Ultimovacs — Cancer vaccine with virtually universal potential

Ultimovacs is a biotechnology company developing novel immunotherapies against cancer. The origins of its proprietary technology stem from research conducted at the Oslo University Hospital by professor of immunology Gustav Gaudernack, who joined Ultimovacs as CSO after it was established in 2011. Ultimovacs is located at the Oslo Cancer Cluster Innovation Park in Oslo, Norway. Ultimovacs has a Swedish subsidiary, Ultimovacs AB, in Uppsala, Sweden, which it acquired in 2018 from Immuneed to access TET platform technology. In 2019 Ultimovacs was listed on the Oslo Stock Exchange.

The lead product is UV1, a peptide-based therapeutic cancer vaccine that activates the immune system to recognise hTERT. Chromosomes are capped with sections of so-called telomeres, which gradually shorten after each normal cell division cycle, causing a finite replicative capacity. Malignant cells develop the ability to maintain telomeres through the expression of hTERT, which enables them to replicate infinitely. So, hTERT is a self-antigen that is known to be overexpressed in over 85% of cancer types. In these malignancies, cell reproduction relies exclusively on hTERT maintaining the length of telomers. For this reason, UV1 has a broad potential in a variety of cancers, in different stages and in combination with other treatments. The vaccine is easy to use, requires no sophisticated hospital infrastructure and will be manufactured as an off-the-shelf product with a long shelf life.

UV1 has an interesting history of discovery. UV1 epitopes were selected based on insights from large clinical trials that investigated another, unrelated, telomerase vaccine. The patients who lived longest in those trials had specific T-cells against three epitopes, none of which were included in the original vaccine. So, UV1 was constructed using real-world evidence.

Three Phase I/IIa trials with UV1 have been completed at Oslo University Hospital. In total, 52 patients with metastatic prostate cancer, metastatic non-small cell lung cancer (NSCLC) or metastatic malignant melanoma received the vaccine. UV1 was immunogenic, with c 80% of the patients developing T helper (Th) cells recognising one or more of the three peptides in the vaccine. The safety profile was good. Initial efficacy data from long-term follow-ups have also been reported (vs historical survival rates). Latest updates include five-year follow-up results. A fourth Phase I study is ongoing in the United States.

Ultimovacs’ R&D strategy is to combine UV1 with CPIs due to an expected synergy. Treatment with CPIs relies on spontaneous antitumour immune responses for the therapy to be effective. Vaccination with UV1 is expected to augment the antitumour immune response against tumour-related antigens, which could improve the effectiveness of CPIs. The current R&D pipeline (Exhibit 1) includes four Phase II trials:

These trials will enrol a total of more than 500 patients. In our view, this amount of proof-of-concept data will be more than enough to inform the late-stage R&D strategy, but also will be invaluable in partnering discussions. The INITIUM and NIPU trials are already up and running, while the DOVACC and FOCUS trials should start recruiting patients in H121. Proof-of-concept trials carry significant R&D risk (historical pass-through success probabilities are 33–54%). But the pipeline is diversified across indications and different combinations and the result readouts are within cash reach, which the investors will find reassuring. However, we expect there to be some read-across effect, ie in the case of positive data from one trial, confidence in good outcomes from the other trials will increase and vice versa.

Ultimovacs is sponsoring its flagship INITIUM trial (UV1 plus ipilimumab and nivolumab in melanoma), whereas the other three are led by investigators that are top European oncology organisations. Ultimovacs’ out-of-pocket costs to support these investigator-led trials vary, but the company noted that costs per patient are still lower compared to a fully sponsored trial. Most of the expensive combination immunoncology drugs are either supplied by large pharma companies or standard of care. Although technically the data will be owned by the investigators, Ultimovacs has been closely involved in clinical trial design, with the idea that it will be able to carry on late-stage development if the data are supportive. In our view, the ability to forge relationships with different stakeholders has allowed such an expansion of the pipeline and will ensure eventful years in 2022 and 2023.

Ultimovacs’ second product in preclinical development is a first-in-class cancer vaccine solution using the proprietary Tetanus-Epitope Targeting (TET) platform technology. The TET technology represents new mechanism of action, where the vaccine immunisation builds on the patient’s existing antibodies from the common tetanus vaccination in childhood. This is a highly differentiated and novel approach that allows incorporation of adjuvant and vaccine into one molecule. Ultimovacs acquired this technology from Immuneed in July 2018. The related assets are structured as the wholly owned subsidiary Ultimovacs AB based in Uppsala, Sweden.

The first-in-human, dose-escalation Phase I TENDU study in prostate cancer has started and recruited the first patient on 18 February 2020. Patients will receive the vaccine prior to standard-of-care treatment with radiation and antihormone therapy and will then be followed for six months after the last dose of the vaccine to assess immunological responses. Patient enrolment is expected to be completed in H122. Preliminary safety results are expected by the end of this year.

During a malignant process, as cancer cells die the composite proteins/antigens are taken up by a patient’s own antigen-presenting cells, such as dendritic cells or macrophages, and presented to T-cells. This can lead to the activation and production of populations of T-cells capable of recognising and attacking cancerous cells that display the antigens. 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 an immune response and enable the tumour to evade immune cells. The goal of cancer immunotherapies is to expose the tumour microenvironment (TME) as foreign to the patient’s immune system, so the tumour is recognised, immunologically attacked and turned from ‘cold’ to ‘hot’.

CPIs were the first successful approved cancer immunotherapies that changed treatment paradigms in many solid cancers. Although very effective in certain subsets, many patients do not respond to this treatment, as CPIs rely on existing cancer-specific T-cells. In cases where the T-cells are not primed, the consensus in the immunoncology community is that there is a need to find ways to increase the supply of such primed, cancer-specific T-cells. One approved and successful approach is CAR T-cells, where the T-cells are taken from the patient via apheresis, genetically modified to recognise the cancer, then administered back to the patient. Although very effective in certain leukaemias, this process is complicated, long and costly.

The search for effective immunotherapies led to the exploration of different approaches, one of which is cancer vaccines. Various options explored so far include peptide-based, oncolytic viruses and allogeneic or autologous dendritic cell vaccines, but Dendreon’s Provenge (dendritic cell vaccine, approved in 2010) and Amgen’s Imlygic (oncolytic virus, approved in 2015) are the only approved cancer vaccines. The relative lack of more successful examples, however, could be explained by the variability in vaccine design, antigen selection and understanding of the inhibitory barriers presenting by immunosuppressive TMEs. In addition, more and more preclinical studies support the idea that the backbone strategy in immunoncology should be combination treatments exploiting different steps in the immunity cycle (Schlom and Gulley, 2018).

Peptide-based cancer vaccines, such as UV1, work by presenting antigenic material expressed by the cancer and aim to strengthen the ability of the immune system to recognise and eliminate the malignant cells. Because peptide vaccines act as immune primers, it is rational to combine them with therapies that act late in the cancer immunity cycle, such as CPIs. Various peptide vaccines have also been shown to be well tolerated in early trials. This characteristic will be crucial in combining them with CPIs with known side effects that have presented hurdles to developing double or triple CPI combinations.

Cancer antigens can be divided into two broad categories. Tumour-specific antigens (TSAs) are only found in cancer cells, not healthy cells. Tumour-associated antigens (TAAs) are peptides from normal proteins, which are overexpressed when cancer develops. So, peptide vaccines that are developed using TSAs are patient specific, which means this type of therapy is highly personalised and involves very complicated logistics. Because of this complexity, few attempts have been made to progress them into the clinic. Peptide vaccines that use TAAs can be used in all patients who have cancers with known overexpressed TAAs. These types of vaccines have the advantages of being convenient, off-the-shelf, manufacturing costs are low, and logistics and administration (subcutaneous) are straightforward.

Telomeres provide cells with a mechanism that prevents the abnormal proliferative capacity that can lead to the development of cancer. During normal cell division, chromosomes are capped with sections of so-called telomeres that are not fully replicated and gradually shorten after each cycle, causing a finite replicative capacity. TERT is one of two major components of the enzyme telomerase, which maintains telomere length in the dividing cells. One of the hallmarks of cancer is the ability to maintain telomeres in this process through the overexpression of hTERT, which enables cancer cells to replicate infinitely.

hTERT is expressed in up to 85% of all cancers (haematopoietic and solid) while being absent in most normal tissue and has been an attractive prospect for cancer immunotherapies with scope to treat a broad range of cancers. hTERT is immunogenic and considered a universal TAA and has been focus of several vaccines that have reached clinical development across various solid tumours (Exhibit 2).

GV1001 is a peptide-based hTERT vaccine being developed by KAEL-GemVax and has been the most extensively investigated vaccine of this type. Collectively, trial data suggest hTERT vaccines are capable of inducing a T-cell response in patients, but broadly speaking, when used in mono therapy, this has been insufficient to effectively control cancer progression. Importantly, data so far highlight the minimal risk of adverse events with the strategy, potentially lending hTERT vaccines to combination regimens with other cancer immunotherapies, such as CPIs, where historically the potential for additive efficacy has had to be carefully balanced with additive toxicity.

We highlight data from the Phase III TeloVac trial, which investigated GV1001 with concurrent chemotherapy (gemcitabine plus capecitabine) as a first-line intervention for pancreatic cancer patients. Despite eliciting immune responses, the concurrent combination showed no improvement overall survival or progression-free survival/time to progression. Investigators speculated that for a cancer vaccine to be effective, sufficient time is required for an immune response to develop and the early metastasising and rapidly progressive nature of pancreatic cancer might partly explain the absence of efficacy for GV1001 in the TeloVac trial.

Given hTERT is an intracellular protein and is not expressed on the surface of cells, it can only be recognised by T-cells through shorter peptide sequences (epitopes), which are antigenic determinant sections of antigens. These are processed inside cells and presented as part of the major histocompatibility complex (MHC), also called human leukocyte antigen (HLA). MHC class I molecules are recognised by CD8+ cytotoxic T lymphocytes (CTLs) expressing a complementary T-cell receptor and MHC class II molecules are recognised by CD4+ ‘helper’ T-cells. Cancer cells can present hTERT peptides recognised by either MHC I or II and peptide-based vaccines developed to date have been designed for both epitope classes.

Although inducing an MHC class I response and activation of CD8+ CTLs through immunisation is considered the major mechanism for inducing an antitumor immune response, insufficient CD4+ T activation can lead to dampening of this. Hence, induction of an MHC class II immune response and CD4+ T activation can enhance the ability for CD8+ CTLs to attack tumours, but also promote immunological memory that translates to long-term cancer immunity.

So far, many peptide cancer vaccines have been aimed at activating CD8+ T-cells via MHC I. Given the lack of encouraging clinical data with this approach, as described above, CD4+ T-cell influence in anticancer immune response is receiving renewed interest in the scientific community. UV1 contains three long peptides, so it induces hTERT specific CD4+ T-cells (via MHC II) producing cytokines associated with T helper cell type 1 (Th1) immune responses, which triggers a strong anti-tumour immune response and expansion of secondary effector cells, including induction of CD8+ anti-tumour T-cell response.

Findings from a long-term follow-up of a Phase I/II trial of GV1001 in NSCLC patients guided the design and composition of UV1, which can be considered a second-generation hTERT vaccine that is distinct and unrelated to GV1001. Blood samples from these long-term survivors in the trial showed expression not only of GV1001-specific T-cells, but also T-cells primed to distinctly different hTERT-derived peptides, which were not part of the GV1001 vaccine. Crucially, the patients, who had these T-cells primed for non-GV1001 hTERT-derived peptides also demonstrated improved survival. The patients, who did not have these T-cells, did not show the clinical benefit from the vaccination, although they did demonstrate T-cell response against GV1001 peptide. UV1 consists of these peptides (hTERT691-705, hTERT660-689 and hTERT652-665). Ultimovacs’ hypothesis is that because T-cell responses against these peptides were only observed in patients with a favourable clinical course, it indicates these specific peptides could be responsible for the tumour eradication in patients.

The three long peptides that UV1 consists of have been shown to contain multiple T-cell epitopes that can fit with the HLA type of the vaccinated patient. Data from numerous patients’ samples indicated there is no HLA bias and immune responses against the vaccine peptides occur across multiple HLA allele types (the peptides are promiscuous with respect to HLA). Therefore, the UV1 vaccine peptides ensure broad population coverage, circumventing the need for HLA screening.

Ultimovacs has completed fairly extensive Phase I development of UV1. Three Phase I single-arm trials with 52 patients in total were conducted at Oslo University Hospital between 2013 and 2015. Primary objectives in these trials were to assess the safety/tolerability of UV1 and immunological response to the vaccine. A secondary objective of the studies was to select the dose of UV1 for further clinical development. In the prostate cancer and NSCLC studies, three different dose levels of UV1 were used (100, 300 and 700µg). In the malignant melanoma study, 300µg UV1 was given in combination with ipilimumab. UV1 was administered intradermally with GM-CSF (75µg) as an adjuvant. After the treatment phase the results showed that:

Of note is that the largest percentage of patients (91%) showing immune response was in the melanoma trial (this group also had highest percentage of patients with immune response at baseline). In addition, the responses appeared earlier, required fewer vaccinations and were stronger and more long lasting compared to vaccination with UV1 alone. This is in line with the scientific rationale behind the UV1 plus CPI combination, where UV1 acts as an immune primer and ipilimumab blocks CTLA-4 checkpoints and induces an expansion of UV1-specific T-cells. The 300μg dose of UV1 was selected for the Phase II trials.

Ultimovacs has also evaluated overall response rates (ORR) and kept following up the patients for overall survival (OS) and median progression-free survival (mPFS). The follow-up phase is ongoing, but available five-year data are summarised in Exhibit 4.

Ultimovacs used the accumulated preclinical and clinical Phase I/IIa data package and applied for an IND with the FDA, which was approved in July 2017. In July 2018, the company initiated a second Phase I/II melanoma study in a front-line setting with UV1 in combination with an anti-PD-1 checkpoint inhibitor pembrolizumab, this time in the United States.

From a regulatory perspective, it is a good R&D strategy to start including US centres as early as possible in the development process. However, this study will also gather more data than the Phase I trial conducted in Norway. The combination CPI is different, but there are two arms with patients receiving two different doses of the adjuvant GM-CSF: the standard dose of 75µg (10-patient arm) and half of that 37.5µg (20-patient arm). Different GM-CSF doses will provide more insight on how the adjuvant influences the frequency of allergic reactions.

The first interim results were released in September 2020, which was a one-year follow-up after the treatment. The OS rate was 85%. For comparison, the one-year OS in the Norwegian melanoma study was 75%. So, these early interim results from the US study also indicate that a lower dose of the adjuvant did not decrease efficacy so far (caveat is that this trial includes a different CPI). Next follow-up will be reported in Q421.

The INITIUM trial fully sponsored by Ultimovacs is enrolling patients with metastatic malignant melanoma (n=154, two arms with 77 patients in each). The trial is randomised, where 77 patients are receiving first-line treatment with nivolumab (anti-PD-1) and ipilimumab (anti-CTLA-4), while the other 77 patients are receiving the combination of nivolumab, ipilimumab and UV1. Patients in the active arm will receive eight UV1 vaccinations over four cycles of nivolumab and ipilimumab. In the control arm, the patients will receive the four cycles of nivolumab and ipilimumab. Subsequently, all patients in both arms will proceed to maintenance therapy (nivolumab every four weeks). The recruitment centres are based in Europe and the United States. The first patient received the treatment in June 2020 and, according to the latest update during the Q420 results presentation, 24 patients have been recruited so far. The readout of the primary endpoint PFS is expected in H222.

Melanoma is a cancer of melanocytes, pigment-producing cells in the bottom layer of the skin. If diagnosed early, surgery is the treatment of choice. A subsequent adjuvant therapy is administered if stage III melanoma is diagnosed, meaning the cancer has started spreading to local or regional lymph nodes.

For a long time, melanoma was characterised by two extremes: completely curable disease if diagnosed early, or virtually incurable as soon as spreading starts. The advent of CPIs revolutionised the treatment of the advanced melanoma. Ipilimumab (Yervoy, anti-CTLA-4, Bristol-Myers Squibb) was the first to receive the FDA’s approval, in March 2011. Since then, nivolumab (Opdivo, anti-PD-1, Bristol-Myers Squibb) and pembrolizumab (Keytruda, anti-PD-1, Merck & Co) have also been approved. CPIs quickly gained popularity and comprise the bulk of the market share.

Novel targeted therapies have also been developed and approved over the past several years. The choice of therapy depends on whether the tumour contains a driver BRAF mutation (although some CPIs are approved in BRAF-mutated melanoma as well). 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 combination therapy, with nivolumab plus ipilimumab as the first choice or single-agent immunotherapy with pembrolizumab or nivolumab.

Before CPIs were introduced, patients with metastatic melanoma had a median survival of six to nine months with five-year overall survival of <10%. The CPIs significantly improved the outcomes. For example, the first-line combined treatment with nivolumab and ipilimumab improved five-year overall survival to 52% versus 44% in nivolumab versus 26% in ipilimumab (from follow-up of CheckMate 067 study patients). Median overall survival was more than 60 months (median not reached) in the nivolumab plus ipilimumab group, 37 months in the nivolumab group, and 20 months in the ipilimumab group. So, although the survival rate improved significantly, even with new treatments, it remains one of the most aggressively spreading cancers.

According to the National Cancer Institute, c 100k new melanoma cases were estimated to be diagnosed and around 6,850 people were estimated to have died of melanoma in 2020 in the United States alone. In the top 15 European countries, which we include in our model, c 116k new cases are estimated to have been diagnosed in 2020 (GLOBOCAN). Around 83% of patients present with localised disease, which means around 17% of new cases involve melanoma that has started spreading. Around half of all metastatic melanomas will have the driver BRAF mutation. Ultimovacs is positioning its UV1 as part of first-line combination treatment with CPIs. We therefore calculate the addressable patient population in the United States and key 15 European countries (top five, Ireland, Benelux, Scandinavia, Austria and Switzerland) is more than 18,000 patients.

The randomised NIPU trial is enrolling patients with malignant mesothelioma (n=118, two arms with 59 patients in each), who receive the same combination treatment as in the INITIUM trial (UV1 plus ipilimumab plus nivolumab), but as second-line treatment. The objective of the study is to achieve a meaningful PFS after the progression on first-line standard platinum doublet chemotherapy. Patients must be CPI naive. The first patient was enrolled in June 2020 and, in total, 18 patients have been recruited so far, as per the Q420 results announcement. Oslo University Hospital is the sponsor of the NIPU study, while Bristol-Myers Squibb is supplying the drugs. The readout of the primary endpoint, PFS, is expected in H222.

Mesothelioma is a rare cancer of the mesothelium, a sheet that covers most internal organs. Most often the location of mesothelioma is pleural mesothelium, a double layer that covers the lungs and the inside of the pleural cavity, forming a pleural space. Breathing difficulty and pain are the hallmark symptoms of mesothelioma, with death occurring due to infection or respiratory failure.

It is a rare cancer with c 3,400 cases estimated to have been diagnosed in the US and c 12,600 cases (GLOBOCAN) in the key European countries (as per our definition above and in Exhibit 7) in 2020. Incidence of mesothelioma ranges from about seven to 40 per 1,000,000 in industrialised Western countries, depending on the amount of asbestos exposure in the past, which is major risk factor. Therefore, the focus in managing mesothelioma is on prevention measures. Surgery, radiation therapy and chemotherapy with cisplatin and pemetrexed are still the mainstay treatment options. Mesothelioma is one of the deadliest cancers, with a five-year survival rate of around 10%.

Classical chemotherapy drugs were only available options for decades. The major recent development, however, was the FDA’s approval of nivolumab in combination with ipilimumab in October 2020 for first-line treatment of unresectable metastatic mesothelioma. Approval was based on the Phase III CheckMate-743 clinical trial, in which the combination of nivolumab and ipilimumab had an OS benefit compared to platinum-based standard of care chemotherapy. Patients who received nivolumab plus ipilimumab survived a median of 18.1 months, while patients who underwent chemotherapy survived a median of 14.1 months. The successful approval despite the modest four-month benefit exemplifies the unmet need in this indication. Other CPIs are also in Phase III trials.

Ultimovacs’ NIPU study is evaluating the same CPI combination with UV1, but in a second-line setting and the patients must be CPI naive. Because the FDA approved this combination as first-line therapy recently, we believe it will take some time for it to become standard of care (modest clinical benefit vs high price may be also challenged by payors in some cases). So, Ultimovacs will be able to access patients who underwent platinum-based chemotherapy to fully enrol the NIPU trial. Furthermore, because it is evaluating the same CPI combination, the accumulated data, if positive, will help to inform how to position UV1 for front-line treatment in later trials. Since virtually all patients progress after the first-line treatment, many will choose to undergo a second-line treatment, so in our model we assume around 80% will receive a second-line treatment. We therefore calculate the addressable patient population in the United States and key 15 European countries is around 12,800 patients.

The DOVACC study, announced on 11 January 2021, is the latest addition to Ultimovacs’ R&D pipeline. In total, 184 patients with BRCA-negative, relapsed, high grade ovarian cancer are expected to be enrolled in three arms (active – UV1 plus olaparib plus durvalumab; control I – olaparib plus durvalumab; control II – olaparib). UV1 will be administered in combination with olaparib (PARP inhibitor) and durvalumab (anti-PD-L1). The patients will have relapsed after the first-line of platinum-based treatment, received second-line platinum-based chemotherapy and, after partial or complete response, will receive the experimental maintenance treatment (so second maintenance setting). The goal of the trial is to evaluate PFS benefit in the active arm, with the triple combination versus the olaparib monotherapy. The reason behind the third arm (olaparib plus durvalumab) is to clearly establish each of the three combination drugs’ contribution to efficacy. This trial is run by the NSGO Clinical Trial Unit in collaboration with the ENGOT (an umbrella organisation for groups such as NSGO) and AstraZeneca, which is supplying the combination drugs. The first patient should be enrolled in H121. Primary endpoint (PFS in the active arm versus olaparib monotherapy) readout is expected in 2023.

The American Cancer Society estimates that 21,750 new cases of ovarian cancer were diagnosed in 2020 and c 13,940 women have died from the disease. In key European markets c 33,400 women were diagnosed in 2020 (GLOBOCAN). Ovarian cancer is characterised by minimal, nonspecific or no symptoms at all. Therefore, most cases are diagnosed in an advanced stage. Prognosis in ovarian cancer is closely related to the stage at diagnosis; thus, overall prognosis for these patients remains poor (OS across all stages is 46%).

The treatment involves aggressive debulking surgery followed by chemotherapy and novel cancer targeted therapies. The surgery is considered curative only for a small percentage of patients (certain histology type tumours in stage I), so most will receive some form of chemotherapy after the surgery (neoadjuvant chemotherapy is also being used). The standard-of-care first-line chemotherapy for epithelial ovarian cancer is a combination of paclitaxel and carboplatin. Despite optimal surgery and appropriate first-line chemotherapy, 70–80% of patients will relapse, therefore a maintenance therapy is considered following the standard-of-care platinum-based chemotherapy.

In this so-called maintenance setting, the three approved PARP inhibitors became standard of care (in patients who are still sensitive to platinum). Approximately 20% of high-grade serous ovarian cancer (most prevalent histology type, c 70–74% of all new cases; also DOVACC target population) cases have the mutated BRCA gene. This group of patients was the original target population for the new successful class of PARP drugs. But PARP inhibitors were also shown to be effective in non-BRCA mutated ovarian cancers and are now approved for patients despite BRCA status. The rapid adoption of these new drugs in ovarian cancer was underpinned by impressive PFS in patients with the BRCA mutation. In patients with no BRCA mutations, the incremental PFS advantage was smaller, which is why this subgroup of patients is the focus in the DOVACC trial. VEGF inhibitor bevacizumab monotherapy or in combination with PARP inhibitors can also be used during as a maintenance therapy.

Subsequent chemotherapy after the relapse depends on how quickly the patients relapse after the primary chemotherapy. If the relapse occurs after more than six months, then platinum-based regimen is used again. If sooner than six months, the disease is considered platinum resistant and other various chemotherapy drugs are considered

So, in the DOVACC trial, Ultimovacs is enrolling patients with high-grade (c 70–74% of all new cases), BRCA wild type (c 80%) ovarian cancer. The setting is second-line maintenance therapy, which is after the second round of platinum-based therapy (70-80% relapse). Around one-quarter of patients relapse during or within six months after end of primary chemotherapy and 60% relapse after six months, so the latter is the target population as they will receive a second round of platinum chemotherapy. Using the patient journey described above, we calculate that the addressable patient population in the United States and key European countries is c 14,500.

Announced in December 2020, the FOCUS study will recruit recurrent or metastatic, PD-L1 positive squamous cell carcinoma of the head and neck (SCCHN). In total, 75 patients will be enrolled into two arms (n=25 control, n=50 active). The goal is to evaluate the addition of UV1 to a standard-of-care treatment with pembrolizumab (anti-PD-1) compared to pembrolizumab monotherapy. The study will be conducted in Germany and will be sponsored by the investigator University Medicine Halle. Primary endpoint readout is expected in 2023.

SCCHN represents a group of aggressive tumours that arise from epithelial cells and occur in the oral cavity, pharynx and larynx. If detected early, the cancer is highly curable. However, nearly 66% of patients present with advanced disease (stage III and IV) and less than 30% of these patients are cured. In advanced cases, combination treatment includes surgery, chemotherapy and radiation therapy. Alcohol and tobacco use are thought to cause 75–85% of the new cases.

Few patients (<5%) present with upfront metastases, so surgery with curative intent or radiation therapy are the key first step in the treatment. Around 50% of patients with locally advanced SCCHN will relapse after primary treatment. Pembrolizumab and nivolumab were both approved in 2016 for patients with recurrent or metastatic SCCHN with disease progression on or after a platinum-based therapy. In 2019, pembrolizumab was approved for first-line monotherapy in patients with tumours expressing PD-L1 or as first-line treatment in combination with platinum and fluorouracil. The ORR rates in the clinical trials were modest at <20%, so the unmet need for novel treatment approaches remains high.

Of the estimated 41,000 patients in the United States who develop SCCHN each year, 13,000 are believed to die from the disease. Because SCCHN is a group of cancers, the patient populations can be defined differently by various databases. For consistency and due to regional similarities, we extrapolate the US incidence data to the key European markets and calculate the total addressable first-line patient population is c 60,300.

Ultimovacs 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 UV1 will be out-licensed; therefore, our valuation is sensitive to potential licensing timing and actual deal terms, although typically the timing of licensing deals is difficult to forecast.

Ultimovacs is yet to obtain clinical proof of concept, therefore the near-term R&D sensitivities are tied to the ongoing Phase II clinical trials. Although the R&D programme is fairly well diversified across four different cancers, once the first clinical data emerge (either positive or negative), there could be a read-across (equally positive or negative) to remaining indications being evaluated in the trials. A significant unknown is how the Phase III programme could look, because theoretically UV1 can be developed for many cancer types. In out-licensing, this would be in the partner’s hands. Ultimovacs’ budget allows it to run operations until the expected readout of all trials, which will provide opportunities for share price inflection. Further funding needs will depend on the interplay between the strength of data, partner interest and Ultimovacs’ ambitions to participate in Phase III development.

We believe Ultimovacs’ current market value is primarily based on UV1. So, volatility in the share price should be expected and will depend on the progress of the Phase II programme over the next two years. In time, however, there is potential for the TET platform to gain value, especially now the first product UV2 has entered a Phase I trial. The technology is unrelated to UV1, so this will help to diversify the R&D risk.

We value Ultimovacs at NOK3.18bn or NOK99.4 per share, which is based on risk-adjusted NPV analysis using a 12.5% discount rate, including net cash of NOK441m at end-2020. Our model includes four rNPV projects with UV1 being evaluated in the Phase II trials in all four indications. We use a bottom-up approach to calculate the market sizes and industry average data for the basis of our other assumptions (eg, probability of success, eligible patient population, pricing; Exhibit 6 and 7). We have allocated the existing budget (NOK441m at the end of Q420) to each of the projects as clinical trial costs to get the true rNPV value. We then assume a full out-licensing deal for UV1 in 2024 with the partner taking over the Phase III development and commercialisation. We do not assign any value to UV2 yet, but will reconsider this once the asset progresses through clinical development. Historical pass-through success probabilities for proof-of-concept trials are 33–54%. We use a 20% cumulative probability to reach the market in our model.

The partnering strategy is a key element in our rNPV valuation of Ultimovacs. We note that partnering deals can vary widely from co-development and co-commercialisation to full out-licensing globally or for specific territories. Ultimovacs is likely to go with an optimal strategy depending on the strength of the data. The timing of any deal is uncertain, but in our model we assume a global out-licensing deal in 2024.

Because theoretically UV1 could be evaluated in many different cancer types, we use historical licensing deal details for assets that the deal terms stipulated many potential indications. Based on deals that have occurred since 2015 for Phase III-ready immunoncology assets (Exhibit 8), we assume an upfront payment of c $250m and milestones totalling up to c $1.4bn. We allocate one-third of the milestones to R&D-related payments such as completion of the Phase III trial and NDA approval; the rest are commercial milestones. We assume tiered royalty rates of 14–18% on sales. The deal values are split proportionally (using peak sales) and allocated to all four projects to get a true rNPV per share value.

Also worth mentioning is the Vaccibody deal with Genentech/Roche. Vaccibody is the latest Norwegian biotech IPO, which listed on the Oslo stock exchange’s Merkur Market on 7 October 2020, only a few days after it had signed a licensing and collaboration agreement with Genentech/Roche for $715m. Vaccibody is developing a cancer vaccine technology using tumour-specific antigens (TSAs, as explained above), which is highly personalised for each patient, but the treatment process involves complicated logistics. The approach is very different from UV1, which is an off-the-shelf vaccine that can be offered virtually to all patients. Nevertheless, the deal shows the large pharma interest in cancer vaccines in general is high.

Ultimovacs reports no income, while the operating spend was NOK124m in 2020, up from NOK66m in 2019, due increasing R&D activities. The company had cash of NOK441m at the end of 2020 and no debt. According to Ultimovacs, and in line with our model, the cash will be sufficient to fund the budgeted activities until 2023. By that time the readouts from all four Phase II trials should be announced, which will be significant catalysts for the share price. Ultimovacs has NOK11.8m booked as goodwill as of end-2020, which was allocated after it acquired TET platform-associated assets in July 2018 from Immuneed (currently Ultimovacs AB).