Ultimovacs — Staying alive with UV1 in NIPU and INTIUM

Ultimovacs presented detailed clinical data for NIPU at the ESMO Congress 2023 (Madrid, Spain, 20–24 October 2023). NIPU (n=118) is a randomised, multi-centre Phase II trial to evaluate UV1 in combination with Bristol-Myers Squibb’s immune checkpoint inhibitors (ICIs) ipilimumab and nivolumab as a potential second-line treatment of patients with MPM. The field of MPM treatment has not progressed much in the last 20 years, with first-line treatment having relied on platinum and pemetrexed chemotherapy. In October 2020, the ipilimumab and nivolumab combination was approved by the FDA in the same line. However, many patients do not respond to chemotherapy or ICI treatment, hence there is a significant unmet need in MPM with no established standard of care in second-line treatment (Exhibit 1). We note that, while PFS was the primary endpoint of the NIPU trial, the secondary endpoint of OS is considered the gold standard of endpoints in oncology trials. For reference, in the CheckMate-743 trial comparing ipilimumab and nivolumab to chemotherapy for the treatment of MPM, there was no difference in PFS between the two arms, but the ICI combination showed a 26% reduction in the risk of death, with a hazard ratio (HR) of 0.74 (Exhibit 2).

In the latest update from Ultimovacs on NIPU, management emphasised that the HR is the key efficacy measure for assessing the clinical data. Importantly, the HR was determined using a multivariate analysis taking into account different demographics between the two arms of the study, including differences in histology and other subgroups, as these are associated with different prognoses. The full clinical data show that treatment with UV1 plus ipilimumab and nivolumab (treatment arm or ‘Arm A (IPI-NIVO-UV1)’) resulted in improved OS, with risk of death reduced by 27% compared to ipilimumab and nivolumab alone (control arm or ‘Arm B (IPI-NIVO)’) (HR = 0.73 [80% confidence interval (CI), 0.53–1.00], 1-sided p value = 0.0985). Median OS was reported as 15.4 months (95% CI, 11.1–22.6) for the UV1 treatment arm versus 11.1 months (95% CI, 8.8–18.1) for the control arm, with a median observation time of 17.3 months, meeting the trial protocol’s predefined threshold for statistical significance (Exhibit 3). The company specified that its analysis was set up on a pre-defined basis with an 80% statistical power and a 1-sided alpha of 0.1. This means that the company’s significance determination for the OS data was based on an 80% confidence interval (ie it has more than 80% confidence that the study results accurately measured the effects of UV1).

In addition, a blinded independent central review (BICR) conducted assessments on objective response rate (ORR, defined by a tumour reduction of at least 30%). In the treatment arm, an ORR of 31% was reported versus 16% in the control arm (odds ratio 2.44 (80% CI, 1.35–4.49), 1-sided p value = 0.028), highlighting that approximately twice as many patients in the UV1 arm responded to treatment (Exhibit 4). In the associated webinar for the NIPU trial results, it was noted that the patients involved in the study will continue to be monitored in the next few years for efficacy (and safety), and the company will share updated data when available.

Regarding PFS, the BICR determined that the study did not meet this predefined primary endpoint. According to the BICR, median PFS was measured as 4.2 months (95% CI 2.9–9.8) for the UV1 treatment arm, whereas it was 4.7 months (95% CI 3.9–7.0) for the control arm, resulting in an HR of 1.01 (80% CI 0.75–1.36, 1-sided p value = 0.4895), suggesting that the control arm may have very slightly outperformed those treated with UV1 (Exhibit 5) in this measure, but we caution that the difference was very far from meeting any statistical thresholds. Conversely, according to the investigator assessment, median PFS was 4.3 months (95% CI 3.0–6.8) for the treatment arm versus 2.9 months (95% CI 2.4–5.5) for the control arm, giving an HR of 0.60 (80% CI 0.45–0.81, 1-sided p value = 0.0125), indicating that patients receiving UV1 treatment performed better than the control arm (Exhibit 6). In the associated webinar, the discrepancy between these assessments was attributed to an inherent challenge in assessing the progression of MPM. Measures of cancer progression should be taken from consistent parts of a tumour and, generally, this is considered more straightforward with certain cancers where lesions are obvious. However, mesothelioma is a relatively thin tumour that lines the lung, and, hence, it may be more difficult for radiologists to make clear evaluations. Given this, Professor Åslaug Helland (the principal investigator for the NIPU trial) noted that OS is ultimately more important for patient outcomes, and the clinically meaningful results here support further clinical development in this indication. We also note that there was a similar rate of serious adverse events in both arms (61% for the treatment arm versus 59% for the control arm), indicating a comparable safety profile with the addition of UV1 to ipilimumab and nivolumab. To our knowledge, this is the first instance of a cancer vaccine with ‘universal potential’ demonstrating efficacy in a randomised Phase II clinical trial.

As a reminder, the NIPU Phase II trial is an investigator-sponsored study and Ultimovacs therefore lacks some control over how it is conducted. Initial clinical results were reported in June 2023 and initially perceived negatively, as the study did not meet its primary endpoint of PFS. However, despite the lack of significance in terms of PFS in the initial results, management was encouraged by the trend in OS benefit in the UV1 treatment arm compared to the control, as well as the safety profile of the cancer vaccine.

Following publication of the full results, we believe the OS data are encouraging for UV1 as a potential treatment for MPM. We highlight that all patients recruited to the NIPU study had inoperable MPM and had previously been treated with first-line platinum-based chemotherapy. We also highlight that the NIPU trial enrolled a relatively high portion of PD-L1 negative patients (53.4%), suggesting that these patients were less likely to respond to ICIs alone (Exhibit 7). Therefore, we believe the results demonstrate measurable efficacy in this hard-to-treat patient population and we view management’s plans to continue clinical development efforts in this indication as a sensible strategic decision.

To further demonstrate Ultimovacs’ progress in MPM, we note that the FDA recently granted orphan drug designation (ODD) to the cancer vaccine for this indication (announced on 9 October) based on the NIPU data, which we believe may support future discussions with regulatory authorities. ODD is issued to drugs/biologics intended for the safe and effective treatment, diagnosis or prevention of rare diseases/conditions that affect fewer than 200,000 people in the US. The benefits of ODD include tax credits for qualified clinical trials, exemption from the Prescription Drug User Fee and, importantly, seven years of US market exclusivity, provided the company receives FDA approval.

Ultimovacs now plans to establish a clear path forward for UV1 in MPM. The company is already engaged in discussions with investigators associated with the trial, as well as third parties not associated with the trial, regarding the next steps. The detailed NIPU results have also been shared with regulatory authorities. We note that the first patient for the NIPU trial was enrolled in June 2020, ahead of the approval of ipilimumab and nivolumab later that year, and recognise that this would have altered the treatment space. Consequently, management has communicated that a potential Phase III trial in MPM may not only include a larger patient population, but also target the first-line setting in addition to the second-line setting. We expect an update once more material decisions have been made.

Given the complexity of and differences between different types of cancer, oncology clinical trials can be difficult to design. Endpoints in such trials must be measurable outcomes to establish the potential benefit, and safety, of a new therapy.

Overall survival: OS is generally considered the gold standard primary endpoint, as the obvious goal of a new cancer treatment is survival. Aptly named, OS is defined as the duration from when a patient is randomised through to death. While this endpoint has many advantages, such as its objectivity, it may also require larger trial populations and is hindered by time and costs.

Progression-free survival: PFS is defined as the duration from when a patient is randomised through to first signs of disease progression or death. This may be chosen as a surrogate endpoint, as fewer patients are required to obtain data at an earlier point in the clinical trial.

For further details and information on other endpoints, we direct readers to this helpful resource.

2023–25 was always expected to be a particularly active period for Ultimovacs, as it gears up for multiple Phase II clinical trial readouts assessing UV1 with different ICIs across various cancer indications (Exhibit 8). With the full results now shared for NIPU in MPM, all eyes now turn to INITIUM in malignant melanoma. We note that for each of these trials, the primary endpoint is PFS, with secondary endpoints of OS, ORR, duration of response and safety.

Post reporting period, on 2 November 2023, Ultimovacs announced the completion of patient enrolment (n=21) for a supplementary study to INITIUM. The supplementary study is intended to explore the biological activity and mode of action of the T cells induced by UV1. All 21 malignant melanoma patients completed treatment with UV1 in combination with ipilimumab and nivolumab as part of the INITIUM Phase II trial. This additional research is intended to assess the ability of UV1 to improve overall immune responses, as well as the ability to enhance the responsiveness of ICIs. Management has noted that, while analyses from this supplementary study will be conducted alongside analyses from the main INITIUM trial, the results will not be included in the topline INITIUM readouts in H124. Provided the data are supportive, we believe this supplementary study could strengthen the foundation for discussions with potential partners, and may also support meetings with regulatory authorities as the company plans late-stage clinical development in this indication.

As a reminder, guided timelines for INITIUM top-line results had been pushed back multiple times (now to H124) due to patients taking longer than anticipated to experience disease progression. Management has now confirmed it has amended the study protocol to ensure that data readouts are not delayed further. The original trial protocol specified that data analysis would be conducted once disease progression was observed in 70/156 patients (referred to as the number of endpoints). However, regulatory authorities have agreed that data analysis may now commence from a cut-off point of mid-January 2024, allowing a minimum 18-month follow-up period of all evaluable patients. Importantly, the amendment will not affect the integrity of the statistical analysis planned for this study, which remains set up with 80% statistical power. With management communicating that the analysis will likely take place with seven or eight fewer endpoints, the company will need to demonstrate a slightly lower HR of 0.726 for a statistically significant result, slightly lower than the previously defined HR of 0.736 with the originally planned 70 endpoints. As melanoma is considered one of the most immunogenic tumour types and since UV1 has already demonstrated proof of concept in this indication in the Phase I UV1-103 trial, we believe that the readouts from INITIUM represent the most significant upcoming catalyst for Ultimovacs.

In October 2021, Ultimovacs received Fast Track designation for UV1 as an add-on therapy to ipilimumab or pembrolizumab for treatment of unresectable or metastatic melanoma. Further, in December 2021, the FDA also granted ODD to UV1 for the treatment of malignant melanoma stage IIB–IV.

Beyond UV1, Ultimovacs is also focused on the clinical development of its first candidate from the TET (tetanus-epitope targeting) technology platform. The Phase I TENDU trial (Exhibit 9) is assessing a prostate cancer-specific vaccine based on TET technology, and is intended to provide information on dosing, safety and immune activation. The enrolment of prostate cancer patients in the TENDU trial (n=12) was completed in December 2022. To date, TENDU treatment has been reported as safe and well-tolerated, and the full readouts are expected to provide an update on immune responses and further information on safety. Provided the data are supportive, Ultimovacs plans to continue developing new vaccine solutions based on the TET platform. Management has communicated that it is on track to share the results from this study, along with an update on the TET platform, in Q423, consistent with prior guided timelines.

In Q323, Ultimovacs reported total operating expenses of NOK54.7m, up 24.2% y-o-y from NOK44.1m in Q322. The increase in operating expenses primarily resulted from a significant upturn (73.7% y-o-y) in payroll expenses to NOK24.5m (versus NOK14.1m in Q322). The increase in payroll was largely due to higher social security tax accrual related to share options, which varies with share price movements, and may be non-recurring in nature as a result. Altogether, the social security tax related to options had a NOK6.9m expense contribution in Q323 (vs a NOK2.2m credit in Q322), resulting in a NOK9.0m yearly swing. The largest overall contributor to payroll expenses was NOK11.5m in salaries, which increased 12.6% y-o-y due to the increase in total headcount (total full-time equivalent count of 24 in Q323 vs 23 in Q322).

External R&D expenses recorded moderate growth of 9.3% y-o-y at NOK26.4m versus NOK24.2m in Q322, due to INITIUM and NIPU trial related expenses, along with chemistry, manufacturing and controls (CMC) activities. Operating losses, which mainly reflect operating expenses due to the absence of any revenue inflow, stood at NOK54.7m in Q323 (versus NOK44.1m in Q322). Net cash flow from operating activities was reported at NOK40.7m in Q322 (NOK32.3m in Q322).

Based on year-to-date results and current operational visibility, we have made some adjustments to our FY23 and FY24 estimates. At the group level, we expect Ultimovacs to continue its R&D activities at a similar pace until end-FY24, hence, we have decreased our R&D forecasts to NOK106.0m and NOK119.8m in FY23 and FY24, respectively, compared to prior expectations of NOK120.0m and NOK136.9m for these periods. Additionally, we have reduced our SG&A estimates to NOK78.6m in FY23 (NOK85.8m previously) and NOK82.5m (NOK102.9m previously) in FY24 as we do not expect any material change in employee headcount, or any additional expense over the next year. Overall, our operating loss estimates are now NOK213.6m in FY23 and NOK234.7m in FY24 (versus NOK238.2m and NOK276.4m previously).

Our valuation for Ultimovacs increases to NOK7.6bn or NOK222 per share (from NOK7.5bn or NOK219 per share previously), mainly representing the effect of rolling forward our model by three months, which was further supported by the above-mentioned modifications to our expense estimates, and partially offset by a reduced net cash balance of NOK300.3m (vs NOK344.1m at end-Q223). Our long-term assumptions for the company remain unchanged, and as we move closer to the expected milestones (first out-licensing deal assumed at end FY24) and projected product launches, our discounted valuation increases in value.

As stated above, at end-September 2023, Ultimovacs had a net cash position of NOK300.3m, which management expects to be sufficient to fund operations to H224, which is also in line with our operating cash burn estimates. Since our model assumes an out-licensing deal by end-2024, we estimate that the company would be required to raise c NOK150m in H224 (before a deal is secured). 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 NOK94/share), Ultimovacs would need to issue 1.60m shares, resulting in our per-share valuation coming down to NOK216 from NOK222 currently (shares outstanding would increase from 34.4m to 36.0m). However, we do not expect Ultimovacs to be fully revenue generating and self-sustaining until the launch of UV1, which we forecast in 2028.