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NOK120.60
▲ 0.80 (0.67%)
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NOK4,121m
Research: Healthcare
Ultimovacs’ Q322 results highlighted an eventful period for the development of the company’s lead cancer vaccine, UV1. Notably, this included supportive three-year overall survival rates (71%) and efficacy signals in hard-to-treat patients from the Phase I UV-103 study in malignant melanoma. At end-Q322, Ultimovacs had a net cash position of NOK469.1m (no debt), which we estimate will fund operations into H124, beyond a handful of key clinical readouts in 2023. Based on the better than anticipated operating expenses, rolling our model forward and updating our foreign exchange (FX) assumptions, our valuation increases to NOK7.9bn or NOK231/share (NOK7.2bn or NOK209/share previously).
Ultimovacs |
On track for upcoming UV1 catalysts |
Q322 update |
Pharma and biotech |
11 November 2022 |
Share price performance
Business description
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Analysts
Ultimovacs is a research client of Edison Investment Research Limited |
Ultimovacs’ Q322 results highlighted an eventful period for the development of the company’s lead cancer vaccine, UV1. Notably, this included supportive three-year overall survival rates (71%) and efficacy signals in hard-to-treat patients from the Phase I UV-103 study in malignant melanoma. At end-Q322, Ultimovacs had a net cash position of NOK469.1m (no debt), which we estimate will fund operations into H124, beyond a handful of key clinical readouts in 2023. Based on the better than anticipated operating expenses, rolling our model forward and updating our foreign exchange (FX) assumptions, our valuation increases to NOK7.9bn or NOK231/share (NOK7.2bn or NOK209/share previously).
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
0.0 |
(120.6) |
(3.98) |
0.0 |
N/A |
N/A |
12/21 |
0.0 |
(164.7) |
(5.09) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(159.2) |
(4.65) |
0.0 |
N/A |
N/A |
12/23e |
0.0 |
(196.0) |
(5.73) |
0.0 |
N/A |
N/A |
Note: *PBT is reported, EPS is fully diluted
Final UV1 Phase II study underway
A recent milestone for Ultimovacs saw the first patient dosed in the Phase II LUNGVAC study in patients with non-small cell lung cancer, representing the last of UV1’s current trials to begin enrolment. The company had communicated that first patient enrolment was expected in Q322; however, we do not see this slight delay as having a significant impact on the overall trial timelines. UV1 is part of five separate Phase II trials in various cancer indications, all of which are expected to report top-line data over 2023/24. The first readouts will come from the INITIUM and NIPU studies in H123.
Costs anticipated to rise into FY23
With initiation of the Phase II LUNGVAC study in October 2022, we anticipate that R&D costs will increase further in Q422 as the study continues patient recruitment. At end-Q322 Ultimovacs reported a cash position of NOK469.1m with management guiding a cash runway into H124. We expect an increased cash burn rate in FY23 as a result of ramped up clinical development activities and the potential initiation of Phase III studies in H223, should positive top-line results be reported from the INITIUM and NIPU trials.
Valuation: NOK7.9bn or NOK231/share
We update our valuation of Ultimovacs to NOK7.9bn or NOK231/share (NOK7.2bn or NOK209/share previously), including a net cash position at end-Q322 of NOK469.1m. We have rolled our model forward and updated our FX rate assumptions. Considering Q322 results, we have revised our financial estimates, but our underlying long-term assumptions remain unchanged.
Catalysts on the horizon
As a reminder, UV1 is being designed as a universal cancer vaccine that triggers an immune response through recognition of human telomerase reverse transcriptase (hTERT), a protein that is estimated to be overexpressed in up to 90% of human cancers but not in healthy tissues. Recognising the combinational synergies between UV1’s immune priming ability and immune checkpoint inhibitors (ICIs), which can turn ‘cold’ (immunosuppressive) tumours to ‘hot’ (vulnerable to the immune system), Ultimovacs is pursuing the development of UV1 in combination with well-known ICIs. These include ipilimumab, nivolumab, durvalumab and pembrolizumab, in multiple indications (Exhibit 1).
Exhibit 1: Ultimovacs’ clinical pipeline |
Source: Q322 results presentation deck |
The most significant near-term catalysts for Ultimovacs are top-line readouts from the Phase II INITIUM trial (in first-line advanced or metastatic malignant melanoma in combination with ipilimumab and nivolumab) and the NIPU trial (in second-line malignant pleural mesothelioma, again in combination with ipilimumab and nivolumab), which are on track for H123. The INITIUM study is now fully enrolled (n=156) and NIPU has almost completed enrolment (108 of 118 patients), so we expect progress to conform to management’s expected readout timelines. The company also expects top-line results from the DOVACC (ovarian cancer) and FOCUS (head and neck cancer) Phase II trials in 2023, with further guidance expected with the Q422 report. Finally, the final Phase II LUNGVAC study began patient enrolment in Q422, with top-line results expected by end-2024. The company had communicated that first patient enrolment was expected in Q322; however, we do not see this slight delay as having a significant impact on the overall trial timelines.
UV1 supported by positive Phase I data
Q322 saw a period of positive news flow which came in the form of encouraging follow-up data from two completed UV1 Phase I studies.
The first (UV1-ipi), investigating UV1 and ipilimumab, reported that vaccine-induced immune responses were observed in 10 out of 11 (91%) evaluable patients following treatment and, notably, clinical responses were observed in patients possessing immunosuppressive ‘cold’ tumours. As ‘cold’ tumours are often challenging to treat with ICIs alone, we see this result as highly encouraging for the future clinical application of UV1, opening potential future opportunities in difficult-to-treat cancers.
The second study (UV-103), investigating UV1 with pembrolizumab, reported encouraging three-year overall survival (OS) of 71% (12/17) with a sub cohort of patients. This result builds on the consistently high OS rates already observed from the trial: 85% (17/20) after one year and 80% (16/20) after two-year follow-up. We believe this data not only highlight the clinical utility of UV1 in melanoma patients, but also provide encouraging signs for additional indications for which UV1 is being investigated in the clinic. Additional data from the UV-103 study also showed that patients with low levels of programmed death-ligand 1 (PD-L1) exhibited robust clinical efficacy when treated with the UV1 combination. Patients with lower levels of PD-L1 are often less responsive to treatment with ICI monotherapies, so this result is highly encouraging for the clinical utility of UV1, in our view. Additionally, it potentially broadens UV1’s addressable patient population into harder-to-treat cancers, providing further opportunity for Ultimovacs’ lead cancer vaccine candidate.
Financials
Q322 operating expenses of NOK44.1m increased from NOK35.4m in Q222 with heightened contract manufacturing expenses and expenses associated with milestone payments for the INITIUM and FOCUS studies. As a result, Q322 R&D expenses of NOK24.2m (Q222: NOK15.7m) will likely increase in Q422 as the patient enrolment continues in the Phase II LUNGVAC study. We now estimate FY22 operating expenses of NOK170.5m, from NOK214.8m, based on the year to date performance and updated patient enrolment timelines and counts.
We now estimate a net cash flow from operating activities in FY22 to be NOK173m and NOK187m in FY23, lower than our previous expectations. Management has yet to provide guidance on potential partnering for further clinical studies; however, we assume that, should positive top-line results be reported from the INITIUM and NIPU Phase II trials, the company will significantly ramp up preparatory work for the initiation of Phase III studies, which may commence end-FY23 and FY24. We expect costs to increase in FY23 relative to FY22 as a result of increased manufacturing, continued patient enrolment in the LUNGVAC and DOVACC studies and regulatory fees associated with UV1’s clinical development activities. With a cash position of NOK469.1m at Q322, we assume the company has sufficient cash to maintain operations into H124 (consistent with prior estimates and management guidance).
Exhibit 2: Financial summary
Accounts: IFRS, Yr end: December, NOK: million |
|
2019A |
2020A |
2021A |
2022E |
2023E |
Income statement |
|
|
|
|
|
|
Total revenues |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Cost of sales |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Gross profit |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
SG&A (expenses) |
|
(20.16) |
(50.99) |
(61.92) |
(58.82) |
(70.59) |
R&D costs |
|
(44.00) |
(70.44) |
(99.21) |
(109.13) |
(130.96) |
Other income/(expense) |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Exceptionals and adjustments |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Reported EBITDA |
|
(64.15) |
(121.43) |
(161.13) |
(167.96) |
(201.55) |
Depreciation and amortisation |
|
(2.06) |
(2.72) |
(2.70) |
(2.51) |
(2.46) |
Reported Operating Profit/(loss) |
|
(66.22) |
(124.15) |
(163.83) |
(170.46) |
(204.01) |
Finance income/(expense) |
|
5.05 |
3.59 |
(0.89) |
11.30 |
8.06 |
Other income/(expense) |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Exceptionals and adjustments |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Reported PBT |
|
(61.17) |
(120.55) |
(164.72) |
(159.17) |
(195.95) |
Income tax expense |
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Reported net income |
|
(61.17) |
(120.55) |
(164.72) |
(159.17) |
(195.95) |
Basic average number of shares, m |
|
22.93 |
30.26 |
32.37 |
34.22 |
34.27 |
Basic EPS (NOK) |
|
(2.67) |
(3.98) |
(5.09) |
(4.65) |
(5.73) |
Diluted EPS (NOK) |
|
(2.67) |
(3.98) |
(5.09) |
(4.65) |
(5.73) |
Balance sheet |
|
|
|
|
|
|
Property, plant and equipment |
|
0.536 |
0.377 |
0.212 |
0.222 |
0.199 |
Intangible assets |
|
66.370 |
76.346 |
71.119 |
68.882 |
66.729 |
Other non-current assets |
|
3.523 |
3.630 |
1.951 |
1.951 |
1.951 |
Total non-current assets |
|
70.429 |
80.353 |
73.282 |
71.055 |
68.878 |
Cash and equivalents |
|
399.607 |
440.925 |
574.168 |
412.146 |
233.456 |
Trade and other receivables |
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
Other current assets |
|
8.004 |
8.438 |
8.087 |
8.087 |
8.087 |
Total current assets |
|
407.611 |
449.363 |
582.255 |
420.233 |
241.543 |
Non-current loans and borrowings* |
|
2.301 |
2.075 |
0.457 |
0.457 |
0.457 |
Deferred tax liabilities |
|
10.851 |
11.795 |
11.031 |
11.031 |
11.031 |
Total non-current liabilities |
|
13.152 |
13.870 |
11.488 |
11.488 |
11.488 |
Trade and other payables |
|
11.768 |
8.611 |
22.555 |
15.583 |
19.069 |
Other current liabilities |
|
8.489 |
18.856 |
28.342 |
18.637 |
18.637 |
Total current liabilities |
|
20.257 |
27.467 |
50.897 |
34.220 |
37.706 |
Equity attributable to company |
|
444.632 |
488.380 |
593.153 |
445.581 |
261.228 |
Cashflow statement |
|
|
|
|
|
|
Operating Profit/(loss) |
|
(66.217) |
(124.146) |
(163.833) |
(170.464) |
(204.005) |
Depreciation and amortisation |
|
2.063 |
2.720 |
2.703 |
2.509 |
2.459 |
Other adjustments |
|
(2.023) |
3.215 |
12.331 |
0.112 |
3.352 |
Movements in working capital |
|
(1.862) |
6.395 |
23.860 |
(16.677) |
3.486 |
Interest paid / received |
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
Income taxes paid |
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
Cash from operations (CFO) |
|
(62.988) |
(108.223) |
(125.828) |
(173.223) |
(186.651) |
Capex |
|
(0.172) |
(0.282) |
(0.085) |
(0.282) |
(0.282) |
Acquisitions & disposals net |
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
Other investing activities |
|
4.490 |
(0.455) |
3.062 |
11.483 |
8.243 |
Cash used in investing activities (CFIA) |
|
4.318 |
(0.737) |
2.977 |
11.201 |
7.961 |
Net proceeds from issue of shares |
|
344.582 |
152.933 |
261.852 |
0.000 |
0.000 |
Movements in debt |
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
Other financing activities |
|
(1.579) |
(1.916) |
(1.895) |
0.000 |
0.000 |
Cash flow from financing activities |
|
343.003 |
151.017 |
259.957 |
0.000 |
0.000 |
Increase/(decrease) in cash and equivalents |
|
284.333 |
42.057 |
137.106 |
(162.022) |
(178.691) |
Cash and equivalents at beginning of period |
|
115.540 |
399.607 |
440.925 |
574.168 |
412.146 |
Cash and equivalents at end of period |
|
399.608 |
440.925 |
574.168 |
412.146 |
233.456 |
Net (debt) cash |
|
395.982 |
437.143 |
572.083 |
410.061 |
231.371 |
Source: Ultimovacs company accounts
|
|
Research: Healthcare
Cantargia’s development programme for its lead asset, nadunolimab (CAN04), continued to build momentum in Q322. The company’s results for the period report an operating loss of SEK74.2m, which was largely driven by R&D expenses of SEK69.7m. Cash outflow from operations for Q322 was SEK81.4m, bringing the total cash used in operations for 9M22 to SEK297.3m, up from SEK256.6m in 9M21, due to expanded clinical activities. Cantargia received net proceeds from the rights issue completed in August 2022 of SEK223.9m, resulting in a cash and short-term investment position of SEK496.5m at end-Q322. Our current forecasts for FY22 and FY23 see the company funded to mid-FY24, beyond commencement of important randomised late-stage trials in FY23. Our valuation of Cantargia is broadly unchanged at SEK7.5bn or SEK44.9 per share.
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