Ultimovacs — NIPU and INITIUM readouts incoming for UV1

Ultimovacs (OSE: ULTI)

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Research: Healthcare

Ultimovacs — NIPU and INITIUM readouts incoming for UV1

Ultimovacs is gearing up for top-line readouts from two of its five ongoing Phase II studies, marking potential major clinical milestones for its cancer vaccine candidate UV1 and, in our view, significant catalysts for investor attention. Results from the NIPU and INITIUM trials in second-line malignant pleural mesothelioma (MPM) and first-line unresectable metastatic melanoma are expected in Q223 and H223, respectively. Readouts from the INITIUM trial had initially been expected in H123; however, this has been pushed back to H223 due to patients in the study taking longer than expected to experience disease progression. In our view, positive results from NIPU and INITIUM would represent the most compelling evidence to date of UV1’s clinical utility in treating solid tumours. We have rolled our model forward and updated our FX assumptions and value Ultimovacs at NOK8.0bn or NOK234/share (previously NOK7.4bn or NOK216/share). We expect to revise our valuation once the NIPU and INITIUM results are released.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Ultimovacs

NIPU and INITIUM readouts incoming for UV1

Clinical results preview

Pharma and biotech

26 April 2023

Price

NOK136

Market cap

NOK4678m

NOK10.59/US$

Net cash (NOKm) at end-December 2022 (excluding leases)

425.3

Shares in issue

34.4m

Free float

56%

Code

ULTI

Primary exchange

Oslo Stock Exchange

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

23.2

25.7

72.2

Rel (local)

16.8

23.9

80.7

52-week high/low

NOK136

NOK60

Business description

Ultimovacs is developing novel immunotherapies against cancer. Its lead product candidate, UV1, is a peptide-based vaccine against the universal cancer antigen telomerase (hTERT), which is expressed in c 85% of all cancer types. UV1 therefore has a broad potential in a variety of different settings and combinations.

Next events

Phase II NIPU top-line data

Q223

Phase II INITIUM top-line data

H223

Phase I TENDU initial data

H223

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Dr Adam McCarter

+44 (0)20 3077 5700

Ultimovacs is a research client of Edison Investment Research Limited

Ultimovacs is gearing up for top-line readouts from two of its five ongoing Phase II studies, marking potential major clinical milestones for its cancer vaccine candidate UV1 and, in our view, significant catalysts for investor attention. Results from the NIPU and INITIUM trials in second-line malignant pleural mesothelioma (MPM) and first-line unresectable metastatic melanoma are expected in Q223 and H223, respectively. Readouts from the INITIUM trial had initially been expected in H123; however, this has been pushed back to H223 due to patients in the study taking longer than expected to experience disease progression. In our view, positive results from NIPU and INITIUM would represent the most compelling evidence to date of UV1’s clinical utility in treating solid tumours. We have rolled our model forward and updated our FX assumptions and value Ultimovacs at NOK8.0bn or NOK234/share (previously NOK7.4bn or NOK216/share). We expect to revise our valuation once the NIPU and INITIUM results are released.

Year
end

Revenue
(NOKm)

PBT*
(NOKm)

EPS**
(NOK)

DPS
(NOK)

P/E
(x)

Yield
(%)

12/21

0.0

(164.7)

(5.09)

0.0

N/A

N/A

12/22

0.0

(167.8)

(4.89)

0.0

N/A

N/A

12/23e

0.0

(217.1)

(6.31)

0.0

N/A

N/A

12/24e

0.0

(279.3)

(8.12)

0.0

N/A

N/A

Note: *PBT is reported. **EPS is fully diluted.

The major catalysts of FY23 approach

In our view, the upcoming readouts from the NIPU and INITIUM studies represent the most significant catalysts for investor attention, to date, for UV1 and Ultimovacs. Positive results from either study could set UV1 up to be Phase III-ready within the assessed indication and may provide a material value uplift for the asset. Additionally, positive data are likely to create a halo effect across the company’s pipeline where UV1 is also being investigated in the Phase II DOVACC (ovarian), LUNGVAC (non-small-cell lung) and FOCUS (head and neck) studies.

AACR puts melanoma vaccines firmly in the spotlight

Previously, we discussed the positive results Merck and Moderna reported from their Phase II study for their personalised mRNA cancer vaccine (mRNA-4157/V940) in advanced melanoma and how the results have helped enhance the clinical reputation of cancer vaccines. However, the study has only recently received widespread media attention following detailed presentation of the results at the American Association for Cancer Research (AACR) meeting. We believe UV1 has potential advantages over personalised therapies that include shorter production lead times and potentially wider access to patients.

Valuation: NOK8.0bn or NOK234/share

We value Ultimovacs at NOK802m or NOK234/share. We have rolled our model forward and updated our historic six-month average FX assumption to NOK10.18/$, which had a c 6% upside effect on our rNPV. We note that results of the upcoming NIPU and INITIUM studies are likely to have a material impact on our valuation and we will look to revise this after the readouts.

NIPU and INITIUM leading the UV1 clinical charge

The upcoming trial readouts expected from the NIPU and INITIUM studies, in our view, represent the most significant potential catalysts for investor attention in FY23 for Ultimovacs. We expect NIPU to be the first study to report top-line data in Q223 followed by INITIUM in H223. Management had previously communicated that it expected the results from INITIUM in H123; however, this has been delayed slightly due to patients taking longer than expected to experience disease progression (cancer progression must be verified in 70 patients). While this is a positive for patients enrolled in the study as the trial is blinded, we cannot ascertain, at this time, whether the extension in disease progression is due to the influence of UV1. Positive results from both studies would be the most compelling clinical evidence, to date, for the company’s universal cancer vaccine candidate, UV1. As a reminder, UV1 is Ultimovacs’ lead pipeline asset, a universal, peptide-based, cancer vaccine targeting antigens associated with the human telomerase reverse transcriptase (hTERT), a protein estimated to be overexpressed in up to 90% of human cancers but not in healthy tissues. The company’s clinical strategy aims to leverage combinational synergies between cancer vaccines and ICIs, that is, UV1’s ability to prime the immune system (stimulate a T-cell response) to specifically target cancer cells and the ability of ICIs to make cancer cells vulnerable to the stimulated T cells.

The primary endpoints for both NIPU and INITIUM is disease progression-free survival (PFS), the time between treatment initiation and metastatic tumour progression or death from any cause. The key secondary endpoints from the study include overall survival (OS), objective response rate (ORR), duration of response and safety.

The randomised, open-label Phase II NIPU (n=118) trial in MPM is split into two arms with 59 patients in each. In the experimental arm, the patients are treated with the same combination as INITIUM (UV1 plus ipilimumab plus nivolumab), while patients in the second arm are to receive ipilimumab plus nivolumab only. The NIPU trial is investigating the UV1 combination in second-line MPM following disease progression after first-line platinum-doublet chemotherapy. With no treatments specifically approved in second-line MPM and limited disease control provided by existing therapies, we believe only moderate improvements in mPFS of at least 20% (c 1–2 months) from the UV1 arm of the NIPU study would be required to be of clinical significance compared to previously reported mPFS data for ipilimumab plus nivolumab (mPFS: 5.6 months).

The Phase II INITIUM trial (n=156) in metastatic malignant melanoma, fully funded by Ultimovacs, is an open-label, randomised and statistically powered study. The trial is split into two arms with 78 patients receiving first-line treatment with nivolumab (anti-PD-1 ICI) and ipilimumab (anti-CTLA-4 ICI), and the other 78 patients receiving a combination of nivolumab, ipilimumab and UV1 plus sargramostim as a UV1 vaccine adjuvant (helps create a stronger immune response). While there are no standardised or regulatory set factors that define a clinically meaningful result from oncology studies, we note that the average improvement in median PFS (mPFS) for FDA-approved drugs is 4.6 months versus standard of care (SoC). In our view, with UV1 being at the Phase II stage of clinical studies in INITIUM, an improvement in mPFS by at least 30% (c 3–4 months), compared to ipilimumab plus nivolumab (mPFS: 11.5 months in ICI-naïve patients, those who have not have undergone previous treatment with ICIs), may potentially be interpreted as a clinically meaningful improvement on the ipilimumab/nivolumab combination. Although ipilimumab/nivolumab is indicated as a first-line therapy in advanced melanoma, we note it directly competes with pembrolizumab monotherapy within this treatment space, which has previously reported mPFS of 16.9 months in ICI-naïve patients. UV1 may therefore need to demonstrate improvements in mPFS by up to 17 months to gain a clinically competitive advantage in the market over pembrolizumab.

Mesothelioma: Rare cancer with cases on the rise

Mesothelioma is a highly aggressive, rare cancer that forms in the mesothelium, a thin layer of tissue that covers most internal organs in the body. It is estimated that in the United States, c 3,000 people will be diagnosed every year with the condition. The primary cause for the development of mesothelioma is through asbestos exposure, a product once widely used worldwide before its carcinogenic properties were fully understood. However, despite asbestos use now being widely banned, its latency period (time between exposure and diagnosis) is often greater than 30 years, an effect that has resulted in mesothelioma cases almost doubling between 1990 and 2019. Pleural mesothelioma specifically affects tissues lining the lungs and accounts for c 75% of mesothelioma cases with c 8090% of these diagnosed as MPM. Today, MPM continues to carry a poor prognosis with a median OS of 912 months and five-year OS of c 10% and there remains a significant need for the development of novel treatments.

Second-line treatments remain underwhelming

The mainstay of first-line treatment for MPM is often a combination of pemetrexed (Alimta) and platinum-based cisplatin (Platinol) or carboplatin (Paraplatin) chemotherapy. The most recent development in the MPM treatment landscape came in 2020 with the FDA approval of the combination of ICIs nivolumab and ipilimumab for the first-line treatment of unresectable metastatic mesothelioma. However, as mesothelioma is incurable, virtually all patients will disease progress and there are currently no treatments specifically approved for patients with relapsed mesothelioma. There remains a divide in the clinical community over the most appropriate second-line therapy for MPM; however, the most widely used often include off-label platinum re-challenge or single-agent chemotherapy and immunotherapy. However, disease control in this patient population remains poor, with studies reporting mPFS rates of 3.0 months for nivolumab monotherapy, 3.1 months for pembrolizumab monotherapy, 3.6 months for chemotherapy and 5.6 months for nivolumab in combination with ipilimumab.

Scope to differentiate in a quieter pipeline

Ultimovacs’ NIPU study is evaluating a triple combination of nivolumab, ipilimumab and UV1 in patients who have progressed after treatment with first-line platinum doublet chemotherapy. In our view, with the limitations of existing second-line treatment options in MPM, UV1 may only need to demonstrate modest improvements in mPFS (c 1–2 months) to differentiate with a competitive and clinically meaningful treatment profile.

To our knowledge, the NIPU trial represents one of the largest (n=118), active, Phase II studies focused on second-line MPM. An analysis of the pipeline highlights very few emerging therapeutic agents being investigated in this area, Exhibit 3. The most advanced clinical asset is Trizell’s adenoviral gene therapy, TR002, which is being investigated in a Phase III study in combination with gemcitabine chemotherapy. However, as previously discussed in our cell and gene therapy (CGT) report, CGTs have limitations that include potential safety concerns around viral vector delivery technology, high cost, limited patient access and the requirement of specialised centres to deliver treatment. As an ‘off-the-shelf’ product, UV1 may facilitate broader access to patients and, compared to CGTs, is associated with lower production costs. Sellas Life Science’s galinpepimut-S is another peptide-based cancer vaccine being investigated in second-line MPM; however, we note the drug is still in the very early stages of clinical development in smaller trial populations.

Exhibit 1: Relapsed MPM pipeline

Drug

Company

Phase

Technology

Description

Notes

TR002

Trizell

Phase III

Gene therapy

Adenovirus-delivered interferon alfa 2b gene (Ad.IFN) therapy. Mesothelioma cell transduction with Ad.IFN is designed to induce cell death triggering an immune response against cancer cells (immuno-gene therapy).

Results of Phase II study (n=40) in second-line MPM reported median OS of 17 months with two- and three-year survival rates of 25% and 20%, respectively. Phase III study aims to recruit up to 300 patients in combination with gemcitabine chemotherapy. There is detail on trial status or expected readouts.

Keytruda / Lenvatinib

Netherlands Cancer Institute / Merck

Phase II

Checkpoint inhibitor / VEGF inhibitor

Pan-tyrosine kinase inhibitor (Lenvatinib) with primarily vascular endothelial growth factor receptor (VEGFR) inhibiting properties combined with PD-1.

Preliminary results from investigator-sponsored Phase II study (n=38) reported that trial met its primary endpoint, achieving an ORR of 58% vs 25% from previous studies of pembrolizumab monotherapy.

Gavo-cell

TCR2

Phase I/II

Gene modified cell therapy

A form of autologous gene modified T-cell receptor therapy. Uses engineered T cells called TRuC-T cells, designed to target multiple patient antigenic peptide presenting human leukocyte antigen subtypes.

Phase I portion of the Phase I/II study in mesothelin expressing solid tumours reported mPFS of 5.6 months and mOS 11.2 months in MPM patients when treated with gavo-cell. Company has now prioritised Phase II portion of study in ovarian cancer but expects interim readouts from those MPM patients treated with gavo-cell and ICIs (ipilimumab and nivolumab) in H123.

Galinpepimut-S (Zeltherva)

Sellas Life Sciences

Phase I

Cancer vaccine

A Wilms tumor-1 (WT1) peptide cancer vaccine. WT1 is a protein highly overexpressed in MPM, making it a potential target for tumour selective cancer vaccines.

In an ongoing investigator sponsored Phase I study in combination with with nivolimuab. Results from a Phase II Investigator sponsored trial studied Galinpepimut-S in combination with immunologic adjuvants (Montanide and GM-CSF) in post-surgery patients reported mPFS of 10.1 months. Trial was not powered to show statistical significance.

MTG201

Momotaro Gene

Phase II

Gene therapy

Adenovirus-delivered Reduced Expression in Immortalized Cells/Dickkopf-3 gene (REIC/Dkk-3 gene). Increased REIC/Dkk-3 gene expression in cancer cells triggering cell death and cancer-cell specific immune response.

Study intends to recruit up to 12 patients investigating intratumoral injections of MTG201 in combination with nivolumab.

Source: EvaluatePharma, Edison Investment Research

While we acknowledge MPM may be a niche indication, limited competitive technologies in the pipeline combined with existing sub-optimal second-line treatments provides greater scope for UV1 to differentiate even if only marginal improvements in efficacy are exhibited, in our view. Additionally, combined sales of nivolumab/ipilimumab in MPM are estimated to reach c $130m by 2028 (according to EvaluatePharma) representing a reasonable market opportunity for Ultimovacs to capture with UV1.

UV1 positioning to disrupt SoC in melanoma

The existing SoC for the treatment of metastatic melanoma depends on whether a tumour contains a driver BRAF mutation (ICIs are more commonly used in metastatic melanoma when there is no BRAF mutation). Around 40–50% of all metastatic melanomas have the driver BRAF mutation, in which case BRAF inhibitors are used in combination with MEK inhibitors to decrease MAPK-driven acquired resistance (dabrafenib/trametinib or vemurafenib/cobimetinib). In patients with no BRAF mutation, the guidelines from the National Comprehensive Cancer Network recommend single-agent immunotherapy with pembrolizumab or nivolumab or combination therapy, with nivolumab plus ipilimumab as the first choice (Exhibit 2).

Exhibit 2: ICIs approved for first-line metastatic melanoma

Company

Drug

Target/s

2028 estimated sales according to EvaluatePharma

FDA approval basis

Bristol Myers Squibb

Nivolumab (Opdivo)

PD-1

$2.6bn

mPFS 5.1 months

Bristol Myers Squibb

Ipilimumab (Yervoy)

CTLA-4

$540m

Two-year survival rate 24%

Bristol Myers Squibb

Nivolumab plus ipilimumab

PD-1 / CTLA-4

See above

mPFS 11.5 months

Bristol Myers Squibb

Nivolumab plus relatlimab (combo brand name Opdualag)

PD-1/ LAG-3

$2.4bn

mPFS 10.1 months

Merck

Pembrolizumab (Keytruda)

PD-1

$2.5bn

ORR 34%

Source: EvaluatePharma, Edison Investment Research

With melanoma one of the most immunogenic tumour types, patients who are eligible to receive immunotherapy often respond well to ICI treatments. In contrast, historically, attempts to develop cancer vaccines as immunotherapies shown disappointing results. However, with the evolution of ICIs, there is potential for a synergistic relationship between ICIs and cancer vaccines such as UV1, with the former making tumour cells vulnerable to attack by the immune system cells and the latter designed to prime the body’s immune cells to fight tumours. Although ICIs have had a major impact on the oncology treatment landscape, they still suffer from relatively low response rates and in 2018 it was estimated only 12% of eligible patients would respond to ICI monotherapy. However, we acknowledge that this number has likely increased since then. In our view, Ultimovacs’ UV1/ICI combination, from a clinical perspective, makes strategic sense with the addition of UV1 to the current SoC treatment protocol providing scope for further efficacy enhancements.

Merck/Moderna combo further validates vaccines in melanoma

Merck and Moderna released highly encouraging results in December 2022 from a Phase II study (KEYNOTE-942, n=157) investigating the jointly developed, personalised mRNA vaccine (mRNA-4157/V940) in combination with Merck’s ICI, pembrolizumab (Keytruda). The study investigated the combination as a post-surgery adjuvant treatment for patients with stage III/IV melanoma who have had complete resection of cutaneous melanoma (completely removed by surgery) but a high risk of disease recurrence. Initial results from the study reported a reduced risk of tumour recurrence, or death, in patients by 44% compared to pembrolizumab alone. Merck presented updated clinical data at the AACR Annual Meeting 2023, where it reported a disease RFS at 18 month follow-up of 78.6% in the combination arm and 62.2% in the pembrolizumab-only control arm. At two years of follow-up, recurrence or death was reported in 22.4% of patients (n=24/107) treated with the combination compared to 40% (n=20/50) treated with pembrolizumab monotherapy. Merck and Moderna intend to initiate a Phase III study for mRNA-4157/V940 in combination with pembrolizumab as an adjuvant treatment in high-risk melanoma patients following complete resection in 2023. In our view, the most recent results provide further clinical validation for the application of the cancer vaccine/ICI combinations in the treatment of advanced melanoma.

Notably, Ultimovacs’ INITIUM study does not directly compete with KEYNOTE-942 as INITIUM is focused on patients with unresectable (not eligible for surgery) metastatic melanoma. Additionally, although comparisons between trial results may not be applicable, due to the differences in the melanoma populations being investigated, we note the similarity in trial designs (open-label, randomised, dual arm, multi-centre and statistically powered) and patient enrolment numbers (n=156 in INITIIUM and n=157 in KEYNOTE-942). With KEYNOTE-942 having recently received positive widespread media attention, following the data presented at AACR, and considering the robustness of both study designs, we believe positive readouts from INITIUM could be of equivalent significance that could, similarly, transform UV1 into a Phase III-ready asset.

…but off-the-shelf therapies such as UV1 may have an edge

While personalised therapy approaches may offer improved efficacies, with treatments tailored to an individual’s specific disease profile, we believe it is highly likely that, from a cost and manufacturing perspective, patient-specific vaccines are likely to encounter production issues similar to those faced by patient-specific cell therapies. Notably, the turnaround time from biopsy to treatment (‘vein-to-vein’ time) for Merck and Moderna’s melanoma vaccine mRNA-4157/V940 has been reported to take 68 weeks, a potentially serious issue for patients with highly aggressive cancers, in our view. Additionally, personalised therapies may face pricing pressures associated with higher COGS, which may lead to concerns over the health economics of such treatments. Sipuleucel-T (Provenge), a personalised dendritic cell vaccine approved by the FDA in 2010 for the treatment of prostate cancer, was initially priced at $93,000. However, the treatment only extended OS by around four months, meaning the drug struggled to secure reimbursement and failed to achieve widespread commercial success. Although we acknowledge the costs of mRNA cancer vaccine production such as Merck/Moderna’s mRNA-4157/V940 may not directly correlate with cell-based vaccines such as sipuleucel-T, personalised treatments are unlikely to benefit from the same economies of scale as ‘off-the-shelf’ products.

In our view, the operational infrastructure to support the commercialisation and mass production of personalised treatments is not yet in place and may not be for quite some time. In the case of cancer vaccines, which aim to target larger patient populations across a broad range of indications, we believe more universal approaches looking to provide timelier, upfront access to treatment for patients offer significant potential to differentiate in the market. With the advantages that ‘off-the-shelf’ therapies such as UV1 might possess with lower production costs, a shorter ‘vein-to-vein’ time and wider patient access, we believe this makes the upcoming readouts from the INITIUM study of even greater significance. Should UV1 demonstrate statistically significant improvements in PFS versus the nivolumab/ipilimumab combination, it not only may potentially disrupt existing first-line ICI treatment regimens, but, in our view, could provide UV1 with a distinct competitive advantage over personalised vaccine approaches such as mRNA. However, we note that UV1 is being investigated in a different melanoma patient population to Merck/Moderna’s mRNA-4157/V940 avoiding potential direct competition and commercial overlap. Positive clinical data may also heighten the interest of BMS, whose ICI combination, nivolumab plus ipilimumab, is being used alongside UV1 in the INITIUM trial. BMS has publicly voiced support for the continued development of cancer vaccine technology and, if BMS looks to compete with Merck and Moderna’s mRNA candidate in melanoma, UV1 may be viewed as an attractive asset, provided upcoming clinical study readouts are positive.

A cancer vaccine with a unique mechanism of action

To our knowledge, UV1 represents one of the most advanced cancer vaccines being investigated for the treatment of melanoma, Exhibit 1. The closest ‘off-the-shelf’ competitor to UV1 is IO-Biotech’s peptide vaccine, IO102-IO103, in Phase III studies. However, IO102-IO103’s mechanism of action (MoA) stimulates T cell responses that target indoleamine 2,3-dioxygenase (IDO) and PD-L1 associated antigens present on tumour cells and immune cells in the tumour microenvironment. UV1 therefore has a differentiating therapeutic MoA in targeting hTERT, primarily expressed in a subpopulation of cancer cells called cancer stem cells (CSCs). CSCs are often resistant to conventional cancer treatments, leading to metastasis and tumour resistance, making hTERT an attractive target for cancer vaccine development, in our view.

Although IO102-IO103 may be slightly further ahead in development, the most significant clinical results, to date, have come from a Phase I/II (n=50) investigator-sponsored study. Patients from cohort A of the study (n=30), who were PD-1 ICI naive and treated with IO102-IO103 in combination with nivolumab, reported a mPFS of 26 months. However, as this was an early-stage study, we caution interpretation of the clinical significance of this result compared to those to be reported from more rigorous trial designs such as INITIUM.

Exhibit 3: Selected cancer vaccine studies in first-line advanced melanoma

Drug

Company

Phase

Personalised

Technology

Notes

IO102-IO103

IO-Biotech

Phase III

No

Dual combination peptide vaccine stimulating production of IDO/PD-L1-specific CD4+ and CD8+ T cells. Thought to work synergistically with anti PD-1 therapy.

Pivotal Phase III study (n=300) recruiting patients, with enrolment expected to be completed by end 2023. Patients to be treated with IO102-IO103 in combination with pembrolizumab vs pembrolizumab monotherapy. Data corresponding to 30 patients treated with IO102-IO103 and nivolumab in investigator sponsored Phase I/II trial reported ORR of 80% and mPFS of 26 months.

mRNA-4157/V940

Merck/Moderna

Phase II

Yes

Personalised tumour neoantigen specific mRNA vaccine capable of coding for up to 34 neoantigens.

Phase II study met primary efficacy endpoint reducing risk of tumour recurrence, or death (RFS) in patients by 44% with mRNA-4157/V940 in combination with pembrolizumab compared to pembrolizumab alone. Combination was tested in melanoma patients with a high risk of recurrence after complete resection (post-surgery) of cutaneous melanoma. Expect initiation of Phase III study in 2023.

EVX-01

Evaxion

Phase II

Yes

Personalised tumour neoantigen specific peptide-based vaccine.

Data from Phase I/II trial (n=9) reported a 67% ORR, which included 22% complete response and 44% partial response in combination with anti-PD1 therapy. Interim readouts assessing EVX-01 in combination with pembrolizumab are expected in H223.

VB10.NEO

Nykode therapeutics

Phase I/II

Yes

Personalised tumour neoantigen specific DNA vaccine capable of coding for up to 20 antigenic epitopes (part of antigen recognised by immune cells) inducing CD4+ and CD8+ T cell responses.

Initial data from Phase I/II reported clinical responses to VB10.NEO treatment (lesion size reduction 10-100%) in 50% of patients assessed evaluated (seven out of 14) including one advanced melanoma patient. Patients are treated in combination with CD122 agonist bempegaldesleukin.

Source: Evaluate Pharma, Edison Investment Research

Long-term survival data provide glimpses of UV1 efficacy

What we believe represents one the most significant clinical validations of Ultimovacs’ technology shown to date, are the encouraging long-term survival data reported from the open-label Phase I study (UV1-103) in metastatic melanoma. The trial is investigating UV1 in combination with Merck’s ICI, pembrolizumab (Keytruda), in a first-line setting with study split into two study cohorts (n=30) receiving different doses of UV1 adjuvant (37.5µg versus 75µg). The one- and two-year OS rates from the two cohorts combined were 87% (26/30) and 73% (22/30) respectively, Exhibit 4. Additionally, a three-year OS rate of 71% has been reported from patients in cohort one (12/17).

Exhibit 4: OS rates from the UV1-103 study

Exhibit 5: mPFS rates from the UV1-103 study

Source: Ultimovacs corporate presentation

Source: Ultimovacs corporate presentation

Exhibit 4: OS rates from the UV1-103 study

Source: Ultimovacs corporate presentation

Exhibit 5: mPFS rates from the UV1-103 study

Source: Ultimovacs corporate presentation

Of note, the three-year OS rate from the KEYNOTE-006 study investigating pembrolizumab as a monotherapy in first-line patients with metastatic melanoma was 51%. The UV1-103 study also reported a mPFS of 18.9 months (Exhibit 5), an improvement on the mPFS of 16.9 months in ICI-naïve patients reported from a separate study for pembrolizumab, KEYNOTE-001. However, we caution there may be limitations in cross-trial comparisons given the differences in study designs, controls and trial populations.

It is worth highlighting that pembrolizumab appears to have a more beneficial clinical profile compared to the combination of ipilimumab/nivolumab in advanced melanoma (mPFS from KEYNOTE-001: 16.9 months vs mPFS from CheckMate-067: 11.5 months), which is being investigated in INITIUM. This means that, from a clinical perspective, the UV1/ ipilimumab/nivolumab combination would need to see an improvement in mPFS by at least 50% to be classified as best in class first line ICI treatment. However, we note that ipilimumab is currently a blockbuster drug in the melanoma market (2022 melanoma sales: $1.9bn, EvaluatePharma) with sales figures competing with that of pembrolizumab (2022 melanoma sales: $2.3bn, EvaluatePharma). Additionally, sales of ipilimumab in melanoma are estimated to surpass those of pembrolizumab by 2028 ($2.8bn vs $2.4bn, EvaluatePharma), which, in our view, provides evidence for the demand of ipilimumab and potential combinations in the melanoma treatment market.

Positive results may hook potential UV1 suitors

The re-emergence of cancer vaccine technology has seen the signing of some notable licensing deals in recent years, Exhibit 6. In our view, a comparable deal of note is the worldwide licensing agreement signed in 2020 between Roche and Nykode worth up to $715m for the Scandinavian biotech’s personalised cancer vaccine, VB10.NEO. At the time of the agreement VB10.NEO was in the Phase I portion of a Phase I/II basket trial that included patients with advanced or metastatic melanoma, non-small-cell lung carcinoma, clear renal cell carcinoma urothelial cancer or squamous cell carcinoma of the head and neck. The study is ongoing and Roche will assume full development responsibilities after the conclusion of the Phase I portion of the trial. However, we acknowledge the upfront payment of $200m received by Nykode is at the upper end of the industry average.

In our view, positive readouts from both the INITIUM and NIPU studies would support the body of growing evidence demonstrating UV1’s clinical utility while significantly enhancing the asset’s value and potential deal value that could be commanded from future licensing opportunities. Additionally, UV1 is being investigated across five ongoing Phase II trials in advanced melanoma, MPM, head and neck cancer, ovarian cancer and non-small-cell lung cancer, and this broader application may add further value to UV1 in the eyes of potential licensing partners.

Exhibit 6: Comparison oncology vaccine and immunotherapy licensing deals

Phase

Date

Licensee/partner

Licensor

Product

Upfront milestone payments ($m)

Total potential deal value
($m)

Phase I

20/10/2022

Roche

Hookipa

HB-700

40

970

Phase III**

07/12/2020

3D Medicines

Sellas Life Sciences

Zeltherva

8

202

Phase I

01/10/2020

Roche

Nykode

VB10.NEO

200

715

Phase II

18/11/2019

Fosun

Mimivax

SurVaxM

10

148

Preclinical

02/08/2016

Amgen

Advaxis

ADXS-NEO

40

540

Phase II*

10/08/2015

AstraZeneca

Inovio Pharmaceuticals

INO-3112

28

728

Phase III*

03/04/2015

Bristol Myers Squibb

Bavarian Nordic

Prostvac

60

975

Median

40

715

Source: EvaluatePharma, Edison Investment Research. Note: *Deal subsequently terminated; **deal includes Greater China only.

Financials and valuation

There are no significant changes to our operating expense forecasts (see our Q422 report for details) and adjustments in our valuation have been realised by rolling our model forward and updating our FX assumptions to NOK10.18/$. Our long-term assumptions remain unchanged and a breakdown of our rNPV calculation can be seen Exhibit 7. We note that the top-line readouts from the upcoming INITIUM and NIPU studies are likely to have a material impact on our assumptions of Ultimovacs, which we will look to revise our valuation after the results.

Exhibit 7: Valuation of Ultimovacs

Product

Launch

Peak sales
($m)

NPV (NOKm)

NPV/share (NOK/share)

Probability

rNPV (NOKm)

rNPV/share (NOK/share)

UV1 – malignant melanoma

2028

1,270

5,961.9

173.3

25.0%

1,620.5

47.1

UV1 – mesothelioma

2028

570

2,789.6

81.1

25.0%

759.3

22.1

UV1 – ovarian cancer

2029

787

3,181.4

92.5

25.0%

893.3

26.0

UV1 – head and neck cancer

2029

1,370

5,772.7

167.8

25.0%

1,582.2

46.0

UV1 – NSCLC

2030

2,683

10,182.9

296.0

25.0%

2,757.4

80.2

Net cash, last reported

 

 

425.3

12.4

100.0%

425.3

12.4

Valuation

 

 

28,313.8

823.2

8,038.0

233.7

Source: Edison Investment Research

Because our model assumes an out-licensing deal by end-2024, we estimate that the company would be required to raise c NOK150m in funds in H224. We account for this raise as illustrative debt in our model. Alternatively, if the funding is realised through an equity issue instead (assuming at the current trading price of c NOK130/share), Ultimovacs would have to issue 1.15m shares, resulting in our per share valuation coming down to NOK226 from NOK234 (shares outstanding would increase from 34.4m to 35.7m). However, we do not expect Ultimovacs to be fully revenue generating and self-sustaining until the launch of UV1, which we forecast in 2028.

Exhibit 8: Financial summary

Accounts IFRS; year end 31 December; NOKm

 

2019

2020

2021

2022

2023e

2024e

Income statement

 

 

 

 

 

 

 

Total revenues

 

0.00

0.00

0.00

0.00

0.00

0.00

Cost of sales

 

0.00

0.00

0.00

0.00

0.00

0.00

Gross profit

 

0.00

0.00

0.00

0.00

0.00

0.00

SG&A (expenses)

 

(20.16)

(50.99)

(61.92)

(71.47)

(85.76)

(102.91)

R&D costs

 

(35.53)

(64.66)

(96.74)

(95.18)

(109.52)

(136.90)

Other income/(expense)

 

(8.47)

(5.78)

(2.48)

(14.34)

(27.38)

(34.22)

Exceptionals and adjustments

 

0.00

0.00

0.00

0.00

0.00

0.00

Reported EBITDA

 

(64.15)

(121.43)

(161.13)

(180.98)

(222.65)

(274.03)

Depreciation and amortisation

 

(2.06)

(2.72)

(2.70)

(2.65)

(2.44)

(2.38)

Reported Operating Profit/(loss)

 

(66.22)

(124.15)

(163.83)

(183.63)

(225.09)

(276.41)

Finance income/(expense)

 

5.05

3.59

(0.89)

15.84

8.02

(2.93)

Other income/(expense)

 

0.00

0.00

0.00

0.00

0.00

0.00

Exceptionals and adjustments

 

0.00

0.00

0.00

0.00

0.00

0.00

Reported PBT

 

(61.17)

(120.55)

(164.72)

(167.79)

(217.08)

(279.34)

Income tax expense

 

0.00

0.00

0.00

0.00

0.00

0.00

Reported net income

 

(61.17)

(120.55)

(164.72)

(167.79)

(217.08)

(279.34)

Basic average number of shares, m

 

22.93

30.26

32.37

34.31

34.40

34.40

Basic EPS (NOK)

 

(2.67)

(3.98)

(5.09)

(4.89)

(6.31)

(8.12)

Diluted EPS (NOK)

 

(2.67)

(3.98)

(5.09)

(4.89)

(6.31)

(8.12)

Balance sheet

 

 

 

 

 

 

 

Property, plant and equipment

 

0.536

0.377

0.212

0.220

0.125

0.007

Intangible assets

 

66.370

76.346

71.119

68.429

66.280

64.211

Other non-current assets

 

3.523

3.630

1.951

5.444

5.444

5.444

Total non-current assets

 

70.429

80.353

73.282

74.093

71.849

69.662

Cash and equivalents

 

399.607

440.925

574.168

425.309

212.206

87.189

Trade and other receivables

 

0.000

0.000

0.000

0.000

0.000

0.000

Other current assets

 

8.004

8.438

8.087

10.270

10.270

10.270

Total current assets

 

407.611

449.363

582.255

435.579

222.476

97.459

Non-current loans and borrowings

 

2.301

2.075

0.457

3.713

3.713

153.713

Deferred tax liabilities

 

10.851

11.795

11.031

10.701

10.701

10.701

Total non-current liabilities

 

13.152

13.870

11.488

14.414

14.414

164.414

Trade and other payables

 

11.768

8.611

22.555

7.655

9.383

11.523

Other current liabilities

 

8.489

18.856

28.342

38.252

38.252

38.252

Total current liabilities

 

20.257

27.467

50.897

45.907

47.635

49.775

Equity attributable to company

 

444.632

488.380

593.152

449.351

232.276

(47.067)

Cashflow statement

 

 

 

 

 

 

 

Operating Profit/(loss)

 

(66.217)

(124.146)

(163.833)

(183.630)

(225.093)

(276.412)

Depreciation and amortisation

 

2.063

2.720

2.703

2.648

2.439

2.382

Other adjustments

 

(2.023)

3.215

12.331

4.437

(8.506)

(4.244)

Movements in working capital

 

(1.862)

6.395

23.860

(6.988)

1.728

2.139

Interest paid / received

 

0.000

0.000

0.000

0.000

0.000

0.000

Income taxes paid

 

0.000

0.000

0.000

0.000

0.000

0.000

Cash from operations (CFO)

 

(62.988)

(108.223)

(125.828)

(167.694)

(221.414)

(279.066)

Capex

 

(0.172)

(0.282)

(0.085)

(0.195)

(0.195)

(0.195)

Acquisitions & disposals net

 

0.000

0.000

0.000

0.000

0.000

0.000

Other investing activities

 

4.490

(0.455)

3.062

8.887

8.506

4.244

Cash used in investing activities (CFIA)

 

4.318

(0.737)

2.977

8.692

8.311

4.049

Net proceeds from issue of shares

 

344.582

152.933

261.852

5.484

0.000

0.000

Movements in debt

 

0.000

0.000

0.000

0.000

0.000

150.000

Other financing activities

 

(1.579)

(1.916)

(1.895)

(1.907)

0.000

0.000

Cash flow from financing activities

 

343.003

151.017

259.957

3.577

0.000

150.000

Increase/(decrease) in cash and equivalents

 

284.333

42.057

137.106

(155.425)

(213.103)

(125.017)

Cash and equivalents at beginning of period

 

115.540

399.608

440.925

574.168

425.310

212.206

Cash and equivalents at end of period

 

399.608

440.925

574.168

425.310

212.206

87.189

Net (debt) cash (including lease liabilities)

 

395.982

437.143

572.083

419.830

206.726

(68.291)

Source: Company reports, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Ultimovacs and prepared and issued by Edison, in consideration of a fee payable by Ultimovacs. 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 2023 Edison Investment Research Limited (Edison).

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

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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Ultimovacs and prepared and issued by Edison, in consideration of a fee payable by Ultimovacs. 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 2023 Edison Investment Research Limited (Edison).

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

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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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