Ultimovacs — UV1 development funded past key readouts

Ultimovacs (OSE: ULTI)

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Research: Healthcare

Ultimovacs — UV1 development funded past key readouts

Ultimovacs’ busy clinical programme for UV1, a universal cancer vaccine, continues to progress on schedule as highlighted in the company’s Q222 report. 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. R&D related expenses in Q222 were NOK30.0m, substantially below estimates, as some costs from the period were delayed. We expect expenses to increase in H222 as these delayed costs are recognised and the LUNGVAC trial (UV1 plus pembrolizumab) in non-small cell-lung cancer begins to enrol patients in Q322. At end-H122 Ultimovacs had a net cash position of NOK486.3m (the company has no debt), which we anticipate will fund operations into H124, past a handful of key readouts from the pipeline in 2023. We update our valuation of Ultimovacs to NOK7.2bn or NOK209/share (NOK6.90bn or NOK202/share previously).

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Ultimovacs

UV1 development funded past key readouts

H222 results

Pharma and biotech

19 August 2022

Price

NOK69.5

Market cap

NOK2,378m

US$/NOK9.70

Net cash (NOKm) at end-June 2022

486.3

Shares in issue

34.2m

Free float

56%

Code

ULTI

Primary exchange

Oslo Stock Exchange

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(0.1)

(9.2)

(32.4)

Rel (local)

(5.5)

(10.5)

(37.9)

52-week high/low

NOK162.0

NOK61.9

Business description

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

Next events

Phase II INITIUM and NIPU top-line data

UV1 Phase I melanoma three-year OS data

H123

Q422

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Harry Shrives

+44 (0)20 3077 5700

Ultimovacs is a research client of Edison Investment Research Limited

Ultimovacs’ busy clinical programme for UV1, a universal cancer vaccine, continues to progress on schedule as highlighted in the company’s Q222 report. 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. R&D related expenses in Q222 were NOK30.0m, substantially below estimates, as some costs from the period were delayed. We expect expenses to increase in H222 as these delayed costs are recognised and the LUNGVAC trial (UV1 plus pembrolizumab) in non-small cell-lung cancer begins to enrol patients in Q322. At end-H122 Ultimovacs had a net cash position of NOK486.3m (the company has no debt), which we anticipate will fund operations into H124, past a handful of key readouts from the pipeline in 2023. We update our valuation of Ultimovacs to NOK7.2bn or NOK209/share (NOK6.90bn or NOK202/share previously).

Year end

Revenue
(NOKm)

PBT*
(NOKm)

EPS*
(NOK)

DPS
(NOK)

P/E
(x)

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

(213.5)

(6.24)

0.0

N/A

N/A

12/23e

0.0

(219.1)

(6.40)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Pipeline momentum continues

Notably in H122, the INITIUM Phase II trial in malignant melanoma completed enrolment in June, after the company reported positive two-year survival data from a previous Phase I trial in the same indication. Top-line data from INITIUM (and NIPU) are expected in H123. For a more in-depth update on Ultimovacs’ development pipeline, see our recent update note.

Costs below expectation but expected to rise

As H122 R&D expenses were lower than our expectations, we have adjusted our estimated R&D costs for FY22/23. We believe our new estimates incorporate an increase in patient enrolment in active Phase II trials, while also considering the commencement of enrolment in the LUNGVAC trial in Q322 and delayed expenses to be recognised in H222. We continue to see Ultimovacs’ development strategy of utilising investigator-led trials as an effective method to lower R&D costs, compared to self-run studies.

Valuation: NOK7.2bn or NOK209/share

We update our valuation of Ultimovacs to NOK7.2bn or NOK209/share (NOK6.90bn or NOK202/share previously), including a net cash position at end-H122 of NOK486.3m. We have rolled our model forward and updated our FX rate assumptions. Considering H122 results, we have revised our financial estimates, but our underlying long-term assumptions remain unchanged. With a cash position of NOK486.3m at H122 and cash burn rate of NOK78.4m in H122, we estimate a cash runway for the company into H124, past key clinical readouts.

Exhibit 1: Financial summary

Accounts: IFRS, Yr end: December, NOK: Thousands

 

2019A

2020A

2021A

2022E

2023E

Income statement

 

 

 

 

 

 

Total revenues

 

0

0

0

0

0

Cost of sales

 

0

0

0

0

0

Gross profit

 

0

0

0

0

0

SG&A (expenses)

 

(20,160)

(50,989)

(61,916)

(63,464)

(65,050)

R&D costs

 

(43,995)

(70,438)

(99,213)

(148,820)

(151,796)

Other income/(expense)

 

0

0

0

0

0

Exceptionals and adjustments

 

0

0

0

0

0

Reported EBITDA

 

(64,155)

(121,427)

(161,129)

(212,283)

(216,846)

Depreciation and amortisation

 

(2,063)

(2,720)

(2,703)

(2,537)

(2,454)

Reported Operating Profit/(loss)

 

(66,218)

(124,147)

(163,832)

(214,820)

(219,300)

Finance income/(expense)

 

5,051

3,593

(889)

1,352

232

Other income/(expense)

 

0

0

0

0

0

Exceptionals and adjustments

 

0

0

0

0

0

Reported PBT

 

(61,167)

(120,554)

(164,721)

(213,468)

(219,068)

Income tax expense

 

0

0

0

0

0

Reported net income

 

(61,167)

(120,554)

(164,721)

(213,468)

(219,068)

 

 

 

 

 

 

 

Basic average number of shares, m

 

22.9

30.3

32.4

34.2

34.2

Basic EPS (NOK)

 

(2.67)

(3.98)

(5.09)

(6.24)

(6.40)

Diluted EPS (NOK)

 

(2.67)

(3.98)

(5.09)

(6.24)

(6.40)

 

 

 

 

 

 

 

Balance sheet

 

 

 

 

 

 

Property, plant and equipment

 

536

377

212

194

176

Intangible assets

 

55,519

64,551

60,088

57,851

55,698

Other non-current assets

 

3,523

3,630

1,951

1,951

1,951

Total non-current assets

 

70,429

80,353

73,282

71,027

68,856

Cash and equivalents

 

399,607

440,925

574,168

346,120

149,269

Trade and other receivables

 

0

0

0

0

0

Other current assets

 

8,004

8,438

8,087

8,087

8,087

Total current assets

 

407,611

449,363

582,255

354,207

157,356

Non-current loans and borrowings

 

0

0

0

0

0

Total non-current liabilities

 

13,152

13,870

11,488

11,488

11,488

Trade and other payables

 

11,768

8,611

22,555

6,038

14,297

Other current liabilities

 

7,164

17,149

26,714

14,609

14,609

Total current liabilities

 

20,257

27,467

50,897

22,275

30,534

Equity attributable to company

 

444,632

488,380

593,153

391,473

184,192

 

 

 

 

 

 

 

Cashflow statement

 

 

 

 

 

 

Operating Profit/(loss)

 

(66,218)

(124,147)

(163,832)

(214,820)

(219,300)

Depreciation and amortisation

 

2,063

2,720

2,703

2,537

2,454

Other adjustments

 

0

0

0

0

0

Movements in working capital

 

(1,862)

6,395

23,860

(28,622)

8,259

Interest paid / received

 

0

0

0

0

0

Income taxes paid

 

0

0

0

0

0

Cash from operations (CFO)

 

(62,989)

(108,224)

(125,827)

(227,765)

(196,568)

Capex

 

(172)

(282)

(85)

(282)

(282)

Acquisitions & disposals net

 

0

0

0

0

0

Other investing activities

 

4,490

(455)

3,062

0

0

Cash used in investing activities (CFIA)

 

4,318

(737)

2,977

(282)

(282)

Net proceeds from issue of shares

 

344,582

152,933

261,852

0

0

Movements in debt

 

0

0

0

0

0

Other financing activities

 

(1,579)

(1,916)

(1,895)

0

0

Cash flow from financing activities

 

343,003

151,017

259,957

0

0

Increase/(decrease) in cash and equivalents

 

284,067

41,317

133,244

(228,047)

(196,850)

Cash and equivalents at beginning of period

 

115,539

399,606

440,923

574,167

346,120

Cash and equivalents at end of period

 

399,606

440,923

574,167

346,120

149,269

Net (debt) cash

 

399,607

440,925

574,168

346,120

149,269

 

 

 

 

 

 

Source: Ultimovacs’ company accounts, 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.

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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 2022 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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 2022 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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