RhoVac — Stopping metastasis in its tracks

RhoVac is an immunotherapy company listed on the Spotlight exchange in Stockholm. RhoVac AB is the listed entity, however all company activities are carried out by its wholly owned subsidiary (and only holding) RhoVac ApS based in Hørsholm, Denmark. RhoVac ApS was founded in 2007 around the original technology (patent filed 2007), and RhoVac AB was created in 2015 in order to access capital from an IPO. Since the companies have the same ownership, we refer to both companies as ‘RhoVac’. RhoVac operates as a virtual organisation supported by partnerships, with few full-time staff and a low fixed-asset base. Management is considering an uplisting to Stockholm First North after the rights issue, but no decision has been taken by the board yet.

We value RhoVac based on risk-adjusted NPV analysis using a 12.5% discount rate, including estimated net cash of SEK170.3m (net cash from end-2018 plus net proceeds from the planned rights issue, which we assign 100% probability since it is fully secured). This results in a value of SEK708m or SEK37.2/share. We include a single asset in a single indication in our valuation, which is RV001 in prostate cancer, specifically in patients with biochemical recurrence following radical prostatectomy or radiotherapy. Further additions are possible depending on a future strategic decision from RhoVac, for example with the initiation of its second Phase II study in combination with a checkpoint inhibitor in another cancer indication. According to our model, a successful Phase IIb outcome would result in an increase in RhoVac’s rNPV to SEK2.0bn or SEK107.1/share.

RhoVac reports no income, while the operating spend was SEK20.2m in 2018, up from SEK12.9m in 2017, mainly to fund the Phase I/II study. The company had cash of SEK16.1m at the end of 2018 and no debt. On 29 April 2019, RhoVac announced a planned rights issue of approx. SEK180.9m gross (SEK154.2m net). In total, 9.5m shares should be issued (a 100% increase in the number of shares outstanding) at a price of SEK19/share (versus SEK34.9/share on the day before the announcement). A group of investors have agreed to make commitments in the share issue amounting to 100% of the full amount. The subscription period will run from 5–19 June 2019. According to RhoVac, current cash plus cash from the rights issue will fund activities until 2022.

RhoVac is subject to typical biotech company development risks, including the unpredictable outcome of trials, regulatory decisions, success of competitors, financing and commercial risks. Our model assumes that RV001 will be out-licensed; therefore, our valuation is sensitive to potential licensing timing and actual deal terms. The near-term R&D sensitivities are tied to RV001 in prostate cancer, which is the only clinical-stage programme. Any setbacks with this asset will influence RhoVac’s share price significantly. RhoVac has one family of patents protecting its immunotherapy, expected to expire in 2028 (Europe, Australia, Japan) and 2032 (US). This gives a limited patent life once on the market, but we expect the Biologic License Application (BLA) to provide protection. In our model, we assume a four-year Phase III trial in prostate cancer. However, there is a risk that the trial could take longer than expected. It is also possible that a future partner carries out a second Phase II study before starting a Phase III. Our valuation is sensitive to such delays. Finally, although a group of investors have agreed to make commitments in the share issue amounting to 100% of the full amount, there may be some risk that it does not receive the full amount, which could delay plans. A single investor, M2 Asset Management, is responsible for the majority of the new commitments.

RhoVac is a development-stage company, and is built around a single technology and corresponding family of patents. RhoVac’s technology involves the use of immunotherapy to activate T-cells against the protein RhoC, for the treatment or prevention of metastasis. Currently, it has one product in development: RV001, which contains RhoC protein fragments plus the adjuvant Montanide ISA 51.

The treatment of metastatic cancer remains a significant unmet need; most patients who reach this advanced stage are terminal, and yet the treatment of metastasis is challenging and far behind the treatment of primary tumours. The metastatic cascade is generally believed to be ‘undruggable’ using traditional small molecule drugs or antibodies.1 Therefore, the idea of preventing or limiting metastasis through T-cell activation is an attractive one. RhoVac’s chosen target RhoC is a promising target since it is overexpressed in cancer cells with metastatic potential compared with healthy cells across multiple cancer types.

Currently RhoVac has just one clinical programme, which is in localised prostate cancer, but it intends to explore further indications. The recently announced rights issue (fully secured) will provide sufficient capital for RhoVac to conduct two Phase II studies with RV001:

Management’s current strategy is to develop RV001 to proof-of-concept stage before securing a partnership agreement or sale, which could generate some returns for shareholders. Management therefore does not expect to take RV001 into Phase III itself, but aims to secure some kind of partnership for the asset around the time of Phase IIb trial completion. We do not expect a deal if the trial does not reach its primary endpoint, in which case RhoVac might have to raise more money or rely on its other programme, ie the combination trial.

Metastatic cancer is the most advanced stage of cancer and is terminal. Unfortunately, a large proportion of patients who are diagnosed with cancer already have metastases. As a result, advanced cancer is a key focus area for pharmaceutical development. Recently there has been great success in this field with the introduction of immune therapies such as checkpoint inhibitors, which are able to reduce the size of primary and secondary tumours, and improve outcomes for patients such as overall survival or progression-free survival. However, these drugs do not always prevent disease progression. Metastases are difficult to treat because they are heterogeneous and can develop drug resistance. Preventing metastasis is also difficult; for example, even if a patient’s cancer is caught early and they are ‘cured’ through the successful removal of the primary tumour, the cancer can still return in the form of a distant metastasis.

Despite the significance of metastasis, there is much less research in this area compared to the treatment of primary tumours. This could be due to the fact that the mechanisms of metastasis are less known than the mechanisms of primary tumour development. This represents both a challenge and an opportunity for companies developing treatments targeting metastasis.

Cancer metastasis is a complex process and still is not fully understood. However, it is generally accepted that metastases form via a ‘metastatic cascade’ with several steps that can occur over several years:

Despite the significance of the metastatic cascade in cancer progression, there has been an apparent lack of interest in this area from the pharmaceutical industry. According to one review article published in Nature, “overt scepticism exists in the pharmaceutical industry and some academic quarters about the concept of drugging metastasis.”3

There are a few notable drugs that have attempted to target specific stages of the metastatic cascade directly. Roche’s bevacizumab (Avastin), an angiogenesis inhibitor, is the most successful commercially. However, this drug has been more successful at treating the primary tumour rather than metastasis. Denosumab, a RANKL inhibitor, has been the most successful at inhibiting metastasis so far, since it actually helps to delay the time to bone metastasis and bone metastasis-free survival in solid tumours. This drug is mainly used to treat bone diseases including osteoporosis. Suggested reasons for failure in this field so far include poor understanding of metastatic pathways, trial design and over interpretation of Phase II clinical data.4

Key challenges for drug development in this area include:

RV001 is a peptide-based immunotherapy that contains fragments of a protein called RhoC, which is overexpressed in cells with metastatic potential in a range of cancers (Karlsson et al 2009). It has been found to be essential for metastasis (Hakem et al 2005), and to cause metastasis in animal models (Clark et al 2000). The adjuvant Montanide ISA 51 is used together with the peptides to increase the immune response. The strategy that RhoVac is employing is similar to other peptide immunotherapies in that the aim is to elicit a T-cell response against a particular protein expressed by tumour cells. RhoVac expects RV001 to elicit a T-cell response against RhoC through MHC class I and II (Exhibit 3). RhoVac envisages that RV001 would be best administered as a combination/adjuvant therapy with a treatment targeting the primary tumour. This is not the case with its lead programme in prostate cancer, since here RV001 is used as an adjuvant to radical prostatectomy or radiotherapy, but future trials in other cancers will likely be combination trials.

RhoC is an Rho GTPase. Rho GTPases have a role in important cellular processes such as migration and cell adhesion. Since metastasis employs these mechanisms, Rho GTPases are also associated with metastasis. Rho GTPases and their pathways have already been investigated as targets for cancer treatment, but so far unsuccessfully. RhoVac has IP around RhoC in cancer immunotherapy.

RhoC is on the National Cancer Institute list as a priority cancer antigen. RhoC regulates the cytoskeleton at the point of the cell that is infiltrating cellular matrix so it is directly associated with invasion. However, this is not a cancer-specific mechanism as any cell involved in tissue repair or angiogenesis will use the same mechanism. Therefore, although this protein is overexpressed in tumour cells, it is only tumour-associated. There is always a risk with tumour-associated antigens (ie. those that are also expressed by healthy cells), in that the body may have developed so-called ‘immune tolerance’ to this protein, so as not to cause a harmful autoimmune response. This occurs through elimination of T-cells that react to the self-protein.

An interesting finding is that RhoC overexpression is maintained in secondary tumours (Liu et al 2007). This observation led RhoVac to the idea that RV001 could be effective at preventing secondary metastases too, so it can theoretically be useful at any stage of cancer.

In a malignant process, cancer cells die and proteins/antigens are released. These are then taken up by the patient’s own antigen-presenting cells, or dendritic cells (DCs), and in lymph nodes they present these antigens to T-cells. This leads to an activation and production of populations of T-cells, which can now recognise and destroy cancerous cells that display the same antigens as those previously presented. However, this process is not perfect, which is why not every malignant process is stopped. Once a tumour develops, it often also has multiple ways to suppress the immune response and enable the tumour to ‘hide’ from the immune cells.

The goal of cancer immunotherapies is to expose the tumour cells as foreign to the patient’s immune system so the tumour is recognised and immunologically attacked. It is generally accepted that the best way to utilise immunotherapies to treat tumours is to combine them with other strategies targeting different parts of the cancer immunity cycle (Schlom and Gulley, 2018). Peptide-based immunotherapies are one such cancer immunotherapy, and work by presenting peptides to the patient’s immune system that are likely to be expressed by the patient’s tumour so that T-cells will be able to target and kill these cells. As with other immunotherapies, it is ideal to combine peptide immunotherapies with other immunotherapy strategies.

Prostate cancer is a common cancer in men over the age of 50. The National Cancer Institute estimates that 174,650 patients in the US will be diagnosed with prostate cancer in 2019 and there will be an estimated 31,620 deaths from the disease in the US during 2019. Prostate cancer is usually diagnosed by carrying out a mixture of prostate-specific antigen (PSA) blood test, digital rectal examination and biopsy. PSA is an important tool also to monitor patients for relapse. Guidelines can differ on recommendations for population-based screening; some recommend screening for men over the age of 50 with average risk, or over the age of 40 with increased risk, whereas others do not recommend it on the basis of unnecessary cost and overtreatment. The stage of prostate cancer at diagnosis is a significant contributor to survival as patients with early local disease have a five-year relative survival rate of 98%, while patients with advanced metastasis have a relative five-year survival of 28% (Tewari et al 2014). The stage of prostate cancer together with the risk level determines treatment options:

RhoVac is targeting patients with localised disease who have relapsed. A relapse in these patients is known as biochemical recurrence/biochemical failure and can be defined as a rise in PSA ≥0.2ng/mL (American Urological Association, European Association of Urology). Currently these patients will move on to hormone therapy or salvage radiotherapy, but RhoVac wants to delay disease progression by extending the effect of the radical therapy (ie radical prostatectomy or radiotherapy). RV001 will be given therefore as an ‘adjuvant’ treatment to the radical therapy. Discussions with the EMA and FDA highlight that this is an area of unmet medical need.

The best-selling drugs in 2018 have been the newer branded hormone drugs targeting advanced disease, ie Zytiga (abiraterone acetate, Janssen Biotech) with sales of $1.8bn, Xtandi (enzalutamide, Astellas) $1.5bn, and Leuplin (leuprolide acetate, Takeda) $400m (EvaluatePharma). EvaluatePharma estimates the revenues per patient per year from Zytiga to be around $30,000 and Xtandi to be around $45,000. RV001 is a peptide-based immunotherapy and these tend to come with a biologics price tag. However, RhoVac is targeting patients with earlier-stage disease so may not be able to command a price as high as Zytiga or Xtandi.

RV001 was studied in a Phase I/II study with 22 patients (Exhibit 5). The primary objective was to evaluate safety and tolerability, while the secondary objective was looking at immune response. Patients were given 11 subcutaneous injections over the course of 30 weeks. So far, the company has not published the full results of the study in any scientific journal, but top-line results were published in August 2018 and on subsequent immune response follow-ups. According to the press release, RV001 was well tolerated in all patients, with no grade 3, 4 or 5 reactions. There were local injection site reactions, but these are common and usually a result of the adjuvant Montanide. Of the 21 evaluable patients, 18 (86%) had an immune response during or following treatment (measured by IFNγ ELIspot analysis). Based on these results, RhoVac now plans to evaluate the therapy in a larger Phase IIb study.

RhoVac has also carried out preclinical studies with RV001. These were ex vivo studies with human cancer cells in breast cancer, bowel cancer and melanoma. These studies are not published, but according to RhoVac, they demonstrate that a T-cell response can be elicited from RV001, and that the T-cells attack and kill metastatic cells.

Following the positive Phase I/II study, RhoVac has designed a larger Phase IIb study to explore efficacy in the same patient group (Exhibit 6). RhoVac received a positive response from the EMA and submitted a clinical trial application to the Danish authorities in April 2019. The trial is expected to initiate in Q319, following clinical trial approval and once funds have been secured from the rights issue. The study will enrol patients in Europe. The therapy will be administered as 12 subcutaneous injections, over several months.

In terms of endpoints, RhoVac plans to use time to PSA progression as the primary endpoint. Patients will be included in the study who have had biochemical recurrence where their PSA level reaches ≥0.2ng/mL, and who have PSA doubling time of between three months and 12 months. During the study their PSA will be measured, in terms of PSA doubling time. RhoVac is aiming to reduce the PSA increase by 50% compared with the placebo group, which is an outcome that would be interesting to urologists.

In our view, PSA progression is a good endpoint for this group of patients (biochemically recurrent prostate cancer following radical therapy) in a Phase II trial, mainly because it allows RhoVac to perform a relatively small, fast and cheap study. Feedback from both the EMA and FDA was positive on the endpoints, and other studies in the same group of patients are also using PSA endpoints in Phase II, eg nivolumab (Bristol-Myers Squibb) and olaparib (AstraZeneca). PSA is known to be a reliable measure of disease progression/metastasis in prostate cancer. However, it is not clear whether a more substantial endpoint such as metastasis-free survival (MFS), OS or PFS would be required at Phase III. RhoVac plans to include MFS as an exploratory endpoint in the Phase IIb study, but it should be noted that the study is not large or long enough to be able to conclude anything about MFS. A good outcome from the trial would be if the study meets its primary endpoint, ie showing that RV001 can delay PSA progression in these patients.

If the Phase IIb study is positive, at least one successful Phase III study will likely be required for regulatory approval. RhoVac’s current strategy is to partner following the Phase IIb outcome, as it does not have the financial firepower to carry out a large Phase III study, but management is open to options including selling the company. Management currently envisages a single Phase III study (Exhibit 7). In our model we also assume a licensing deal in 2022 following the Phase IIb readout followed by a single Phase III study, which we assume will be a global study including both European and US sites, and will take approximately four years to complete. However, it is also plausible that an additional Phase II or Phase III study would be required, or that the Phase III study will take longer. This would increase time to market.

Pre-IND meetings with the FDA went well; RhoVac received a positive response from the FDA in April 2019. RhoVac expects to receive clinical trial approval from the Danish authorities and start the trial in Denmark in Q319 and plans to resume discussions with the FDA at this time. For the moment, we do not include a separate Phase IIb study in the US but assume the FDA will allow the European study (possibly including some US sites) as the basis for approval, together with the global Phase III study (which should include US sites).

So far, the only endpoints that have been the basis for FDA approval in prostate cancer are OS, PFS and MFS. Based on discussions with the FDA and EMA, RhoVac expects metastasis-free survival (MFS) to be accepted as the primary endpoint. Both the FDA and EMA now accept this endpoint in non-metastatic, castrate-resistant prostate cancer patients at high risk of developing metastases, demonstrated by recent apalutamide and enzalutamide approvals in this patient population using the same endpoint. RhoVac is targeting a slightly earlier patient population, but expects MFS to be acceptable based on discussions with the regulators. Studies with MFS as the primary endpoint can take many years to complete; for example, this study in high-risk localised or locally advanced prostate cancer is recruiting 1,500 patients and is expected to take seven years (NCT02531516). There is a call for other surrogate endpoints in prostate cancer trials, including PSA endpoints, which could shorten trials.8,9 Time to biochemical failure has been proposed as a surrogate endpoint, as demonstrated in a Phase III study in localised disease, but no products have been approved on PSA. According to RhoVac, the EMA and FDA are open to discussing the use of such endpoints, because they recognise the problem of designing trials in this group of patients, where there is a significant unmet need. However, until the Phase IIb outcome and further discussions with the regulators, the Phase III endpoints remain uncertain.

Based on feedback from the regulators, RhoVac does not need to carry out any further toxicology studies or Chemistry, Manufacturing, and Controls (CMC) development. In addition, any further studies in new indications can go directly into Phase IIb, since the safety data will also be sufficient for these new indications.

There have been several studies carried out in prostate cancer with drugs targeting metastasis:

So far, immunotherapies have not been successful in prostate cancer, but extremely successful in many other cancers. Several checkpoint inhibitors and other immunotherapies have been evaluated as monotherapies in prostate cancer trials but without much success. The only immunotherapy approved for prostate cancer is Provenge (Sipuleucel-T) developed by Dendreon. As a result, it has been suggested that prostate cancer is a ‘cold tumour’ that resists T-cell infiltration.10 Immunotherapies are now being studied in combination for prostate cancer, which could improve T-cell infiltration. RV001 might be able to avoid this issue, since it is designed to target cells with metastatic potential rather than primary tumours.

Provenge/Sipuleucel-T (Dendreon) is an autologous cellular immunotherapy, which involves leukapheresis, treatment of the patient’s peripheral blood mononuclear cells with prostatic acid phosphatase (PAP) and GM-CSF followed by reinfusion into the patient. It was approved by the FDA in 2010 and is still the only approved immunotherapy for prostate cancer, specifically asymptomatic or minimally symptomatic metastatic castrate-resistant prostate cancer (mCRPC). It has been withdrawn from the market in Europe for commercial reasons. Despite adding four months of survival benefit in Phase III, it has not been very successful commercially. This is likely due to the high cost ($93,000 per patient), lack of efficacy, complexity of the procedure (the patient must undergo three procedures) and concerns about reimbursement.

Prostvac (Bavarian Nordic) is another high-profile example of an immunotherapy developed for prostate cancer, but so far has not been approved. It encodes transgenes for PSA (prostate specific antigen) as the targeted tumour associated antigen, and three co-stimulatory proteins known as TRICOM (B7-1, ICAM-1 and LFA-3) that further activate cytotoxic T lymphocytes that may recognise and kill PSA-expressing cancer cells. It was evaluated in asymptomatic or minimally symptomatic mCRPC. Although it showed an 8.5-month improvement in OS vs placebo in a Phase II study, this was not replicated in a Phase III study. Bristol-Myers Squibb took an option to Prostvac in 2015 prior to the Phase III results, and started to evaluate it in combination with ipilimumab. It is still being evaluated in several other studies, including by the National Cancer Institute in biochemical recurrence (Exhibit 8).

The majority of clinical development in prostate cancer is for mCRPC. However, there are a few ongoing studies with immunotherapeutics being conducted in patients with biochemical recurrence – the same population as RhoVac’s planned Phase IIb study (Exhibit 8). To our knowledge, there have not been any Phase III studies carried out in this group of patients. Results from these studies could provide insights for RhoVac, and if any Phase III studies are initiated it will also be helpful for RhoVac when discussing endpoints with the regulators.

RhoVac has a single patent family based on the PCT application WO2009076966 and priority date of December 2008. It has patents in Europe, Australia and Japan (EP2234635B1, AU2008338063B2, JP5813801B2) expected expiry December 2028), and the US (US9163077B2, expected expiry March 2032), and patents pending in Canada. This patent family covers RV001 and any other immunotherapies that RhoVac may develop relating to RhoC. According to our model, if RV001 reaches the market in prostate cancer, this will likely be in 2027 (assuming a four-year Phase III study that includes a longer endpoint such as MFS or PFS), which does not leave much room for patent protection (and it would take even longer to reach the market in other indications). Patent protection could be extended, but we expect that RhoVac or a potential partner would have to rely on market exclusivity resulting from the Biologic License Application (BLA). Since RV001 is an immunotherapy, we expect it will go down the BLA pathway, which would secure 12 years’ exclusivity in the US and at least 10 years in Europe (upon market authorisation). To achieve patent extension in the US, RhoVac would benefit from including clinical trial centres in the US as early as possible, ie in the Phase IIb study.

A second Phase II study (n=20–30) is planned to evaluate RV001 in combination with a checkpoint inhibitor. This will be more of an ‘exploratory’ study and will be carried out with the planned funds from the rights issue. The study is still in the early planning stages. For the moment, this trial plan demonstrates the fact that RhoVac is looking to evaluate RV001 in multiple stages of cancer and in combinations. RhoVac is trying to evaluate the immunotherapy in combination with a therapy that can tackle the established tumours, while RV001 aims to prevent further metastasis/disease progression in these patients.

Cancer stem cells have been heavily implicated in metastasis, but their existence is still debated. There are different theories about their involvement in metastasis; for example, one theory suggests that only cancer stem cells can establish metastasis, another that both cancer cells and cancer stem cells can metastasise.11

RhoVac has entered into a collaboration with Lund University in order to understand whether its immunotherapy can also target cancer stem cells to treat metastasis. The aim of the collaboration is to firstly confirm that RhoC is expressed in prostate cancer stem cells, and then, if so, work out whether RV001 is active against these cells. Since metastasis is a relatively unknown area of science, and there is no consensus on the involvement or requirement of cancer stem cells in this process, it would add significantly to RhoVac’s scientific rationale if RhoC was overexpressed in all types of metastasising cell. If cancer stem cells do contribute to metastasis and overexpress RhoC, they would represent a target for RhoVac’s immunotherapy.

RhoVac is subject to typical biotech company development risks, including the unpredictable outcome of trials, regulatory decisions, success of competitors, financing and commercial risks. Our model assumes that RV001 will be out-licensed; therefore, our valuation is sensitive to potential licensing timing and actual deal terms.

RhoVac is an early-stage drug developer, therefore in the foreseeable future the value creation will depend on successful R&D progress and any potential partnering activities, although typically the timing of licensing deals is difficult to forecast. The near-term R&D sensitivities are tied to RV001 in prostate cancer, which is the only clinical-stage programme. Any setbacks with this asset will influence RhoVac’s share price significantly. As additional indications reach clinical development, this risk will be diversified.

Currently, RhoVac is a single technology company, which is high risk since if the technology is not successful in treating metastasis the company cannot fall back on any alternatives. RhoVac has one family of patents protecting its technology, which are expected to expire in 2028 and 2032. This gives a short patent life once on the market (if successfully commercialised). We expect the BLA to provide protection, but there could be some risks relating to this short patent life such as reduced interest from potential partners.

A significant unknown is the design of the Phase III study in prostate cancer including the cost and length of the study. In our model, we assume a four-year Phase III trial in prostate cancer. However, there is a risk the trial could take much longer if a different endpoint is required, which could affect the valuation, or that a partner carries out a second Phase II study before starting a Phase III. Such delays would delay any licensing revenues to RhoVac, thus significantly lowering our valuation.

Finally, although a group of investors have agreed to make commitments in the share issue amounting to 100% of the full amount, there may be some risk that it does not receive the full amount, which could delay plans. Importantly, a single investor, M2 Asset Management, is responsible for the majority of the new commitments (49.2%).

We value RhoVac based on risk-adjusted NPV analysis using a 12.5% discount rate, including estimated net cash of SEK170.3m (net cash from end-2018 plus net proceeds from the planned rights issue, which we assign 100% probability since it is fully secured) (Exhibit 9). This results in a value of SEK708m or SEK37.2/share. We assume a 10% probability of success, reflecting the fact that the Phase IIb study has not yet initiated.

We include a single asset in a single indication in our valuation, which is RV001 in prostate cancer, specifically in patients with biochemical recurrence following radical prostatectomy or radiotherapy. Exhibit 10 summarises our detailed assumptions for the risk-adjusted NPV valuation, while licensing deals used for benchmarking are shown in Exhibit 11. We use these deal terms but apply a 30% discount due to the differences between these deals and RhoVac’s asset. The key difference is the stage of development – these deals are for Phase III assets, whereas RV001 is Phase IIb-ready. Additionally, in our view, if a partner were to license RV001, it may want to conduct another Phase II study before starting a Phase III study. Finally, these deals were made a few years ago and the products were not successful, which will likely influence the deal negotiations. We use the following deal terms: upfront payment of $30m, development and regulatory milestones totalling $150m, sales milestones of $250m and tiered double digit royalties starting from 10%.

We decided to perform a sensitivity analysis on two key inputs, peak penetration and pricing. This is because there are no comparable treatments in this specific patient population. For our pricing assumption we have used Zytiga (abiraterone) and Xtandi (enzalutamide) as the closest benchmarks, which have a list price of $45–70k per patient per year (EvaluatePharma). However, these hormone therapies are used in more advanced patient populations, so are not directly comparable. We have assumed 20% peak penetration, since there are a few other treatments in development for this patient population, but penetration will ultimately depend on the strength of RVV001’s clinical data and pricing vs other available treatments.

According to our model, a successful Phase IIb outcome would result in a significant increase in RhoVac’s rNPV to SEK2.0bn or SEK107.1/share (not including the net cash estimate). For this scenario, we increased the probability of success to 40% as a Phase III-ready asset and changed the date of the valuation to the start of 2022, but left all other inputs unchanged.

RhoVac reports no income, while the operating spend was SEK20.2m in 2018, up from SEK12.9m in 2017, mainly to fund the Phase I/II study. RhoVac received SEK2.9m in tax credits in 2018. The company had cash of SEK16.1m at the end of 2018 and no debt. In April 2019, RhoVac announced a rights issue of SEK180.9m gross (SEK154.2m net). In total 9,523,551 shares should be issued (a 100% increase in number of shares outstanding) at a price of SEK19/share (versus SEK34.9 per share the day before the announcement). The rights issue is guaranteed by commitments from a group of investors. The subscription period is planned to last from 5 June to 19 June 2019.

RhoVac reported SEK6.2m in loss before tax in Q119. The Phase IIb study is expected to start in Q319 after the rights issue. The fresh capital will support RhoVac’s Phase IIb study and the potential exploratory study with a checkpoint inhibitor. According to the company, and our model the cash will be sufficient to fund the budgeted activities until 2022. We therefore forecast operating expenses to pick up in H219 through to H221 (Phase IIb completion). Our current operating spend estimates for 2019 and 2020 are SEK37.0m and SEK50.0m, respectively.