Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Healthcare
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.
Written by
Targovax |
Confirmatory 12-month mesothelioma update |
R&D news |
Pharma & biotech |
22 June 2020 |
Share price performance
Business description
Next events
Analyst
Targovax is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||
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.
Year end |
Revenue (NOKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
0.0 |
(147.3) |
(2.8) |
0.0 |
N/A |
N/A |
12/19 |
2.3 |
(147.9) |
(2.4) |
0.0 |
N/A |
N/A |
12/20e |
0.0 |
(134.5) |
(1.9) |
0.0 |
N/A |
N/A |
12/21e |
0.0 |
(136.6) |
(1.8) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Green light for the next stage
The mPFS for ONCOS-102-treated first-line patients remained at 8.9 months (unchanged from previously reported). mPFS in the control arm first-line patients treated with standard of care (SoC) chemotherapy only was 7.6 months (vs the 6.8 months reported previously). So, ONCOS-102 plus SoC retained the mPFS benefit. The 12-month overall survival (OS) was 64% in the ONCOS-102-treated first-line patients versus 50% in the first-line control arm. As a recent reference point, durvalumab (anti-PD-L1) plus SoC achieved 70% OS at 12 months (ASCO 2020 data). Due to the expected complementary mechanism of action between ONCOS-102 and CPIs, the triple combination of ONCOS-102 plus CPI plus SoC can be expected to have an even more pronounced survival benefit. This will be Targovax’s goal in the upcoming trial.
Next steps
Median OS data are still not mature and will be reported in the future, but other than that the results can be considered final. While the size of the study limited the analysis for statistical significance of clinical effect (this was not the goal of the study), the trending mPFS and 12-month OS data and the fact that clinical outcomes seem to correlate with a cancer-specific immune response, are clearly positive signals. The good safety profile of ONCOS-102 is key for a viable triple combination therapy, as both chemotherapy and CPIs have known safety issues.
Valuation: NOK1.64bn or NOK21.6/share
Our valuation has increased to NOK1.64bn or NOK21.6/share from NOK1.52bn or NOK20.0 after increasing the success probability in our mesothelioma project to 25% from 20% and rolling the model forward. An update on the upcoming Phase I melanoma trial is the key potential catalyst this year.
Updated Phase I/II mesothelioma trial confirms further development pathway
On 22 June 2020 Targovax reported randomised data from the Phase I/II study (n=31) in unresectable malignant pleural mesothelioma. The randomised, open-label trial compared ONCOS-102 plus SoC (pemetrexed/cisplatin) versus SoC-only treatment in first- and second-line settings. In total, 31 patients were enrolled, with 20 patients assigned to the ONCOS-102 plus SoC arm and 11 patients to the SoC-only arm. The primary goal of the study was to evaluate the safety and tolerability of ONCOS-102, which is typical for this stage. Key secondary endpoints evaluated:
■
Tumour-specific immunological activation and T-cell tumour infiltration.
■
Immunological activation and correlation with a clinical response.
■
Overall response rate (ORR).
■
Median progression-free survival (mPFS).
■
OS (at 12 months available; data will continue to mature).
In addition to the overall results, first-line and second-line (or later) patient subpopulations were also evaluated.
|
Exhibit 1: Phase I/II mesothelioma study design |
|
|
Source: Targovax |
Efficacy signals at 12-month follow up: First-line patients identified as a target population
In the previously reported data (January 2020), Targovax identified first-line patients as the most rational target population and the preliminary plans for the next trial also include first-line mesothelioma patients. In addition, we believe the data were biased in the second-line patients in the control arm (unusually high response), likely due to the small number of patients (n=5). Economically, it also makes sense to focus on the front-line patients, as this ensures the largest pool of new patients. Since mesothelioma is not a crowded indication, Targovax will have a good chance competing for the front-line position, if the data in the late stage development are good.
In addition, we note that descriptive patient data showed that the experimental arm had generally more advanced patients (as shown in our January 2020 report), and there was therefore a relatively higher hurdle rate for ONCOS-102 to demonstrate efficacy against the control.
mPFS
The mPFS for ONCOS-102 treated first-line patients remained at 8.9 months (ie, the same as previously reported). mPFS in the control arm first-line patients treated with SoC chemotherapy only was 7.6 months vs 6.8 months reported previously. So, ONCOS-102 plus SoC retained the mPFS benefit. As this was a relatively early stage trial, it was not designed to check for a statistically significant clinical effect, but the trend seems pronounced. ONCOS-102 mPFS also compares well with historical controls, which fall in the range of 5.7–7.3 months.
12-month OS
The 12-month OS was 64% in the ONCOS-102 treated first-line patients vs 50% in the first-line control arm. Median OS data are too early and will be reported in the future. For comparison, results from a Phase II study with 55 patients presented at this year’s ASCO conference (May 29–31) showed that durvalumab (anti-PD-L1) plus SoC achieved 70% OS at 12 months. Mesothelioma remains one of the few cancers where the SoC is still a classical chemotherapy with no new treatments approved. There is a high interest in the use of CPIs in this indication and several trials are ongoing, but none are approved yet. Due to the expected complementary mechanism of action between ONCOS-102 and CPIs (described in our initiation report in detail), the triple combination of ONCOS-102 plus CPI plus SoC can be expected to have an even more pronounced survival benefit. This will be the primary goal for Targovax in the next trial in this indication.
Immunological data
The updated immunological data confirmed previous findings:
■
The activation of both innate and adaptive immune responses was observed, which was also associated with better clinical outcomes.
■
Evidence that ONCOS-102 drives favourable changes in the tumour microenvironment:
•
increase in intra-tumoral cytotoxic T-cells;
•
upregulation of adaptive immunity and cytotoxicity related gene expression;
•
macrophage phenotype polarisation from M2 to M1; and
•
upregulation of PD-L1 expression.
These changes were not observed to such an extent in patients who were treated with SoC only. This shows that patients can be sensitised to other immunoncology therapies like CPIs. We also note that in this particular trial the patients received chemotherapy and immunotherapy (ONCOS-102). Immunosuppression (or myelosuppression) is a known side effect of chemotherapy, especially in cisplatin’s case. Therefore, the fact that ONCOS-102 generated a strong immune response in such a setting is encouraging.
Valuation
Our valuation has increased to NOK1.64bn or NOK21.6/share from NOK1.52bn or NOK20.0 after increasing the success probability in our mesothelioma project to 25% from 20% and rolling the model forward. An update on the upcoming Phase I melanoma trial is the key potential catalyst this year.
Exhibit 2: Sum-of-the-parts Targovax valuation
Product |
Launch |
Peak sales |
Unrisked NPV (NOKm) |
Unrisked NPV/share (NOK) |
Probability (%) |
rNPV |
rNPV/share (NOK) |
|||
ONCOS-102 – advanced melanoma |
2025 |
590 |
2,925.5 |
38.4 |
15% |
744.4 |
9.8 |
|||
ONCOS-102 – mesothelioma |
2026 |
424 |
2,315.8 |
30.4 |
25% |
761.3 |
10.0 |
|||
Net cash, last reported |
135.3 |
1.8 |
100% |
135.3 |
1.8 |
|||||
Valuation |
5,376.6 |
70.7 |
1,641.0 |
21.6 |
||||||
Source: Edison Investment Research. Note: WACC = 12.5% for product valuations. Excludes conditional government long-term loans.
Exhibit 3: Financial summary
NOK'000s |
2018 |
2019 |
2020e |
2021e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
27 |
2,251 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
27 |
2,251 |
0 |
0 |
||
Research and development |
(64,006) |
(80,286) |
(60,103) |
(59,913) |
||
EBITDA |
|
|
(145,804) |
(146,247) |
(134,508) |
(136,550) |
Operating Profit (before amort. and except.) |
|
|
(146,100) |
(150,273) |
(134,508) |
(136,550) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Operating Profit |
(146,100) |
(150,273) |
(134,508) |
(136,550) |
||
Net Interest |
(1,249) |
2,423 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(147,349) |
(147,850) |
(134,508) |
(136,550) |
Profit Before Tax (reported) |
|
|
(147,349) |
(147,850) |
(134,508) |
(136,550) |
Tax |
334 |
321 |
0 |
0 |
||
Profit After Tax (norm) |
(147,015) |
(147,529) |
(134,508) |
(136,550) |
||
Profit After Tax (reported) |
(147,015) |
(147,529) |
(134,508) |
(136,550) |
||
Average Number of Shares Outstanding (m) |
52.6 |
60.8 |
69.6 |
75.9 |
||
EPS - normalised (NOK) |
|
|
(2.79) |
(2.43) |
(1.93) |
(1.80) |
EPS - normalised fully diluted (NOK) |
|
|
(2.79) |
(2.43) |
(1.93) |
(1.80) |
EPS - reported (NOK) |
|
|
(2.79) |
(2.43) |
(1.93) |
(1.80) |
Dividend per share (NOK) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
100.0 |
100.0 |
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 |
|
|
371,129 |
371,050 |
371,050 |
371,050 |
Intangible Assets |
370,240 |
367,083 |
367,083 |
367,083 |
||
Tangible Assets |
889 |
726 |
726 |
726 |
||
Investments |
0 |
3,241 |
3,241 |
3,241 |
||
Current Assets |
|
|
166,509 |
85,858 |
42,407 |
16,429 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
0 |
0 |
||
Cash |
151,189 |
70,429 |
26,978 |
1,000 |
||
Other |
15,320 |
15,429 |
15,429 |
15,429 |
||
Current Liabilities |
|
|
(59,377) |
(50,690) |
(40,149) |
(43,874) |
Creditors |
(50,250) |
(53,931) |
(43,390) |
(47,115) |
||
Short term borrowings |
(9,127) |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(103,565) |
(109,263) |
(109,263) |
(210,465) |
Long term borrowings |
(43,933) |
(50,441) |
(50,441) |
(151,643) |
||
Other long term liabilities |
(59,632) |
(58,822) |
(58,822) |
(58,822) |
||
Net Assets |
|
|
374,696 |
296,955 |
264,045 |
133,141 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(112,816) |
(140,094) |
(139,403) |
(127,180) |
Net Interest |
1,249 |
(2,423) |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
0 |
(134) |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
(30) |
66,863 |
95,950 |
0 |
||
Other |
(3,041) |
(2,353) |
2 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(114,638) |
(78,141) |
(43,451) |
(127,180) |
||
Opening net debt/(cash) |
|
|
(212,767) |
(98,129) |
(19,988) |
23,463 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(98,129) |
(19,988) |
23,463 |
150,643 |
Source: Targovax accounts, Edison Investment Research
|
|
Research: TMT
4imprint’s order volumes are starting to recover as the US economy reopens. The company has been diligent at updating the market and the latest update shows order levels improving towards 50% of prior year, having dipped as low as 20% in early April. Cash conservation measures are having the desired effect and the group still had $28.1m cash (with lease debt only) at the end of May, despite having paid out $9.4m as a one-off lump sum into the pension scheme as scheduled. Based on assumptions over the speed and extent of the recovery but in the absence of formal management guidance, we have reinstated provisional forecasts.