RhoVac — Limited impact from COVID-19 pandemic

Addressing the impact of the COVID-19 pandemic, RhoVac has pointed out that not a single patient has dropped out of the Phase II BRaVac trial. Furthermore, clinical trial sites in Germany started enrolling patients in April when the pandemic was peaking. Clinical trial sites in six European countries and the US will be recruiting patients, of which Denmark, Finland and Germany already are, while the US, Belgium and Sweden should start in coming weeks. Originally, RhoVac anticipated full enrolment by end September, while the current target is the end of December. The company stated that the modest delay is manageable within the existing budget, so we do not see any significant effect on the investment case.

There is an unexpected benefit of the delay of recruitment in European countries. Originally, the BRaVac trial design focused on Europe and the IND was to be filed with the FDA later. The US can now be a source of patients alongside Europe, resulting in more patients being recruited overseas than initially planned. When CEO Anders Månsson came on board in May 2019, he argued for inclusion of sites in the US. The FDA typically asks for data from a meaningful sample of US patients to initiate regulatory approval discussions. So, although such expansion adds to the costs of the trial, in general, it is advisable to have a presence in the US as soon as possible in drug development.

The FDA approved the IND in February 2020 and RhoVac indicated that as a next step it will apply for fast-track designation in August. The requirements for this designation are that the drug is meant to treat an important disease and that the drug addresses an unmet need. Prostate cancer is one of the most prevalent malignancies and there is no treatment available for the specific indication that RhoVac is initially targeting, ie prevention of cancer metastases after curative intent therapy of the local tumour. ‘Watchful waiting’ is common practice in this setting, and since there is a significant risk of recurrence, waiting without knowing what will happen can very negatively affect the mental health of the patients and their families. The FDA has agreed that RhoVac can use placebo in the control arm, which is another sign that the regulator agrees there is no other option than just waiting. Should there be a viable intervention, it would be unethical to use placebo and RhoVac would have been asked to use standard of care treatment as the control instead. So, all in all, we believe there is a good chance that the application will be approved.

The benefits of Fast track designation include more frequent meetings and written correspondence with the FDA, potential for accelerated approval or priority review if additional criteria are met, and rolling review, which means a company can submit completed sections of its new drug application (NDA) for review by the FDA, rather than waiting until every section of the application is completed.

Near-term newsflow includes:

The article publication is particularly interesting, as this will be a peer-reviewed article, a form of external validation. It should also contain a more detailed background description of the science, as well as some additional data. The full results of the Phase I/II study have already been published via a press release, so we do not expect substantial modifications to our R&D model, but RhoVac mentioned the article will contain indicative PSA data as well as in-depth analysis of RV001’s pharmacodynamics.

With regards to background on the target RhoC (and as a reminder), a comprehensive third-party review article on this target was published in July 2019 for the first time to our knowledge (Thomas et al, ‘RhoC: a fascinating journey from a cytoskeletal organizer to a Cancer stem cell therapeutic target’). In cancer, RhoC is responsible for enhanced migration, invasion and metastasis. Existing data show that it is essential for cancer metastasis, which is how RhoVac is developing its vaccine (prevention of prostate cancer spreading). We have reviewed this article in detail in our January 2020 report.

With regards to exploratory preclinical studies in other cancers that the company aims to initiate this year, RhoVac has a clear strategy to complete the ongoing Phase IIb trial and then to out-license the asset. To increase the attractiveness of RV001’s data package, however, the company plans to conduct one or more small exploratory preclinical and potentially clinical trials in other cancer indications.

On the personnel front, it is worth mentioning that RhoVac has been ramping up its scientific advisory board. This year alone three new experts have joined the board. Anne J Ridley, PhD, is the professor of cell biology and head of School of Cellular and Molecular Medicine, University of Bristol, UK. Prof Ridley has 30 years of research experience in cancer, specifically in tumour progression, inflammation, cell migration and the Rho family of GTPases to which RhoC belongs.

Prof Ridley joined the board in February, while Prof Emeritus Per-Anders Abrahamsson and Prof Klaus Brasso joined in June. Per-Anders-Abrahamsson is former head of operations at the Urological Clinic, Skåne University Hospital SUS and research group head at the Faculty of Medicine, Department of Clinical Sciences, at Lund University. Prof Brasso is an expert in prostate cancer and the principle investigator in RhoVac's ongoing Phase IIb BRaVac study.

The three new advisors joined Professor Per thor Straten, who is co-founder of RhoVac and a long-time scientific advisor. He has extensive research experience in immunotherapy, specifically therapeutic cancer vaccines. With these four scientific advisers, RhoVac now covers both the scientific and clinical sides of RV001 development.

Q120 operating costs were SEK9.7m, up from SEK6.2m in Q119 due to more intensive R&D activities as the BRaVac study is gaining pace. Grant income of SEK2.4m and tax credits of SEK1.6m meant that the Q120 net loss of SEK6.1m was largely in line with SEK5.7m booked in Q119.

The reported end-Q120 cash position was SEK125m with no interest-bearing debt. However, RhoVac will also receive the remaining part of the grant of c SEK13m and expects around SEK18m in tax credits during the duration of the BRaVac trial. These expected amounts in addition to prepaid expenses of SEK16m (current asset on the balance sheet) mean that the total expected funding is around SEK172m, which is more than sufficient to complete the ongoing Phase IIb study. We maintain our financial estimates.

Our RhoVac valuation is marginally higher at SEK925m or SEK48.6/share compared to the previous SEK889.5m or SEK46.7/share due to rolling the model forward, which offset the lower cash position (SEK130m at end-Q419). We maintain the assumptions in our risk-adjusted NPV model. Our valuation is based on RV001 in prostate cancer only, specifically in patients with biochemical recurrence following radical prostatectomy or radiotherapy.

According to our model, a successful Phase IIb outcome would result in RhoVac’s rNPV increasing to SEK2.05bn or SEK108/share (not including the net cash estimate). This would include setting the probability of success at 40% as a Phase III-ready asset and changing the date of the valuation to the start of 2022, but leaving all other inputs unchanged.