began in June 2015 and has an estimated completion date of October 2018, so we anticipate news flow from this study in late 2018.

IMP731/GSK2831781 Phase I in psoriasis

Prima’s second out-licensed LAG-3 programme utilises LAG-3 in a different way to target autoimmune disease. It is based on IMP731, which is a cytotoxic mAb that will kill the few LAG-3+ activated T-cells that infiltrate autoimmune disease sites.

IMP731 is under development by partner GlaxoSmithKline (GSK), which in-licensed the programme from Prima (Immutep) in 2011. GSK has developed a humanised form of the IMP731 mAb, which it has termed GSK2831781. GSK dosed the first patient in a Phase I study of GSK2831781 in January 2015 in patients with plaque psoriasis.

The trial is testing GSK2831781 at lower doses in four cohorts of healthy subjects previously vaccinated with Bacillus Calmette Guérin (BCG), where it will measure safety and impact on the immune response to BCG vaccine. In the second part of the trial, 32 patients with plaque psoriasis will be treated in four higher-dose cohorts randomly assigned to be administered either GSK2831781 or placebo.

The trial will measure the activity of GSK2831781 in the psoriasis patients, including the proportion of patients achieving 50% and 75% improvement from baseline in Psoriasis Area Severity Index (PASI), and change from baseline in Psoriatic Lesion Severity Scores (PLSS). This suggests that the Phase I trial could potentially produce early evidence of activity of the therapy in psoriasis patients.

The heading on a slide shown at GSK’s R&D investor day in November 2015 which listed GSK2831781 alongside three other first-in-class immuno-inflammation antibodies indicated that all four were expected to enter Phase II in 2016 with anticipated regulatory filings in 2021-25. However, there is currently no entry for the mooted Phase II trial of GSK2831781 on clinicaltrials.gov, so it is not clear when it will commence.

CVac out-licensed to Sydys but future uncertain

In May 2016, Prima out-licensed CVac to Sydys Corporation (OTC: SYYC, www.sydyscorp.com), a publicly traded New York company that has been repurposed to develop the CVac assets. There was no upfront payment, but Prima received a 9.9% equity stake in Sydys at the time of closing. Should CVac be successfully commercialised, Prima could receive over A$400m (US$293m) in development, regulatory and commercial milestone payments for achieving set commercial sales targets, in addition to low single-digit royalties on sales. The deal removes any requirement to fund further development of CVac, while allowing Prima to participate in upside if the vaccine proves effective in future clinical trials.

However, there is no evidence on the Sydys website that it has been able to raise the funds necessary to progress the development of CVac, and Google Finance suggests that Sydys has a market capitalisation of US$3m. Due to the uncertainty around the ability of Sydys to fund the development programme, we have removed CVac from our valuation model of Prima.

Valuation

After reviewing the probable development timelines for Prima’s pipeline of in-house and partnered products, taking into account the expansion of the AIPAC randomised Phase IIb from 196 to 226 patients and the fact that GSK has not yet commenced a Phase II trial of GSK2831781, we have delayed the forecast launch date for each product by 12 months and have in turn extended our cash flow forecast period by 12 months to 2035. We have removed CVac ovarian cancer vaccine (previously valued at A$27.9m) from our valuation model as we await evidence that Sydys has the resources to fund the necessary clinical trials.

We have updated our risk-adjusted DCF valuation to account for these changes and have rolled forward the model to end H117 (December 2016). Our valuation of Prima has decreased to A$252m (previously A$282m) or 12c per share (undiluted, previously 14c per share). On a fully diluted basis our valuation falls to 8c per share (vs 9c per share), after taking into account the options, warrants and convertible notes on issue. We assume that product sales reach peak market share six years after launch, grow in line with the market for the next four years and then decline at 10% per year. Other core valuation assumptions are unchanged. Exhibit 5 summarises the constituent parts of our valuation, which is based on a discount rate of 12.5%.

The gross cash balance at end FY16 was A$20.9m. For valuation purposes we deduct the A$13.75m face value of the Ridgeback Capital convertible note in calculating end-FY16 net cash of A$7.1m as shown in Exhibit 6. We note that this is different to the accounting treatment of the convertible note, which includes only the A$5.0m estimated fair value of the convertible note as a non-current liability with the remainder treated as equity, resulting in a balance sheet net cash figure of A$15.9m as shown in Exhibit 7.

Our unchanged peak sales estimates for IMP321 and IMP701/LAG525 are based on pricing per patient of US$60k and US$40k in the US and Europe, respectively. The marketed ICIs Keytruda, Nivolumab and Tecentriq are all priced at about US$12,500 per month (US$150k per year) in the US, which suggests that our pricing assumptions may be conservative depending on the approved indications, duration of treatment and total cost of combination therapies.

Exhibit 5: DCF valuation of Prima BioMed

Value driver

Launch date

Likelihood of success

Peak sales (US$m)

Royalty

Value

(A$)

Value per share

(A$)

IMP321-MBC

2021 (EU), 2024 (US)

35%

971

17.5%

180.2

0.09

IMP321+anti-PD1 ICI-melanoma

2025

15%

480

17.5%

29.0

0.01

IMP321 milestones - assume partnered post PII in MBC

US$225 estimated risk-adjusted milestones from out-licensing North American and European rights.

47.5

0.02

IMP731-autoimmune disease

2023

15%

1,079

8%

40.0

0.02

Potential IMP731 milestones from GSK

US$90m of total US$100m in risk-adjusted milestones from GSK

17.8

0.01

IMP701-solid tumours (lung cancer)

2025

15%

2,440

5%

41.6

0.02

Potential IMP701 milestones from Novartis

US$20m in risk-adjusted milestones from Novartis

2.9

0.00

Grants

0.0

0.00

R&D expenses

(16.4)

(0.01)

Admin expenses

(17.2)

(0.01)

Capex

(0.1)

(0.00)

Tax

(80.4)

(0.04)

Net cash

End FY16 net cash (including A$13.75m convertible note at face value)

7.1

0.00

Total

252.1

0.12

Source: Edison Investment Research

Exhibit 6 shows that in addition to the 2,073m Prima shares currently in issue, there are a further 1,373m potential shares that could be issued on the exercise of options, warrants and convertible notes, including 1,296m that would be in the money at our 12c per share undiluted valuation. Exhibit 6 shows that after taking into account these potential shares, our diluted valuation is 8c per share. Depending on the timing of milestone payments from partners, Prima is likely to require additional funding to complete the IMP321 clinical trials; our diluted valuation of 8c per share does not take into account potential dilution from any future capital raising.

Exhibit 6: Potential further dilution and value per share

Average exercise price (A$)

m

Current number of shares

2,073

Ridgeback convertible note potential shares

0.020

688

Ridgeback warrants

0.024

380

Listed options

0.200

77

Unlisted options

0.052

151

Performance rights

0.000

78

Total in-the-money potential shares

1,296

Total potential diluted number of shares

3,369

Net cash raised from options and CN exercise

A$30

Valuation (above plus additional cash)

A$282

Diluted value per share

A$0.08

Source: Edison Investment Research

The breadth of the LAG-3 pipeline means there could be further upside if Prima or its partners launch additional products into the clinic or broaden the indications being studied.

We include risk-adjusted milestones payable by current partners GSK for IMP731 and Novartis for IMP701, plus milestones from prospective deals for IMP321. Possible catalysts include efficacy data from the AIPAC dose-finding cohorts, progression of the licensed anti-LAG-3 antibody into Phase II by GSK or news on partnering, all of which could provide upside to our current valuation.

Financials

The gross cash position at the end of December 2016 was A$16.6m. Operating cash burn in H117 was A$4.1m, 39% lower than the corresponding period in the previous year. This has led us to modestly reduce our forecast total expenditure in FY17, although we still forecast cash burn to more than double in the second half of FY17 as the randomised Phase IIb component of the AIPAC trial gets underway. The lower expenditure sees forecast FY17 EBITDA loss contract by 5% to A$14.4m (vs A$15.0m). Our forecasts assume that Prima receives a risk-adjusted US$7m (A$9.2m) milestone payment from GSK in FY18 under the IMP731 licence agreement. If no milestone payments are received in the period we estimate that an extra A$5m will be needed to fund operations until end FY18.

Sensitivities

Prima is exposed to the same clinical, regulatory and commercialisation risks as all biotech companies. The key sensitivity is clinical progress of its pipeline of LAG-3 candidates, primarily the internally funded IMP321. While Prima has funds to initiate the randomisation stage of the IMP321 Phase II study in MBC, it would require a partnership or alternative forms of funding to complete the study and advance IMP321 further. Existing partnerships with big pharma reduce the financial and execution risk for IMP701 and IMP731; in addition, if the Phase I study of IMP701 reveals evidence of efficacy, it could lead GSK to extend the study to additional indications including rheumatoid arthritis and multiple sclerosis, which could increase the potential peak sales and therefore the value of the product. Separately, progress with CVac depends on partner Sydys raising sufficient funds to progress development.

Exhibit 7: Financial summary

A$'000s

2015

2016

2017e

2018e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,336

1,949

1,253

10,564

R&D expenses

(8,952)

(7,060)

(7,271)

(7,489)

SG&A expenses

(5,723)

(6,983)

(7,122)

(7,336)

EBITDA

 

 

(13,345)

(12,093)

(13,141)

(4,262)

Operating Profit (before GW and except.)

 

(13,671)

(12,275)

(13,144)

(4,269)

Intangible Amortisation

(1,015)

(1,993)

(1,877)

(1,708)

Exceptionals

(18,338)

(47,468)

0

0

Operating Profit

(33,024)

(61,736)

(15,021)

(5,976)

Other

538

(1,716)

0

0

Net Interest

192

256

418

244

Profit Before Tax (norm)

 

 

(12,940)

(13,735)

(12,727)

(4,025)

Profit Before Tax (IFRS)

 

 

(32,294)

(63,196)

(14,603)

(5,732)

Tax

142

1,181

0

0

Profit After Tax (norm)

(12,798)

(12,554)

(12,727)

(4,025)

Profit After Tax (IFRS)

(32,152)

(62,015)

(14,603)

(5,732)

Average Number of Shares Outstanding (m)

1,490.1

2,236.3

2,061.6

2,073.1

EPS - normalised (c)

 

 

(0.9)

(0.6)

(0.6)

(0.2)

EPS - IFRS (c)

 

 

(2.2)

(2.8)

(0.7)

(0.3)

Dividend per share (c)

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

N/A

N/A

N/A

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

22,960

20,883

19,031

17,347

Intangible Assets

22,662

20,852

18,975

17,267

Tangible Assets

298

32

56

79

Other

0

0

0

0

Current Assets

 

 

8,023

21,671

8,919

4,871

Stocks

0

0

0

0

Debtors

315

168

168

168

Cash

6,760

20,880

8,128

4,080

Other

948

623

623

623

Current Liabilities

 

 

(4,380)

(1,472)

(1,472)

(1,472)

Creditors

(2,791)

(1,444)

(1,444)

(1,444)

Short term borrowings

(1,508)

(0)

(0)

(0)

Short term leases

0

0

0

0

Other

(80)

(28)

(28)

(28)

Long Term Liabilities

 

 

(1,914)

(5,765)

(5,765)

(5,765)

Long term borrowings incl. conv. note

0

(5,027)

(5,027)

(5,027)

Long term leases

0

0

0

0

Other long term liabilities

(1,914)

(737)

(737)

(737)

Net Assets

 

 

24,690

35,317

20,714

14,981

CASH FLOW

Operating Cash Flow

 

 

(7,785)

(11,594)

(13,141)

(4,262)

Net Interest

0

284

418

244

Tax

(2)

0

0

0

Capex

(49)

(27)

(28)

(30)

Acquisitions/disposals

(20,913)

130

0

0

Financing

7,745

27,229

0

0

Dividends

0

0

0

0

Other

(164)

0

0

0

Net Cash Flow

(21,168)

16,022

(12,752)

(4,048)

Opening net debt/(cash)

 

 

(23,200)

(5,251)

(15,852)

(3,100)

HP finance leases initiated

0

0

0

0

Other

3,220

(5,421)

0

0

Closing net debt/(cash)

 

 

(5,251)

(15,852)

(3,100)

948

Source: Company accounts, Edison Investment Research

Contact details

Revenue by geography

Level 12, 95 Pitt Street, Sydney, NSW 2000 +61 (0)2 8315 7003 www.primaBioMed.com.au

N/A

Contact details

Level 12, 95 Pitt Street, Sydney, NSW 2000 +61 (0)2 8315 7003 www.primaBioMed.com.au

Revenue by geography

N/A

Management team

Chairman: Lucy Turnbull AO

CEO/CFO: Marc Voigt

Non-executive chairman since October 2010. Lawyer and prominent business leader, highly active in the Australian not-for-profit sector, especially in medicine. Officer of the Order of Australia. Previously active in politics, including as Lord Mayor and deputy Lord Mayor of Sydney; wife of current Australian Prime Minister, The Hon. Malcolm Turnbull MP.

Appointed in October 2011, having joined as GM of European operations. Previously CFO/CBO at Revotar Biopharmaceuticals and Medical Enzymes, and an investment manager for a German biotech venture fund. Holds an MBA from Free University of Berlin. Based in Berlin, where Prima’s European operations are located. Mr Voigt was appointed CEO in July 2014.

CSO/CMO: Dr FrédéricTriebel, MD PhD

General Counsel and Company Secretary: Deanne Miller

A founder and medical and scientific director at Immutep, Dr Triebel discovered the LAG-3 gene while working at the Institut Gustave Roissy Paris, where he was involved in running Phase I/II immunology studies and headed up a research group. Previously, from 1991 to 1996, Dr Triebel was a director of an INSERM unit.

Ms Miller has broad commercial experience having held legal, investment banking, regulatory compliance and tax advisory positions. She joined Prima as General Counsel and Company Secretary in October 2012. She has a Combined Bachelor of Laws (Honours) and Bachelor of Commerce from the University of Sydney

Management team

Chairman: Lucy Turnbull AO

Non-executive chairman since October 2010. Lawyer and prominent business leader, highly active in the Australian not-for-profit sector, especially in medicine. Officer of the Order of Australia. Previously active in politics, including as Lord Mayor and deputy Lord Mayor of Sydney; wife of current Australian Prime Minister, The Hon. Malcolm Turnbull MP.

CEO/CFO: Marc Voigt

Appointed in October 2011, having joined as GM of European operations. Previously CFO/CBO at Revotar Biopharmaceuticals and Medical Enzymes, and an investment manager for a German biotech venture fund. Holds an MBA from Free University of Berlin. Based in Berlin, where Prima’s European operations are located. Mr Voigt was appointed CEO in July 2014.

CSO/CMO: Dr FrédéricTriebel, MD PhD

A founder and medical and scientific director at Immutep, Dr Triebel discovered the LAG-3 gene while working at the Institut Gustave Roissy Paris, where he was involved in running Phase I/II immunology studies and headed up a research group. Previously, from 1991 to 1996, Dr Triebel was a director of an INSERM unit.

General Counsel and Company Secretary: Deanne Miller

Ms Miller has broad commercial experience having held legal, investment banking, regulatory compliance and tax advisory positions. She joined Prima as General Counsel and Company Secretary in October 2012. She has a Combined Bachelor of Laws (Honours) and Bachelor of Commerce from the University of Sydney

Principal shareholders

(%)

Ridgeback Capital

5.7%

Innoven Tactical Investment Fund

1.3%

Thomas Tscherepko

1.3%

Lucy Turnbull

0.8%

Companies named in this report

BMS, Eddingpharm, GSK, Merck, Novartis, WuXi AppTec, Neopharm, Sydys Corporation

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Prima BioMed and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Prima BioMed and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Share this with friends and colleagues