OSE Immunotherapeutics — Full Lusvertikimab results reflect potential in UC

OSE Immunotherapeutics (PAR: OSE)

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Research: Healthcare

OSE Immunotherapeutics — Full Lusvertikimab results reflect potential in UC

OSE Immunotherapeutics’ final analysis of the CoTikiS trial in ulcerative colitis (UC) confirmed that Lusvertikimab met the primary endpoint with statistical significance, highlighting its potential to offer a clinically meaningful solution for the condition. In our view, this marks a positive step forward for the candidate, which, to our knowledge, has a unique mechanism of action to address chronic inflammatory and autoimmune diseases. We believe that OSE plans to advance this programme to the next stages of development (Phase IIb or Phase III) once a partner is onboard. Based on the encouraging full results, we have increased our probability of success for Lusvertikimab in UC to 35% (from 17%), resulting in a valuation upgrade for OSE to €541.2m or €24.8/share (from €465.7m or €21.3/share previously).

Written by

Arron Aatkar

Analyst

Healthcare

OSE Immunotherapeutics

Full Lusvertikimab results reflect potential in UC

Clinical update

Pharma and biotech

21 November 2024

Price

€8.65

Market cap

€189m

€0.89/US$

Gross cash and cash equivalents at 30 June 2024

€80.8m

Shares in issue

21.8m

Free float

65%

Code

OSE

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(12.0)

18.5

86.8

Rel (local)

(7.0)

23.0

88.2

52-week high/low

€10.74

€3.20

Business description

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

Next events

OSE-279: Phase I/II trial update

Q424

Tedopi: ARTEMIA interim updates

2026

Analysts

Dr Arron Aatkar

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

OSE Immunotherapeutics is a research client of Edison Investment Research Limited

OSE Immunotherapeutics’ final analysis of the CoTikiS trial in ulcerative colitis (UC) confirmed that Lusvertikimab met the primary endpoint with statistical significance, highlighting its potential to offer a clinically meaningful solution for the condition. In our view, this marks a positive step forward for the candidate, which, to our knowledge, has a unique mechanism of action to address chronic inflammatory and autoimmune diseases. We believe that OSE plans to advance this programme to the next stages of development (Phase IIb or Phase III) once a partner is onboard. Based on the encouraging full results, we have increased our probability of success for Lusvertikimab in UC to 35% (from 17%), resulting in a valuation upgrade for OSE to €541.2m or €24.8/share (from €465.7m or €21.3/share previously).

Year
end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/22

18.3

(18.0)

(0.96)

0.0

N/A

N/A

12/23

2.2

(23.2)

(1.18)

0.0

N/A

N/A

12/24e

98.5

64.5

2.80

0.0

3.1

N/A

12/25e

86.3

50.9

2.33

0.0

3.7

N/A

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

Statistically significant & clinically meaningful results

The full CoTikiS results confirmed the potential efficacy and safety of Lusvertikimab in UC. The primary endpoint (improvement of the Modified Mayo Score (MMS) at Week 10) was met with statistical significance at the two tested doses, with the pooled group showing a -1.00 point difference compared to placebo (p=0.01). Key secondary endpoints showed high rates of clinical and endoscopic remission, and in addition, the candidate was found to be comparable to placebo in terms of safety and tolerability, demonstrating its potential as a first-in-class interleukin-7 (IL-7) antagonist. In our view, the decision to advance the programme in partnership represents a sensible strategy, and we highlight that big pharma has shown interest in the disease area, exemplified by Eli Lilly’s $3.2bn acquisition of Morphic.

Registrational Tedopi trial remains the top priority

OSE’s strategic priority remains the registrational ARTEMIA trial, which commenced in September 2024, assessing Tedopi as a monotherapy in the second-line non-small cell lung cancer setting. We expect interim updates in 2026, top-line results in 2027, and provided the data are positive, a commercial launch from 2028. For a more detailed discussion, we direct readers to our prior note.

Valuation: Upgrades to €541.2m or €24.8 per share

We expect the release of the full data for the Phase II CoTikiS trial to support OSE’s discussions with potential partners for Lusvertikimab’s next phase of development in UC. We therefore increase our probability of success for the programme to 35%, from 17% previously. This results in our overall valuation for OSE rising to €541.2m or €24.8/share, from €465.7m or €21.3/share previously.

CoTikiS: A Phase II trial of Lusvertikimab in UC

The CoTikiS trial was a multicentre, randomised, double-blind, placebo-controlled, parallel-group study designed to assess Lusvertikimab in UC patients. The study included participants with moderate to severe UC, who were either unresponsive or had inadequate response to the standard of care and other biologics. Participants were randomised to receive a dose of either 850mg or 450mg, or placebo, and the primary endpoint was based on MMS improvements, a FDA-recognised outcome measure (Exhibit 1). The MMS is a nine-point scale measuring disease activity in patients with UC, based on three parameters – stool frequency, rectal bleeding and endoscopic sub-scores – with each component assigned a score between zero and three, where higher scores correspond to greater disease severity.

134 patients were analysed in the Phase II study in the period up to week 10 (850mg group: n=50; 450mg group: n=35; placebo group: n=49). 120 patients treated with Lusvertikimab participated in the 24-week open-label extension.

Exhibit 1: CoTikiS trial design

Source: OSE corporate presentation (November 2024). Note: Induction: Lusvertikimab at 450mg/850mg or placebo: IV infusions at Week 0; 2; 6. Analysis at Week 10; Open-label extension at week 10: additional infusions at 850mg every 4 weeks for 6 months.

While the topline results were first published in July 2024, OSE shared the full results in November 2024, including the final analysis of the primary endpoint at week 10. The primary endpoint was met with statistical significance at both tested doses. While the placebo group reported a 1.5-point improvement on the MMS from baseline, the higher dose group of 850mg recorded a 2.4-point improvement, while the 450mg dose cohort saw a 2.7-point improvement. The pooled cohort recorded a 2.5-point improvement from baseline. On a placebo-adjusted basis, these results translated to a 0.9-point difference versus placebo (p=0.036) in the 850mg group, and notably, a higher 1.16-point difference versus placebo (p=0.019) in the 450mg cohort. For the pooled cohort (n=85), a 1.00-point difference versus placebo (p=0.01) was recorded at week 10 (Exhibit 2).

Importantly, the trial also reported encouraging results on key secondary endpoints. One of the key secondary endpoint measures was clinical remission, defined by an MMS of ≤2 points, including a rectal bleeding score of zero. The results showed that, compared to 4% for the placebo group, 13% of patients in the 850mg group (odds ratio, OR, 3.26), and 22% of patients in the 450mg group (OR 6.19), achieved clinical remission, again showing superior result at the lower of the two tested doses (Exhibit 3). Data from the lower dose cohort compares favourably to results from the Phase III induction trial data for AbbVie’s second-generation biologic Skyrizi, which received FDA approval in June 2024 for moderate to severe UC. This study evaluated 975 patients (2:1 active arm to placebo) and reported a clinical remission rate of 20.3% for the candidate versus 6.2% for placebo following a 12-week treatment period. However, we caution that while this data provides directional guidance, one cannot draw firm conclusions given the possible differences in patient populations, trial design, treatment dosage and duration.

Exhibit 2: CoTikiS primary endpoint data – MMS improvement

Exhibit 3: CoTikiS clinical remission data

Source: OSE corporate presentation. Note: MMS improvement defined on mean change at week 10 from baseline on the three sub-scores: rectal bleeding, stool frequency, endoscopic.

Source: OSE corporate presentation. Note: Clinical remission defined by a modified Mayo score of ≤2 points with no individual sub-score of >1 point and a rectal bleeding sub-score at 0.

Exhibit 2: CoTikiS primary endpoint data – MMS improvement

Source: OSE corporate presentation. Note: MMS improvement defined on mean change at week 10 from baseline on the three sub-scores: rectal bleeding, stool frequency, endoscopic.

Exhibit 3: CoTikiS clinical remission data

Source: OSE corporate presentation. Note: Clinical remission defined by a modified Mayo score of ≤2 points with no individual sub-score of >1 point and a rectal bleeding sub-score at 0.

For CoTikiS, clinically meaningful benefits were also observed across measures of endoscopic improvement and endoscopic remission, as well as in measures on the UC endoscopic index of severity (UCEIS) (Exhibit 4). As with the primary endpoint measure and the clinical remission data, the 450mg group appeared to outperform the 850mg group. We note that an early interim futility analysis (including c 30% of patients) had proposed an interruption of the 450mg group, and as such, the 850mg group was initially considered for the primary analysis. However, in the final analysis the futility of the 450mg group was not confirmed, and the Statistical Analysis Plan (SAP) Addendum confirmed the inclusion of 450mg group. The two groups were pooled to assess the global treatment effect on the primary efficacy measure.

Exhibit 4: CoTikiS endoscopic improvement, remission and index of severity data

Source: Source: OSE corporate presentation. Notes: *Endoscopic remission defined by endoscopic MMS sub-score =0. **Endoscopic improvement defined by endoscopic Mayo sub-score ≤1 point. ***Defined by three sub-scores: vascular pattern: 0 to 2, bleeding: 0–3, erosions-ulcerations: 0–3.

In terms of safety, Lusvertikimab exhibited a desirable safety and tolerability profile throughout the 24-week label extension period (up to week 34), bolstering its data package. Importantly, there were no differences observed between the two tested doses and placebo in terms of serious adverse events, adverse events leading to discontinuation, severe drug-related adverse events, opportunistic infections or infusion reactions during the induction period.

Collectively, we view these full results as favourable for the potential of Lusvertikimab to address moderate to severe UC. This latest update indicated that OSE will look to advance the programme with a development partner, which we anticipate could materialise in 2025.

Ulcerative colitis: Seeking novel treatments

UC is a form of inflammatory bowel disease, associated with inflammation around the lining of the large intestines (colon) and rectum. Symptoms include abdominal pain, cramping, bloating, blood in the stool and diarrhoea. The condition most commonly affects people between 15–30 years of age and can range from mild to severe. The prevalence of UC was estimated to be five million cases globally (as of 2023). The US prevalence is estimated to be between 600990k. According to a report by Market Research Future, the global UC treatment market was valued at US$7.2bn in 2022, and projected to reach US$10.8bn by 2032, at a CAGR of 5.1%.

Standard UC treatment regimens include aminosalicylates (5-ASA drugs) in the first-line setting, which work more effectively where cases are mild to moderate. For patients not benefiting from 5-ASA drugs, other treatment options include corticosteroids (such as prednisone), immunomodulators (such as methotrexate and azathioprine), biologics and JAK inhibitors. Biologics typically work by inhibiting or blocking proteins/cytokines that cause inflammation, and since the first biologics approval in the indication in the late-1990s (Remicade, approved in 1998), they have become the standard of care in moderate to severe UC. Three separate categories of biologics are currently approved for the condition:

Anti-tumour necrosis factor (anti-TNF) inhibitors: Humira (adalimumab), Remicade (infliximab) and Simponi (golimumab),

Integrin receptor antagonists: Entyvio (vedolizumab), and

Interleukin-12 and interleukin-23 antagonists: Stelara (Ustekinumab) and Skyrizi (risankizumab).

While anti-TNFs were the first biologics to receive the regulatory green light in UC, recent years have seen second-generation biologics, such as interleukin (IL) antagonists, gain prominence. As noted previously, the most recently approved biologic for UC is Skyrizi (an IL-23 antagonist), which received FDA approval in June 2024 in moderate to severe UC.

While available biologics continue to be an effective treatment option for UC, a portion of patients remain either unresponsive or eventually develop resistance to the treatments. Reports note that treatment efficacy tends to plateau over time, with less than 50% of patients achieving remission over one year. In our view, this highlights the need for alternative treatments with novel mechanisms of action.

OSE’s Lusvertikimab targets IL-7 and its receptor IL-7R, a cytokine implicated in UC and other inflammatory bowel diseases, and, to our knowledge, is the most clinically advanced IL-7R antagonist in clinical development, targeting CD127 (a cytokine that modulates the proliferation, apoptosis and activation of CD4 and CD8 T-cells). Reported scientific data suggests that high expression of IL-7R is associated with poor responses to other biological treatments, such as anti-TNF therapies and could, therefore, offer a solution as a potentially more effective treatment compared to other biologics.

Valuation

We expect the release of the additional positive data on the primary and secondary endpoints of the Phase II CoTikiS trial to support OSE’s discussions with potential partners for Lusvertikimab’s next phase of development in UC. We therefore increase our probability of success for the programme to 35%, from 17% previously. This results in our overall valuation of OSE rising to €541.2m or €24.8/share, from €465.7m or €21.3/share previously.

Exhibit 5: OSE rNPV valuation

Product

Launch

Peak sales (€m)

NPV
(€m)

NPV/share (€)

Probability

rNPV
(€m)

rNPV/share (€)

Tedopi – NSCLC

2028

541

421.1

19.3

67%

274.3

12.6

OSE-127 – ulcerative colitis

2028

819

318.4

14.6

35%

125.9

5.8

BI 765063 – multiple cancer indications (MSS CRC)

2029

513

202.2

9.3

14%

40.5

1.9

FR-104 – Veloxis deal milestones (kidney transplantation)

2029

92

149.7

6.9

17%

27.7

1.3

OSE-279 solid tumours (SCLC)

2029

416

206.0

9.4

14%

35.9

1.6

Net cash at 30 June 2024 (including lease liabilities)

36.9

1.7

100%

36.9

1.7

Valuation

 

 

1,334.2

61.1

541.2

24.8

Source: Edison Investment Research

Based on our cash burn projection, we estimate the current cash reserves to be sufficient for the company to fund operations into 2027, in line with management guidance. We note that this does not consider further licensing or milestone-related inflows from partners, which should widen the runway further.

Exhibit 6: Financial summary

€000s

2022

2023

2024e

2025e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

18,302

2,227

98,480

86,271

Cost of Sales

0

0

0

0

Gross Profit

18,302

2,227

98,480

86,271

Research and development

(26,893)

(17,158)

(23,575)

(26,696)

Overhead expenses

(6,673)

(6,015)

(7,218)

(7,435)

EBITDA

 

 

(14,992)

(19,566)

66,673

53,348

Operating Profit (before amort. and excepts.)

 

 

(18,478)

(22,986)

65,523

52,140

Intangible Amortisation

0

0

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

(18,478)

(22,986)

65,523

52,140

Net Interest

455

(235)

(1,070)

(1,231)

Profit Before Tax (norm)

 

 

(18,023)

(23,221)

64,453

50,910

Profit Before Tax (reported)

 

 

(18,023)

(23,221)

64,453

50,910

Tax

263

219

(3,540)

0

Profit After Tax (norm)

(17,760)

(23,002)

60,913

50,910

Profit After Tax (reported)

(17,760)

(23,002)

60,913

50,910

Average Number of Shares Outstanding (m)

18.5

19.6

21.7

21.8

EPS - normalised (c)

 

 

(95.86)

(117.58)

280.20

233.23

EPS - reported (€)

 

 

(0.96)

(1.18)

2.80

2.33

Dividend per share (€)

0.0

0.0

0.0

0.0

Gross Margin (%)

100.0

100.0

100.0

100.0

EBITDA Margin (%)

N/A

N/A

67.7

61.8

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

N/A

N/A

66.5

60.4

BALANCE SHEET

Fixed Assets

 

 

54,580

51,576

55,950

49,108

Intangible Assets

48,784

46,401

45,594

44,787

Tangible Assets

743

464

471

520

Investments

5,053

4,711

9,885

3,801

Current Assets

 

 

37,200

30,478

85,599

139,027

Stocks

0

0

0

0

Debtors

403

982

1,031

1,083

Cash and cash equivalents

25,620

18,672

73,744

127,121

Other

11,177

10,824

10,824

10,824

Current Liabilities

 

 

16,268

18,799

17,108

24,520

Creditors

8,539

9,299

9,764

10,252

Short term borrowings

3,093

6,403

4,247

11,171

Other

4,636

3,097

3,097

3,097

Long Term Liabilities

 

 

42,855

40,280

38,175

26,439

Long term borrowings

37,231

35,508

34,261

23,090

Deferred tax liabilities

1,514

1,311

1,311

1,311

Other long term liabilities

4,110

3,461

2,603

2,038

Net Assets

 

 

32,657

22,975

86,267

137,177

CASH FLOW

Operating Cash Flow

 

 

(17,760)

(23,002)

60,913

50,910

Movements in working capital

 

(3,142)

(835)

416

437

Depreciation and other

3,486

3,420

1,150

1,208

Net Interest

(3,066)

(657)

0

0

Tax

(499)

(435)

0

0

Others

2,728

1,746

2,164

0

Net Cash Flows from Operations

 

 

(18,253)

(19,763)

64,642

52,554

Capex

(274)

(232)

(350)

(450)

Acquisitions/disposals

0

0

0

0

Others

300

(275)

0

0

Net Cash Flow from Investing Activities

 

 

26

(507)

(54,330)

54,440

Equity Financing

6

11,357

215

0

Debt financing

11,046

2,304

(3,403)

(4,247)

Other

(785)

(337)

(858)

(565)

Dividends

0

0

0

0

Net Cash Flow from Financing Activities

 

 

10,267

13,324

(4,046)

(4,812)

Effect of FX

0

0

0

0

Net Cash Flow

 

 

(7,960)

(6,946)

6,266

102,182

Opening net debt/(cash)

 

 

(1,167)

14,704

23,239

(35,236)

Change in debt

7,912

1,587

(3,403)

(4,247)

Change in cash

7,960

6,946

(6,266)

(102,182)

Closing net debt/(cash)

 

 

14,704

23,239

(35,236)

(92,860)

Source: Company reports, Edison Investment Research

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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 £60,000 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.

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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 £60,000 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 2024 Edison Investment Research Limited (Edison).

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United Kingdom

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Murray Income Trust — Income focus keeps paying dividends

Murray Income Trust (MUT) invests in high-quality, mainly UK-listed stocks. MUT’s manager, Charles Luke, believes quality stocks are best placed to support the trust’s objective to provide a high and rising dividend. The trust has realised this objective, delivering continually rising dividends for 51 years, and looks set to extend this record in FY25. MUT’s quality focus has undermined its relative performance over recent years, as value stocks have outperformed, but long-term performance has been positive and close to the benchmark, satisfying MUT’s capital growth goal. And Luke is optimistic about the prospects for UK equities, especially the quality businesses he targets. Investors have been underweight this market for some time, suggesting a rise in inflows is overdue, especially as the UK’s political environment has stabilised. Furthermore, declining interest rates should encourage greater M&A activity as investors seek to take advantage of valuations that Luke believes remain ‘compelling’.

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