R&D progress triggers milestone payment windfall

OSE Immunotherapeutics 30 September 2019 Update
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OSE Immunotherapeutics

R&D progress triggers milestone payment windfall

Company update

Pharma & biotech

30 September 2019

Price

€3.80

Market cap

€57m

Gross cash (€m) as of end-H119, (government debt not included)

26.3

Shares in issue

15.0m

Free float

24%

Code

OSE

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

11.4

5.8

(5.0)

Rel (local)

6.6

3.0

(5.5)

52-week high/low

€4.35

€3.00

Business description

OSE Immunotherapeutics is an immunotherapy company based in Nantes and Paris, France, and listed on the Euronext Paris exchange. OSE is developing immunotherapies for the treatment of solid tumours and autoimmune diseases and has established several partnerships with large pharma companies.

Next events

Phase III Atalante 1 interim results

Q120

First preclinical data from BiCKI platform

Q419/2020

Analyst

Jonas Peciulis

+44 (0)20 3077 5728

OSE Immunotherapeutics is a research client of Edison Investment Research Limited

OSE Immunotherapeutics now has four clinical trials running. Interim results from its Phase III Atalante 1 trial with cancer vaccine Tedopi are a key catalyst and due in Q120. Another three trials were initiated over the last 12 months, which brought OSE a total of €27m in payments from partners (plus another €5.4m from Bpifrance). These trials include a Phase I study with OSE-127 (partnered with Servier), a Phase I study with BI 765063 (previously OSE-172; with Boehringer Ingelheim, BI) and a Phase II study with Tedopi in pancreatic cancer (GERCOR). We raise our valuation of OSE to €198m or €13.2/share (previously €190m).

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/17

6.7

(12.6)

(0.72)

0.0

N/A

N/A

12/18

24.5

4.8

0.38

0.0

N/A

N/A

12/19e

16.6

(6.1)

(0.41)

0.0

N/A

N/A

12/20e

0.0

(22.8)

(1.53)

0.0

N/A

N/A

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

Phase III Atalante 1 interim results in Q120

Although OSE has a broad and diversified R&D pipeline, much of the focus until early 2020 (Q120) will be on the Phase III Atalante 1 trial with a peptide cancer vaccine Tedopi for second- and third-line treatment of non-small cell lung cancer patients (NSCLC). OSE hosted a Tedopi-focused KOL event in New York in May 2019, where the presenters provided a detailed overview of the cancer vaccine’s development and of target indications NSCLC and pancreatic cancer.

Self-sufficient R&D

In addition to Phase III Atalante 1 (funded by OSE), Tedopi is being tested in a Phase II trial in pancreatic cancer patients, which is run by OSE’s partner GERCOR (a physician network). Another two trials were initiated earlier this year and both are financed by partners. These include a Phase I study with BI 765063 (OSE-172), a SIRPα antagonist for solid tumours, which is run by OSE but funded by BI, which paid €15m in milestones on initiation of the trial. According to the terms of the licensing deal with BI, OSE is still eligible to receive up to €1.1bn in milestones plus royalties if certain conditions are met. Similarly, OSE initiated a Phase I trial with its OSE-127 IL-7Rα (CD127) antagonist for autoimmune diseases, which triggered a €12m payment (Servier exercised an option; total value of the deal €272m, of which €22m has been received).

Valuation: €198m or €13.2/share

We have raised our valuation of OSE to €198m or €13.2/share from €190m or €12.8/share previously, which is due to a better cash position, rolling our model forward and increasing the probability of success to 10% for BI 765063 (OSE-172) as the Phase I trial has been initiated. The milestone payments from Servier and BI had virtually no effect as we have already included them in our model. The interim results from the Phase III Atalante 1 trials are the main catalyst in the near term.

Tedopi KOL event; interim Atalante 1 trial data in Q120

On 30 May 2019, OSE hosted a KOL day in New York, which focused on Tedopi, NSCLC and pancreatic cancer. The presentations provided more detailed background on the development of Tedopi and an overview of the target cancer indications. Overall, we view the update as in line with our discussions in our initiation report. Although OSE has a well-balanced R&D pipeline in terms of asset stages and technology types, the focus on Tedopi will prevail due to a combination of factors. It is the most advanced OSE asset in development and interim analysis will be carried out in Q120, which will also include some efficacy data; this makes it a substantial catalyst for OSE.

Atalante 1 is a Phase III trial with Tedopi as second- or third-line treatment against standard of care (docetaxel or pemetrexed) in HLA-A2 positive patients with locally advanced (IIIB), unsuitable for radiotherapy or metastatic (IV) NSCLC. Post-checkpoint failure patients represent an area where no novel treatment has been approved yet. The trial aims to enrol 300 patients. Interim analysis is expected in Q120, which will include survival data from the first 84 patients. This is a significant catalyst for OSE, although the final results should come later in 2021. OSE presented case reports from three patients from the Atalante 1 trial at AACR in Atlanta on 31 March 2019, which we discussed in our last update report.

At the end of 2018, OSE’s partner GERCOR (a physician network) initiated a Phase II trial with Tedopi as maintenance therapy alone or in combination with Opdivo or FOLFIRI in pancreatic cancer after induction therapy with FOLFIRINOX. Bristol-Myers Squibb is supporting the trial by providing Opdivo for free. Results are expected in 2022. Pancreatic cancer represents an unmet need with relatively little advance in treatment compared to most other cancers over the last decade. Pancreatic cancer is a ‘cold’ tumour, so the rationale is to combine immune-priming cancer vaccine Tedopi (stimulates specific T-cell response) with checkpoint inhibitors (makes tumours ‘visible’ to the immune system). OSE will evaluate options for further development and commercialisation depending on the results of this study.

Exhibit 1: OSE’s pipeline

Source: OSE

BI 765063: First patient enrolled in Ph I, milestone paid

OSE announced on 17 June 2019 that the first patient had been dosed in the Phase I study with BI 765063 (OSE-172), a monoclonal antibody antagonist of SIRPα, that OSE licensed to BI. This triggered the second part of the €15m milestone payment from BI as expected (we only adjusted the milestone with 95% probability in our model). OSE is still eligible to receive up to a further €1.1bn in milestones plus royalties if certain milestones are met.

The full clinical trial design is now available (Exhibit 2). It is an open-label, dose-finding Phase I study of BI 765063 (OSE-172) as single agent and in combination with BI 754091 (anti-PD-1) to characterise safety, PK/PD and preliminary efficacy in patients with advanced solid tumours. OSE is responsible for running the trial but BI bears the costs, according to the collaboration and licensing agreement. BI will take over the development after Phase I.

In total 116 patients with advanced/metastatic tumours are expected to be enrolled. The study includes two steps and four cohorts, essentially two dose escalation cohorts and two expansion cohorts (BI 765063 standalone and BI 765063 in combination with BI’s own anti-PD-1). The dose-escalation cohorts are enrolling patients with advanced/metastatic primary or recurrent malignancies who failed or are not eligible to standard therapy. Then the expansion cohorts will be restricted to selected cancers (see Exhibit 2 notes for the list).

Exhibit 2: Phase I study with BI 765063 monotherapy and in combination with BI 754091 (NCT03990233)

Number of patients

116

Treatment groups

Step 1. Cohort A – dose escalation: BI 765063 alone patients with advanced solid tumours

Step 1 Cohort B – dose escalation: BI 765063 in combination with BI 754091 (PD-1 inhibitor) in patients with advanced solid tumours

Step 2. Cohort C1 – expansion cohort: BI 765063 patients with selected advanced solid tumours*

Step 2. Cohort C2 – expansion cohort: BI 765063 in combination with BI 75409 in patients with selected advanced solid tumours*

Endpoints

Primary endpoint: Number of patients with dose-limiting toxicities (DLTs) during the first treatment cycle; maximum tolerated dose (MTD) determination; number of patients with DLT-like events during the whole treatment

Secondary endpoints: safety, tolerability, PK parameters, objective response rate (ORR), percentage and evolution of SIRPα receptor occupancy (RO) in blood at pre, on-treatment and after the end of treatment

Source: clinicaltrials.gov. Note: *NSCLC, triple negative breast cancer, pancreatic cancer, melanoma, head and neck squamous cell carcinoma, renal cell carcinoma, urothelial carcinoma, small cell lung cancer, gastric cancer, colorectal cancer and ovarian cancer.

Combining BI 765063 with a PD-1 inhibitor is based on the complementary mechanisms of action of the two agents. That is, CD47/SIRPα inhibition should lead to phagocytosis of tumour cells by myeloid cells; this leads to tumour antigen uptake and presentation, which should activate the adaptive immune system, namely, T-cells killing tumour cells, which in turn is facilitated by PD-1/PD-L1 inhibition. OSE recently published an article describing the role of SIRPα in the induction and maintenance of immune tolerance and a poster presentation supporting the combination of a SIRPα monoclonal antibody and checkpoint inhibitor (anti-PD-L1 not anti-PD-1 as in the Phase I study). These pre-clinical studies add support to OSE’s strategy. As with many Phase I cancer trials, the indications are quite broad at the moment but will focus on the most promising cancers in further trials.

BiCKI bispecific platform: PD-1 + innovative targets

OSE presented its new BiCKI platform at the World Immunotherapy Congress in San Diego on 5 March 2019. This included some information about the bispecific/fusion antibody platform and included a lot of information on the first potential bispecific candidate, BiCKI IL-7. While we do not include any new assets in our valuation, we conducted a more detailed review of the platform and the opportunities.

Bispecifics and other types of antibodies can bind multiple targets. BiCKI is a bispecific/fusion antibody platform (Exhibit 3) that consists of:

A humanised high-affinity anti-PD-1 monoclonal antibody (blue Y in Exhibit 3). OSE has developed its own anti-PD-1 antibody that forms the ‘backbone’ of the bispecifics. So far there is limited information about this anti-PD-1 but OSE indicated it was chosen due to its good yield in terms of manufacturing and productivity, in particular in bispecific format. This is an IgG antibody in that it has a normal structure with heavy and light chains, where the Fab region binds to the PD-1 receptor on T-cells.

Engineered proteins attached to the Fc region (green circles in Exhibit 3). The silent Fc region of the antibody (base of the heavy chains) is the effector part of the molecule. It determines what effect the antibody has once it has bound to the antigen – usually an immune response. OSE plans to engineer different proteins to the Fc region, eg IL-7, through protein fusion to target novel receptors.

Exhibit 3: BiCKI platform (left) and BiCKI IL-7 mechanism of action on T-cells (right)

Source: OSE BiCKI presentation at the World Immunotherapy Congress in San Diego on 5 March 2019

OSE hopes these anti-PD-1 bispecifics will help overcome the resistance (primary and secondary, depending on the second target) to anti-PD-1 drugs by selecting targets that are involved in different stages of the immunity cycle and so are complementary. In particular, OSE is looking for targets that would have synergistic potential.

OSE’s first candidate based on this platform is BiCKI IL-7 (Exhibit 3). OSE is already working with the IL-7 receptor (IL-7R) from the OSE-703 and OSE-127 programmes, so has experience in this area with a cytotoxic agonist asset. OSE suggested a few mechanisms of action for BiCKI IL-7 during the BiCKI presentation in March 2019, but perhaps the most important is that IL-7R sustains the life of exhausted T-cells. IL-7 is a cytokine that controls the proliferation, apoptosis and activation of CD4+ and CD8+ T-cells in humans. IL-7Rα expression is reduced in exhausted T-cells. Activating the IL-7Rα receptor with IL-7 should reduce T-cell exhaustion. The main advantage of the bispecific drug (over a combination of two drugs: anti-PD-1 with IL-7) is that BiCKI IL-7 synergistically increases TCR signalling and hence antigen-specific T cells responses.

OSE presented the first preclinical data with its BiCKI IL-7 technology at the International Cancer Immunotherapy Conference (CICON; 25–28 September, 2019) in Paris. The company showed that the bifunctional anti-PD1/IL-7 fusion protein potentiates effector function of exhausted T-cells and disarms the suppressive activity of regulatory T-cells.

Large biotech/pharma are getting in early on bispecifics

Many players are trying to tackle the resistance to checkpoint inhibitors issue through developing combination therapies and bispecifics to solve the same problem. Some existing projects in the anti-PD-1 bispecifics space are listed in Exhibit 4. The most advanced candidates are in Phase I. There are a few companies trying to use bispecifics to target multiple checkpoints, eg XmAb20717 targets both PD-1 and CTLA-4, with the aim of further reducing any T-cell inhibition by tumour cells and promoting T-cell activation.

Exhibit 4: Anti-PD-1 bispecifics

Drug

Company

Target 1

Target 1 – location

Target 2

Target 2 - location

Target 2 - mechanism of action

Indications, stage of development

Targeting multiple checkpoints

XmAb20717

Xencor

PD-1

T-cell

CTLA-4

T-cell

Promote tumour-selective T-cell activation

Advanced solid tumours (Phase I]

RG7769

Roche

PD-1

T-cell

TIM-3

T-cell

Promote tumour-selective T-cell activation

Advanced solid tumours (Phase I]

MEDI5752

AstraZeneca

PD-1

T-cell

CTLA-4

T-cell

Promote tumour-selective T-cell activation

Advanced solid tumours (Phase I]

FS118

F-star

PD-1

T-cell

LAG-3

T-cell

Promote tumour-selective T-cell activation

Advanced solid tumours or haematological malignancies (Phase I]

Other

SL-279252

Takeda, Shattuck Labs

PD-1

T-cell

OX40 (bispecific contains OX40L)

T-cells

Promotes cytokine production, induces proliferation of memory and effector T-cells against tumour cells

Advanced solid tumours or lymphomas (Phase I]

XmAb23104

Xencor

PD-1

T-cell

ICOS

T-cell

Promotes T-cell activation, enhances T-cell response against tumour cells

Advanced solid tumours (Phase I]

BiCKI IL-7

OSE Immunotherapeutics

PD-1

T-cell

IL-7Rα

T-cell

Expands T-cells, restores exhausted T-cells

Preclinical stage

Source: Evaluate Pharma, Clinicaltrials.gov, Edison Investment Research. Note: MAb: monoclonal antibody, ICOS: inducible T-cell co-stimulator, CTLA: Cytotoxic T lymphocyte associated protein, TIM: T-cell immunoglobulin & mucin domain, TGF: transforming growth factor.

The bispecifics field has recently become a popular area. There are three bispecific antibodies (they do not target checkpoint receptors) that have been approved – Blincyto (blinatumomab, Amgen), Hemlibra (emicizumab, Roche) and Removab (catumaxomab, Fresenius now withdrawn), but there are many more in clinical stages (57 individual bispecifics according to EvaluatePharma). They are being developed for both oncology and immunology indications.

Most of the programmes are still very early stage therefore the existing deals are for bispecific platforms and pre-clinical programmes. There have been several large deals (Exhibit 5), which is promising for OSE. Most of the pre-clinical deals in Exhibit 5 include a collaboration based on the licensor’s bispecific platform plus rights for their existing pre-clinical bispecific programmes. These deals achieved between $45–150m in upfront payments and $180–1,700m in milestone payments (for platform plus existing programmes), depending on the number of candidates included in the deal. As there is an appetite for bispecifics platforms and bispecific candidates from pharma, OSE’s decision to invest in BiCKI seems well founded.

Exhibit 5: Pre-clinical bispecifics deals

Date

Licensor

Licensee

Product

Pharmacological class / Target

Indications included

Upfront ($m)

Milestones ($m)

08/03/2019

Xencor

Genentech (Roche)

XmAb24306

IL-15 and IL-15 receptor alpha (IL-15RA) bispecific MAb

Autoimmune disease and cancer

120

180

11/02/2019

TeneoOne

AbbVie

TNB-383B

Anti-B cell maturation antigen (BCMA) and CD3 bispecific MAb

Multiple myeloma

90

N/A

20/12/2018

Agenus

Gilead Sciences

AGEN1423 + option on four other programmes

Undisclosed bispecific MAb mechanism

Cancer indications

150 (including 30 equity)

1,700

27/11/2018

Xymeworks

BeiGene

ZW25, ZW49

HER2

Cancer indications

40

390

27/11/2018

Xymeworks

BeiGene

Azymetric and EFECT platforms

Bispecific platform

Cancer indications

20

702

03/10/2017

CytomX Therapeutics

Amgen

CytomX Probody T-cell engaging bispecific

Anti-EGFR and CD3 bispecific MAb

Cancer indications

60 (including 20 equity)

455

+ up to three additional undisclosed targets

N/A

N/A

Up to 950 in additional upfront and milestones

04/06/2017

F-star

Merck KGaA

FS118 + option on 4 other programmes

Anti-LAG 3 and PD-1 bispecific MAb

Cancer indications

€115

€1,000

28/06/2016

Xencor

Novartis

XmAb14045

Anti-CD3 and IL-3 alpha/CD123 bispecific MAb

Acute myeloid leukaemia

150

N/A

XmAb 13676

Anti-CD3 and CD20 bispecific MAb

B-cell malignancies

16/09/2015

Xencor

Amgen

AMG 424 + 5 other programs

Anti-CD3 and CD38 bispecific MAb

Multiple myeloma + other cancer /immune disorders

45

1,700

Source: Edison Investment Research, EvaluatePharma, company press releases.

Financials

OSE reported a top line of €16.0m in H119, which was mostly a milestone from BI (the rest is R&D cost reimbursement to OSE). The milestone payment of €10m from Servier was booked as prepaid income (cash balanced with deferred income plus €2m in VAT received as OSE and Servier are both French companies). Total H119 operating expenses were €12.1m, of which R&D costs and overhead expenses amounted to €9.2m and €2.9m respectively, resulting in an operating profit of €3.9m. R&D costs are mainly associated with the Tedopi Phase III NSCLC study. Our full 2019 and 2020 estimated operating expenses were €19.6m and €19.7m, which we now revise to €22.7m and €22.8m.

As of end-H119, OSE had cash, cash equivalents and financial assets of €26.5m (includes ‘current financial assets’). The balance sheet also includes debt of €5.1m, which is mainly government loans. In September 2019, OSE announced it had received a €5.4m milestone payment from Bpifrance, the French public investment bank, in connection to the initiation of the Phase I trial with BI 765063 (€4.8m as a loan and €0.6m as income) as well. As part of a research consortium with the Léon Bérard cancer research centre, OSE also received a grant of €800k from the French National Research Agency, which will support preclinical research focused on validation of new targets linked to myeloid cells. Our model implies a comfortable cash reach to around end of 2020.

Valuation

We have raised our valuation of OSE to €198m or €13.2/share from €190m or €12.8/share previously. The increase is due to a better cash position and rolling our model forward, but is also a result of increased probability of success to a standard 10% for BI 765063 (OSE-172) as the Phase I trial has now been initiated (previously we used a slightly discounted probability of 7.5%). The milestone payment from Servier and BI had no effect as we have already included them in our model (now moved from respective projects to cash in Exhibit 6). We make no other changes to our assumptions, described in detail in our initiation report.

We include Tedopi NSCLC, FR104, OSE-127 and OSE-172 in our valuation. Although GERCOR has initiated the Phase II study with Tedopi in pancreatic cancer, we still do not include this indication in the valuation because its commercial strategy has not been confirmed – OSE will evaluate this based on the Phase II results. We do not include the new bispecific platform in the valuation because it is still in a pre-clinical stage.

Exhibit 6: Sum-of-the-parts OSE valuation

Product

Launch

Peak sales
($m)

Unrisked NPV (€m)

Unrisked NPV/share (€)

Probability
(%)

rNPV
(€m)

rNPV/share
(€)

Tedopi – NSCLC

2023

657

269.6

18.0

25

58.9

3.9

OSE-127 - ulcerative colitis

2027

843

168.7

11.3

10

21.4

1.4

OSE-172 - multiple cancer indications (TNBC)

2027

1,801

258.6

17.3

10

36.7

2.4

FR104 - rheumatoid arthritis

2026

1,056

230.0

15.4

15

55.4

3.7

Gross cash at end-H119*

25.5

1.7

100%

25.5

1.7

Valuation

952.4

63.6

197.9

13.2

Source: Edison Investment Research. Note: WACC = 12.5% for product valuations. Note: *OSE’s debt, not shown above, consists of government loans, which are typically repayable on commercial success only.

Exhibit 7: Financial summary

EUR'000s

2016

2017

2018

2019e

2020e

December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

383

6,682

24,456

16,579

0

Cost of Sales

0

0

0

0

0

Gross Profit

383

6,682

24,456

16,579

0

Research and development

(5,149)

(14,641)

(15,057)

(17,000)

(17,000)

EBITDA

 

 

(6,760)

(12,502)

4,963

(5,988)

(22,746)

Operating Profit (before amort. and except.)

 

 

(6,867)

(12,625)

4,847

(6,079)

(22,827)

Intangible Amortisation

24,365

0

0

0

0

Exceptionals

0

0

0

0

0

Other

0

0

0

0

0

Operating Profit

17,498

(12,625)

4,847

(6,079)

(22,827)

Net Interest

0

0

0

(1)

(6)

Profit Before Tax (norm)

 

 

(6,867)

(12,625)

4,847

(6,080)

(22,833)

Profit Before Tax (reported)

 

 

17,498

(12,625)

4,847

(6,080)

(22,833)

Tax

3,074

2,238

783

0

0

Profit After Tax (norm)

(3,793)

(10,387)

5,630

(6,080)

(22,833)

Profit After Tax (reported)

20,572

(10,387)

5,630

(6,080)

(22,833)

Average Number of Shares Outstanding (m)

12.5

14.4

14.6

14.8

15.0

EPS - normalised (€)

 

 

(0.30)

(0.72)

0.38

(0.41)

(1.53)

EPS - normalised fully diluted (€)

 

 

(0.30)

(0.72)

0.36

(0.41)

(1.53)

EPS - reported (€)

 

 

1.64

(0.72)

0.38

(0.41)

(1.53)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

100.0

100.0

100.0

100.0

N/A

EBITDA Margin (%)

N/A

N/A

20.3

N/A

N/A

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

N/A

N/A

19.8

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

53,009

53,367

53,879

55,617

55,535

Intangible Assets

52,600

52,600

52,600

52,600

52,600

Tangible Assets

110

429

904

814

732

Investments

299

338

375

2,203

2,203

Current Assets

 

 

30,084

12,655

14,687

26,709

4,802

Stocks

0

0

0

0

0

Debtors

12,318

127

2,253

1,178

1,178

Cash

14,885

9,646

9,573

22,670

3,624

Other

2,881

2,882

2,861

2,861

0

Current Liabilities

 

 

(18,663)

(14,497)

(9,075)

(20,909)

(20,909)

Creditors

(18,076)

(13,908)

(8,447)

(20,253)

(20,253)

Short term borrowings

(587)

(589)

(628)

(656)

(656)

Long Term Liabilities

 

 

(6,358)

(7,409)

(6,075)

(16,324)

(16,324)

Long term borrowings

(1,197)

(4,296)

(3,832)

(9,293)

(9,293)

Other long term liabilities

(5,161)

(3,113)

(2,243)

(7,031)

(7,031)

Net Assets

 

 

58,072

44,116

53,416

45,093

23,105

CASH FLOW

Operating Cash Flow

 

 

682

(7,995)

1,860

7,611

(21,901)

Net Interest

0

0

0

(1)

(6)

Tax

0

0

(783)

0

0

Capex

(30)

(353)

(593)

0

0

Acquisitions/disposals

0

0

0

0

0

Financing

(440)

(50)

(37)

0

0

Other

4,537

58

(95)

5,488

2,861

Dividends

0

0

0

0

0

Net Cash Flow

4,749

(8,340)

352

13,097

(19,046)

Opening net debt/(cash)

 

 

(8,352)

(13,101)

(4,761)

(5,113)

(12,721)

HP finance leases initiated

0

0

0

0

0

Other

0

0

(0)

0

0

Closing net debt/(cash)

 

 

(13,101)

(4,761)

(5,113)

(12,722)

6,325

Source: Company data, Edison Investment Research


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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by OSE Immunotherapeutics and prepared and issued by Edison, in consideration of a fee payable by OSE Immunotherapeutics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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