Last close As at 06/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Healthcare
Two ONCOS-102 readouts are expected in the next 12 months: mesothelioma Phase I/II data around new year 2020, and data from the Phase I melanoma study in H120. Targovax is also conducting preclinical trials with its new oncolytic viruses, with first results likely to be released in H219. This will support its move to becoming a focused oncolytic virus company. In addition, it provided an update on the Phase I/II trial with ONCOS-102 + Imfinzi (durvalumab) in patients with advanced peritoneal malignancies in collaboration with the Ludwig Institute for Cancer Research, where the expansion part has now started. Our Targovax valuation is virtually unchanged at NOK1.18bn or NOK18.6/share (vs NOK18.9/share previously).
Written by
Targovax |
Multiple data readouts over next 12 months |
Q219 update |
Pharma & biotech |
4 September 2019 |
Share price performance
Business description
Next events
Analysts
Targovax is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Two ONCOS-102 readouts are expected in the next 12 months: mesothelioma Phase I/II data around new year 2020, and data from the Phase I melanoma study in H120. Targovax is also conducting preclinical trials with its new oncolytic viruses, with first results likely to be released in H219. This will support its move to becoming a focused oncolytic virus company. In addition, it provided an update on the Phase I/II trial with ONCOS-102 + Imfinzi (durvalumab) in patients with advanced peritoneal malignancies in collaboration with the Ludwig Institute for Cancer Research, where the expansion part has now started. Our Targovax valuation is virtually unchanged at NOK1.18bn or NOK18.6/share (vs NOK18.9/share previously).
Year end |
Revenue (NOKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.0 |
(122.3) |
(2.6) |
0.0 |
N/A |
N/A |
12/18 |
0.0 |
(147.3) |
(2.8) |
0.0 |
N/A |
N/A |
12/19e |
0.0 |
(140.2) |
(2.4) |
0.0 |
N/A |
N/A |
12/20e |
0.0 |
(137.2) |
(2.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Preclinical data on new viruses expected H219
The highlight of the quarter was the announced overall response rate (33%) and immune activation data from Part 1 of the Phase I study with ONCOS-102 in patients with advanced, unresectable, anti-PD1 refractory melanoma (n=9). We discussed this in detail in our previous update. The other ONCOS-102 trial in mesothelioma is progressing according to plan and Targovax expects to report results around new year 2020. Targovax’s preclinical pipeline is also maturing, with three new oncolytic viruses in in vivo testing. Patents have been filed on these viruses but not yet published, so little information about the mechanism of action has been disclosed at the moment. Preclinical data will be announced in H219 and will help guide Targovax towards specific indications. Management plans to select one virus to take into Phase I.
Financials: Cash reach to 2020
Targovax reported immaterial revenues and an operating loss of NOK44.6m in Q219, compared to NOK36.7m in Q218, largely in line with our expectations. External Q219 R&D expenses were NOK22.0m versus NOK14.5m a year ago, indicating more intensive clinical R&D. Targovax had cash and cash equivalents of NOK135m at the end of Q219 and guided that this should be sufficient to reach 2020, which is in line with our model. We make no changes to our estimates.
Valuation: NOK1.18bn or NOK18.6/share
Our Targovax valuation is virtually unchanged at NOK1.18bn or NOK18.6/share compared to NOK1.20bn or NOK18.9/share due to rolling our model forward, which was offset by a lower net cash position. All other assumptions for our rNPV model are unchanged. There will be several data readouts over the next 12–18 months (Exhibit 3) starting with preclinical data on new oncolytic viruses in H219.
Adjusting the treatment regime in melanoma study
With its Q219 results, Targovax presented data from Part 1 of the Phase I melanoma trial, which we discussed in our last note. Three of the nine anti-PD1-resistant patients in Part 1 responded to the ONCOS-102 and subsequent Keytruda treatment.
The Part 2 – of the Phase I melanoma trial is currently enrolling patients (six recruited, up to 12 expected). These patients will be on a different treatment regime, which management described as more optimal compared with Part 1 (Exhibit 1). Rather than receiving three injections of ONCOS-102 at week 1 followed by eight doses of Keytruda, patients in Part 2 will continue to receive doses of ONCOS-102 in combination with Keytruda, which means these patients will receive a total of 12 ONCOS-102 injections rather than three.
The rationale for combining an oncolytic virus with a checkpoint inhibitor is to overcome resistance to the checkpoint inhibitor, eg by releasing tumour antigens via direct tumour cell lysis, priming the immune response and increasing T-cell infiltration. To give continued injections of the virus could enhance and maintain these mechanisms to maximise the potential for overcoming resistance. Targovax expects to report data from Part 2 of the trial during H120.
|
Exhibit 1: Design of the Phase I melanoma study |
|
|
Source: Targovax |
How ONCOS-102 plus Keytruda data compare with other similar studies
Targovax provided a comparison of the ONCOS-102 plus Keytruda data from Part 1 of the melanoma trial (n=9) with data from other studies in the same patient population (ie melanoma patients that have progressed after a checkpoint inhibitor). These included Cavatak (oncolytic virus), lifileucel (T-cell therapy), CMP-001, tilsotolimod and SD-101 (TLR-9 agonists), and entinostat (HDAC inhibitor).
Although not directly comparable in terms of technology or clinical trial design, it is encouraging to see that ONCOS-102 produced a similar ORR (33%) to these other drugs (ORRs ranging from 19% to 38%) and we look forward to performing more meaningful comparisons at a later stage once more data are available.
In comparing clinical trial design, we would single out Checkmate Pharmaceuticals, a biotech company developing a TLR-9 agonist, a class of immunotherapy drugs, in combination with CPIs. Targovax’s ONCOS-102 is also a TLR-9 agonist. Checkmate Pharmaceuticals is conducting a Phase Ib study of intratumoral administration of its lead product CMP-001 in combination with Keytruda in patients with advanced melanoma who were considered refractory to Keytruda treatment. Published interim data (not complete) include an ORR rate of 22% (15/69).
|
Exhibit 2: ONCOS-102 plus Keytruda data cross-trial comparison |
|
|
Source: Targovax |
|
Exhibit 3: Targovax R&D pipeline |
|
|
Source: Targovax. Note: Trials sponsored by collaborators highlighted in grey. |
Valuation
Our updated valuation is NOK1.18bn or NOK18.6/share, compared to NOK1.20bn or NOK18.9/share previously, which is based on a risk-adjusted NPV analysis using a 12.5% discount rate, including NOK129.8m net cash. We continue to exclude other long-term debt of NOK53.5m in Finnish government grants from our valuation, as repayment is only required if the products are sold or launched. Our financial forecasts are unchanged.
Exhibit 4: Sum-of-the-parts Targovax valuation
Product |
Launch |
Peak sales |
Unrisked NPV (NOKm) |
Unrisked NPV/share (NOK) |
Probability (%) |
rNPV |
rNPV/share (NOK) |
|||
ONCOS-102 – advanced melanoma |
2025 |
590 |
2,634.6 |
41.6 |
15% |
652.2 |
10.3 |
|||
ONCOS-102 – mesothelioma |
2026 |
424 |
2,094.0 |
33.0 |
10% |
398.5 |
6.3 |
|||
Net cash, last reported |
129.8 |
2.0 |
100% |
129.8 |
2.0 |
|||||
Valuation |
4,858.4 |
76.7 |
1,180.5 |
18.6 |
||||||
Source: Edison Investment Research. Note: WACC = 12.5% for product valuations. Note: Excludes conditional government long-term debt of NOK48.8m.
Exhibit 5: Financial summary
NOK'000s |
2017 |
2018 |
2019e |
2020e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
37 |
27 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
37 |
27 |
0 |
0 |
||
Research and development |
(45,571) |
(64,006) |
(55,567) |
(50,103) |
||
EBITDA |
|
|
(119,630) |
(145,804) |
(139,856) |
(136,929) |
Operating Profit (before amort. and except.) |
|
|
(119,926) |
(146,100) |
(140,152) |
(137,225) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Operating Profit |
(119,926) |
(146,100) |
(140,152) |
(137,225) |
||
Net Interest |
(2,347) |
(1,249) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(122,273) |
(147,349) |
(140,152) |
(137,225) |
Profit Before Tax (reported) |
|
|
(122,273) |
(147,349) |
(140,152) |
(137,225) |
Tax |
328 |
334 |
0 |
0 |
||
Profit After Tax (norm) |
(121,945) |
(147,015) |
(140,152) |
(137,225) |
||
Profit After Tax (reported) |
(121,945) |
(147,015) |
(140,152) |
(137,225) |
||
Average Number of Shares Outstanding (m) |
47.3 |
52.6 |
58.0 |
63.3 |
||
EPS - normalised (NOK) |
|
|
(2.58) |
(2.79) |
(2.42) |
(2.17) |
EPS - normalised fully diluted (NOK) |
|
|
(2.58) |
(2.79) |
(2.42) |
(2.17) |
EPS - reported (NOK) |
|
|
(2.58) |
(2.79) |
(2.42) |
(2.17) |
Dividend per share (ore) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
100.0 |
100.0 |
N/A |
N/A |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
367,415 |
371,129 |
376,788 |
376,521 |
Intangible Assets |
366,250 |
370,240 |
370,240 |
370,240 |
||
Tangible Assets |
1,165 |
889 |
604 |
337 |
||
Investments |
0 |
0 |
5,944 |
5,944 |
||
Current Assets |
|
|
276,193 |
166,509 |
89,381 |
16,320 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
0 |
0 |
||
Cash |
261,573 |
151,189 |
74,061 |
1,000 |
||
Other |
14,620 |
15,320 |
15,320 |
15,320 |
||
Current Liabilities |
|
|
(28,295) |
(59,377) |
(46,070) |
(47,018) |
Creditors |
(28,295) |
(50,250) |
(33,181) |
(34,129) |
||
Short term borrowings |
0 |
(9,127) |
(12,889) |
(12,889) |
||
Long Term Liabilities |
|
|
(108,156) |
(103,565) |
(105,805) |
(156,791) |
Long term borrowings |
(48,806) |
(43,933) |
(46,173) |
(97,159) |
||
Other long-term liabilities |
(59,350) |
(59,632) |
(59,632) |
(59,632) |
||
Net Assets |
|
|
507,157 |
374,696 |
314,294 |
189,032 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(111,093) |
(112,816) |
(144,884) |
(124,018) |
Net Interest |
2,347 |
1,249 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(56) |
0 |
(31) |
(29) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
194,407 |
(30) |
67,785 |
0 |
||
Other |
(4,753) |
(3,041) |
1 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
80,852 |
(114,638) |
(77,128) |
(124,047) |
||
Opening net debt/(cash) |
|
|
(131,915) |
(212,767) |
(98,129) |
(14,999) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
(6,002) |
0 |
||
Closing net debt/(cash) |
|
|
(212,767) |
(98,129) |
(14,999) |
109,048 |
Source: Targovax accounts, Edison Investment Research
|
|
Research: Industrials
We expect a stronger H219 from John Laing Group (JLG) after a mixed performance in H1, when NAV growth was restrained by asset write downs. Although we have reduced our FY19 estimate for NAV per share to 353p (+9% year-on-year), we believe the long-term outlook for the business remains favourable given the global requirement for infrastructure investment. JLG’s shares now stand at a small discount to peer group averages, offering an attractive entry point for potential investors.