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Initial LAG-3 combo data presented

Prima BioMed 23 March 2017 ADR Update
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Prima BioMed

Initial LAG-3 combo data presented

Initial TACTI-mel data

Pharma & biotech

23 March 2017

ADR research

 

Price

US$2.48

Market cap

US$52m

ADR/Ord conversion ratio 100/1

Gross cash ($m) at 31 December 2016

12.6

ADRs in issue

20.8m

ADR code

PBMD

ADR exchange

NASDAQ

Underlying exchange

ASX

Depository

BNY

ADR share price performance

52-week high/low

US$3.8

US$2.1

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). It has out-licensed CVac, an autologous dendritic cell vaccine.

Next events

AIPAC immune monitoring and activity data from run-in phase

Mid-2017

Further TACTI-mel dose escalation safety and activity data

2017

IMP761 preclinical data

2017

Analysts

Dennis Hulme

+61 (0)2 9258 1161

Dr Susie Jana

+44 (0)20 3077 5700

Prima BioMed is a research client of Edison Investment Research Limited

Prima BioMed has presented encouraging early signs of efficacy from the TACTI-mel trial of IMP321 in combination with Keytruda, with one of the six melanoma patients in the first (1mg/kg) cohort experiencing a complete response. Recruitment in the second cohort is complete and the final cohort is expected to be fully recruited by Q317. Preliminary efficacy data from the 15-patient, run-in phase of the AIPAC breast cancer study are expected mid-year (recruitment in the 226-patient Phase IIb component is ongoing). Our valuation is unchanged at $192m ($9.24 per ADR).

Year end

Revenue (US$m)

PTP (US$m)

EPADR ($)

DPADR ($)

P/E (x)

Gross yield (%)

06/15

1.0

(9.8)

(0.65)

0.0

N/A

N/A

06/16

1.5

(10.4)

(0.43)

0.0

N/A

N/A

06/17e

1.0

(9.7)

(0.47)

0.0

N/A

N/A

06/18e

8.0

(3.1)

(0.15)

0.0

N/A

N/A

Note: Converted at A$1/US$0.76 for the table above and throughout the note.

A complete response in low-dose TACTI-mel cohort

The TACTI-mel trial is using IMP321 (Prima’s LAG-3-based antigen presenting cell activator) to enhance efficacy in melanoma patients who have had a suboptimal initial response to the PD1 immune checkpoint inhibitor Keytruda. A presentation to the Immune Checkpoint Inhibitors conference in Boston showed that that one of the six patients (17%) in the first cohort experienced a complete response (CR). Even though there is only one patient with a CR, the initial CR rate compares favorably with rates of 2-6% seen in Merck’s Phase III trials of Keytruda monotherapy in melanoma. The combination has been well tolerated so far. Recruitment in the third and highest (30mg) dose cohort is expected to complete in Q317, so we expect efficacy data from the final cohort in H118.

Initial efficacy data from AIPAC run-in due mid-year

Initial efficacy data are expected mid-2017 (possibly at ASCO in June) from the 15 metastatic breast cancer patients treated with IMP321 in combination with paclitaxel during the safety run-in phase of the AIPAC study (the response rate in a previous Phase I study was 50%). Dosing began in January in the 226-patient randomized Phase IIb component of AIPAC; top-line PFS data could mature sometime between late 2018 and mid-2019. Patients will receive either 30mg of IMP321 or placebo, in combination with paclitaxel.

Valuation: Unchanged at $192m, $9.24 per ADR

Our valuation is unchanged at $192m, which is equal to ($9.24 per ADR) on an undiluted basis or $6.37/ADR after accounting for dilution from options, warrants and convertible notes. Guidance is that the cash balance of $12.6m at 31 December will be sufficient to fund operations through Q1 CY18, excluding any milestone payments from partners Novartis and GSK. Milestone revenue (we model ~$7m in FY18) would extend the cash runway.

Complete responder in first TACTI-mel cohort

On 16 March Prima’s chief medical and scientific officer, Dr Frédéric Triebel, presented an update on the Phase I TACTI-mel trial, including preliminary efficacy data from the first cohort, at the Immune Checkpoint Inhibitors conference in Boston, Massachusetts. This study will test three doses of IMP321 (1, 6 and 30mg/kg) in combination with the anti-PD-1 immune checkpoint inhibitor Keytruda (pembrolizumab, Merck) in 18 patients with advanced melanoma. Recruitment in the first two cohorts is complete, as shown in Exhibit 1.

The trial is investigating IMP321 in subjects who have had a suboptimal response to initial treatment with Keytruda. Subjects are assessed after they have undergone three cycles (nine weeks) of treatment with Keytruda; patients with stable disease or slow progression not requiring urgent intervention are eligible to participate in the trial and receive IMP321, starting with the fifth Keytruda cycle at week 13.

Six patients were enrolled in the first dose cohort (1mg/kg every two weeks), which began in Q216. The second cohort of six patients is fully recruited, and all subjects continue to receive three-weekly injections of Keytruda and fortnightly injections of IMP321 at 6mg/kg. No clinically significant adverse events related to IMP321 or the combination of IMP321 with Keytruda have been observed at either dose level so far. Recruitment in the third and highest (30mg) dose cohort is expected to complete in Q317.

Exhibit 1: TACTI-mel Phase I status and preliminary results

Source: Prima BioMed presentation at Immune Checkpoint Inhibitors conference, Boston, Massachusetts

One of the six patients receiving the lowest dose of IMP321 experienced a complete response (CR, Exhibit 2). After the completion of four cycles (12 weeks) of Keytruda monotherapy there was no shrinkage in this patient’s tumors, but after four cycles of combination therapy with Keytruda and low dose IMP731 the lung metastases had shrunk by 73%; 23 weeks after initiation of IMP321 combination therapy the tumors had disappeared altogether. Of the other five patients, two experienced disease progression (tumor growth), one withdrew due to unrelated sepsis and there is no information about the other two, although they appear to have completed 26 weeks of treatment with IMP321 without disease progression. One should not read too much into a single tumor response, particularly given that the dose of IMP321 was low and delayed responses are a well-recognized feature of therapy with ICI, but it is encouraging that the tumor shrinkage appears to have coincided with the initiation of combination therapy. Again, while the number of patients is small, the preliminary CR rate of 17% (1/6) compares favorably with CR rates of 2-6% seen in Phase III trials of Keytruda monotherapy in melanoma.

Exhibit 2: TACTI-mel first cohort (1mg/kg IMP321) complete responder and preliminary results

Source: Prima BioMed presentation at Immune Checkpoint Inhibitors conference, Boston, Massachusetts

Exhibit 3: Financial summary

 

US$000s

2015

2016

2017e

2018e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,015

1,481

952

8,028

Cost of Sales

(6,804)

(5,365)

(5,526)

(5,692)

Gross Profit

(4,350)

(5,307)

(5,413)

(5,575)

EBITDA

 

 

(10,142)

(9,191)

(9,987)

(3,239)

Operating Profit (before GW and except.)

 

(10,390)

(9,329)

(9,990)

(3,244)

Intangible Amortization

(772)

(1,515)

(1,426)

(1,298)

Exceptionals

(13,937)

(36,076)

0

0

Operating Profit

(25,099)

(46,920)

(11,416)

(4,542)

Other

409

(1,304)

0

0

Net Interest

146

194

317

185

Pre-Tax Profit (norm)

 

 

(9,835)

(10,439)

(9,672)

(3,059)

Pre-Tax Profit (IFRS)

 

 

(24,543)

(48,029)

(11,099)

(4,357)

Tax

108

898

0

0

Profit After Tax (norm)

(9,727)

(9,541)

(9,672)

(3,059)

Profit After Tax (IFRS)

(24,435)

(47,132)

(11,099)

(4,357)

0.0

0.0

0.0

0.0

Average Number of Shares Outstanding (m)

1,490.1

2,236.3

2,061.6

2,073.1

Average Number of ADRs Outstanding (m)

14.9

22.4

20.6

20.7

EPS - normalized (c)

 

 

(0.7)

(0.4)

(0.5)

(0.1)

EPS - IFRS (c)

 

 

(1.6)

(2.1)

(0.5)

(0.2)

Dividend per share (c)

0.0

0.0

0.0

0.0

Earnings per ADR - normalized ($)

(65.3)

(42.7)

(46.9)

(14.8)

Earnings per ADR - IFRS (c)

(164.0)

(210.8)

(53.8)

(21.0)

Dividend per ADR (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

 

 

17,450

15,871

14,464

13,183

Intangible Assets

17,223

15,847

14,421

13,123

Tangible Assets

226

24

43

60

Other

0

0

0

0

Current Assets

 

 

6,098

16,470

6,779

3,702

Stocks

0

0

0

0

Debtors

240

128

128

128

Cash

5,137

15,868

6,177

3,101

Other

720

473

473

473

Current Liabilities

 

 

(3,329)

(1,119)

(1,119)

(1,119)

Creditors

(2,121)

(1,098)

(1,098)

(1,098)

Short term borrowings

(1,146)

(0)

(0)

(0)

Short term leases

0

0

0

0

Other

(61)

(21)

(21)

(21)

Long Term Liabilities

 

 

(1,455)

(4,381)

(4,381)

(4,381)

Long term borrowings incl. conv. note

0

(3,821)

(3,821)

(3,821)

Long term leases

0

0

0

0

Other long term liabilities

(1,455)

(560)

(560)

(560)

Net Assets

 

 

18,764

26,841

15,742

11,386

CASH FLOW

Operating Cash Flow

 

 

(5,917)

(8,811)

(9,987)

(3,239)

Net Interest

0

216

317

185

Tax

(1)

0

0

0

Capex

(37)

(21)

(22)

(23)

Acquisitions/disposals

(15,894)

99

0

0

Financing

5,886

20,694

0

0

Dividends

0

0

0

0

Other

(125)

0

0

0

Net Cash Flow

(16,088)

12,176

(9,691)

(3,076)

Opening net debt/(cash)

 

 

(17,632)

(3,991)

(12,047)

(2,356)

HP finance leases initiated

0

0

0

0

Other

2,447

(4,120)

0

0

Closing net debt/(cash)

 

 

(3,991)

(12,047)

(2,356)

720

Source: Prima Biomed accounts, Edison Investment Research. Note: Solely for the convenience of the reader the financial summary table has been converted to US$ at a rate of US$0.76 to A$1. Prima reports statutory accounts in Australian dollars. These translations should not be considered representations that any such amounts have been or could be converted into US dollars at the assumed conversion rate.

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. 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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 8249 8342

Level 12, 95 Pitt Street,

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 8249 8342

Level 12, 95 Pitt Street,

Sydney NSW 2000

Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. 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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 8249 8342

Level 12, 95 Pitt Street,

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 8249 8342

Level 12, 95 Pitt Street,

Sydney NSW 2000

Australia

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