Ultimovacs — NIPU and INITIUM readouts incoming for UV1

The upcoming trial readouts expected from the NIPU and INITIUM studies, in our view, represent the most significant potential catalysts for investor attention in FY23 for Ultimovacs. We expect NIPU to be the first study to report top-line data in Q223 followed by INITIUM in H223. Management had previously communicated that it expected the results from INITIUM in H123; however, this has been delayed slightly due to patients taking longer than expected to experience disease progression (cancer progression must be verified in 70 patients). While this is a positive for patients enrolled in the study as the trial is blinded, we cannot ascertain, at this time, whether the extension in disease progression is due to the influence of UV1. Positive results from both studies would be the most compelling clinical evidence, to date, for the company’s universal cancer vaccine candidate, UV1. As a reminder, UV1 is Ultimovacs’ lead pipeline asset, a universal, peptide-based, cancer vaccine targeting antigens associated with the human telomerase reverse transcriptase (hTERT), a protein estimated to be overexpressed in up to 90% of human cancers but not in healthy tissues. The company’s clinical strategy aims to leverage combinational synergies between cancer vaccines and ICIs, that is, UV1’s ability to prime the immune system (stimulate a T-cell response) to specifically target cancer cells and the ability of ICIs to make cancer cells vulnerable to the stimulated T cells.

The primary endpoints for both NIPU and INITIUM is disease progression-free survival (PFS), the time between treatment initiation and metastatic tumour progression or death from any cause. The key secondary endpoints from the study include overall survival (OS), objective response rate (ORR), duration of response and safety.

The randomised, open-label Phase II NIPU (n=118) trial in MPM is split into two arms with 59 patients in each. In the experimental arm, the patients are treated with the same combination as INITIUM (UV1 plus ipilimumab plus nivolumab), while patients in the second arm are to receive ipilimumab plus nivolumab only. The NIPU trial is investigating the UV1 combination in second-line MPM following disease progression after first-line platinum-doublet chemotherapy. With no treatments specifically approved in second-line MPM and limited disease control provided by existing therapies, we believe only moderate improvements in mPFS of at least 20% (c 1–2 months) from the UV1 arm of the NIPU study would be required to be of clinical significance compared to previously reported mPFS data for ipilimumab plus nivolumab (mPFS: 5.6 months).

The Phase II INITIUM trial (n=156) in metastatic malignant melanoma, fully funded by Ultimovacs, is an open-label, randomised and statistically powered study. The trial is split into two arms with 78 patients receiving first-line treatment with nivolumab (anti-PD-1 ICI) and ipilimumab (anti-CTLA-4 ICI), and the other 78 patients receiving a combination of nivolumab, ipilimumab and UV1 plus sargramostim as a UV1 vaccine adjuvant (helps create a stronger immune response). While there are no standardised or regulatory set factors that define a clinically meaningful result from oncology studies, we note that the average improvement in median PFS (mPFS) for FDA-approved drugs is 4.6 months versus standard of care (SoC). In our view, with UV1 being at the Phase II stage of clinical studies in INITIUM, an improvement in mPFS by at least 30% (c 3–4 months), compared to ipilimumab plus nivolumab (mPFS: 11.5 months in ICI-naïve patients, those who have not have undergone previous treatment with ICIs), may potentially be interpreted as a clinically meaningful improvement on the ipilimumab/nivolumab combination. Although ipilimumab/nivolumab is indicated as a first-line therapy in advanced melanoma, we note it directly competes with pembrolizumab monotherapy within this treatment space, which has previously reported mPFS of 16.9 months in ICI-naïve patients. UV1 may therefore need to demonstrate improvements in mPFS by up to 17 months to gain a clinically competitive advantage in the market over pembrolizumab.

Mesothelioma is a highly aggressive, rare cancer that forms in the mesothelium, a thin layer of tissue that covers most internal organs in the body. It is estimated that in the United States, c 3,000 people will be diagnosed every year with the condition. The primary cause for the development of mesothelioma is through asbestos exposure, a product once widely used worldwide before its carcinogenic properties were fully understood. However, despite asbestos use now being widely banned, its latency period (time between exposure and diagnosis) is often greater than 30 years, an effect that has resulted in mesothelioma cases almost doubling between 1990 and 2019. Pleural mesothelioma specifically affects tissues lining the lungs and accounts for c 75% of mesothelioma cases with c 80–90% of these diagnosed as MPM. Today, MPM continues to carry a poor prognosis with a median OS of 9–12 months and five-year OS of c 10% and there remains a significant need for the development of novel treatments.

The mainstay of first-line treatment for MPM is often a combination of pemetrexed (Alimta) and platinum-based cisplatin (Platinol) or carboplatin (Paraplatin) chemotherapy. The most recent development in the MPM treatment landscape came in 2020 with the FDA approval of the combination of ICIs nivolumab and ipilimumab for the first-line treatment of unresectable metastatic mesothelioma. However, as mesothelioma is incurable, virtually all patients will disease progress and there are currently no treatments specifically approved for patients with relapsed mesothelioma. There remains a divide in the clinical community over the most appropriate second-line therapy for MPM; however, the most widely used often include off-label platinum re-challenge or single-agent chemotherapy and immunotherapy. However, disease control in this patient population remains poor, with studies reporting mPFS rates of 3.0 months for nivolumab monotherapy, 3.1 months for pembrolizumab monotherapy, 3.6 months for chemotherapy and 5.6 months for nivolumab in combination with ipilimumab.

Ultimovacs’ NIPU study is evaluating a triple combination of nivolumab, ipilimumab and UV1 in patients who have progressed after treatment with first-line platinum doublet chemotherapy. In our view, with the limitations of existing second-line treatment options in MPM, UV1 may only need to demonstrate modest improvements in mPFS (c 1–2 months) to differentiate with a competitive and clinically meaningful treatment profile.

To our knowledge, the NIPU trial represents one of the largest (n=118), active, Phase II studies focused on second-line MPM. An analysis of the pipeline highlights very few emerging therapeutic agents being investigated in this area, Exhibit 3. The most advanced clinical asset is Trizell’s adenoviral gene therapy, TR002, which is being investigated in a Phase III study in combination with gemcitabine chemotherapy. However, as previously discussed in our cell and gene therapy (CGT) report, CGTs have limitations that include potential safety concerns around viral vector delivery technology, high cost, limited patient access and the requirement of specialised centres to deliver treatment. As an ‘off-the-shelf’ product, UV1 may facilitate broader access to patients and, compared to CGTs, is associated with lower production costs. Sellas Life Science’s galinpepimut-S is another peptide-based cancer vaccine being investigated in second-line MPM; however, we note the drug is still in the very early stages of clinical development in smaller trial populations.

While we acknowledge MPM may be a niche indication, limited competitive technologies in the pipeline combined with existing sub-optimal second-line treatments provides greater scope for UV1 to differentiate even if only marginal improvements in efficacy are exhibited, in our view. Additionally, combined sales of nivolumab/ipilimumab in MPM are estimated to reach c $130m by 2028 (according to EvaluatePharma) representing a reasonable market opportunity for Ultimovacs to capture with UV1.

The existing SoC for the treatment of metastatic melanoma depends on whether a tumour contains a driver BRAF mutation (ICIs are more commonly used in metastatic melanoma when there is no BRAF mutation). 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 single-agent immunotherapy with pembrolizumab or nivolumab or combination therapy, with nivolumab plus ipilimumab as the first choice (Exhibit 2).

With melanoma one of the most immunogenic tumour types, patients who are eligible to receive immunotherapy often respond well to ICI treatments. In contrast, historically, attempts to develop cancer vaccines as immunotherapies shown disappointing results. However, with the evolution of ICIs, there is potential for a synergistic relationship between ICIs and cancer vaccines such as UV1, with the former making tumour cells vulnerable to attack by the immune system cells and the latter designed to prime the body’s immune cells to fight tumours. Although ICIs have had a major impact on the oncology treatment landscape, they still suffer from relatively low response rates and in 2018 it was estimated only 12% of eligible patients would respond to ICI monotherapy. However, we acknowledge that this number has likely increased since then. In our view, Ultimovacs’ UV1/ICI combination, from a clinical perspective, makes strategic sense with the addition of UV1 to the current SoC treatment protocol providing scope for further efficacy enhancements.

Merck and Moderna released highly encouraging results in December 2022 from a Phase II study (KEYNOTE-942, n=157) investigating the jointly developed, personalised mRNA vaccine (mRNA-4157/V940) in combination with Merck’s ICI, pembrolizumab (Keytruda). The study investigated the combination as a post-surgery adjuvant treatment for patients with stage III/IV melanoma who have had complete resection of cutaneous melanoma (completely removed by surgery) but a high risk of disease recurrence. Initial results from the study reported a reduced risk of tumour recurrence, or death, in patients by 44% compared to pembrolizumab alone. Merck presented updated clinical data at the AACR Annual Meeting 2023, where it reported a disease RFS at 18 month follow-up of 78.6% in the combination arm and 62.2% in the pembrolizumab-only control arm. At two years of follow-up, recurrence or death was reported in 22.4% of patients (n=24/107) treated with the combination compared to 40% (n=20/50) treated with pembrolizumab monotherapy. Merck and Moderna intend to initiate a Phase III study for mRNA-4157/V940 in combination with pembrolizumab as an adjuvant treatment in high-risk melanoma patients following complete resection in 2023. In our view, the most recent results provide further clinical validation for the application of the cancer vaccine/ICI combinations in the treatment of advanced melanoma.

Notably, Ultimovacs’ INITIUM study does not directly compete with KEYNOTE-942 as INITIUM is focused on patients with unresectable (not eligible for surgery) metastatic melanoma. Additionally, although comparisons between trial results may not be applicable, due to the differences in the melanoma populations being investigated, we note the similarity in trial designs (open-label, randomised, dual arm, multi-centre and statistically powered) and patient enrolment numbers (n=156 in INITIIUM and n=157 in KEYNOTE-942). With KEYNOTE-942 having recently received positive widespread media attention, following the data presented at AACR, and considering the robustness of both study designs, we believe positive readouts from INITIUM could be of equivalent significance that could, similarly, transform UV1 into a Phase III-ready asset.

While personalised therapy approaches may offer improved efficacies, with treatments tailored to an individual’s specific disease profile, we believe it is highly likely that, from a cost and manufacturing perspective, patient-specific vaccines are likely to encounter production issues similar to those faced by patient-specific cell therapies. Notably, the turnaround time from biopsy to treatment (‘vein-to-vein’ time) for Merck and Moderna’s melanoma vaccine mRNA-4157/V940 has been reported to take 6–8 weeks, a potentially serious issue for patients with highly aggressive cancers, in our view. Additionally, personalised therapies may face pricing pressures associated with higher COGS, which may lead to concerns over the health economics of such treatments. Sipuleucel-T (Provenge), a personalised dendritic cell vaccine approved by the FDA in 2010 for the treatment of prostate cancer, was initially priced at $93,000. However, the treatment only extended OS by around four months, meaning the drug struggled to secure reimbursement and failed to achieve widespread commercial success. Although we acknowledge the costs of mRNA cancer vaccine production such as Merck/Moderna’s mRNA-4157/V940 may not directly correlate with cell-based vaccines such as sipuleucel-T, personalised treatments are unlikely to benefit from the same economies of scale as ‘off-the-shelf’ products.

In our view, the operational infrastructure to support the commercialisation and mass production of personalised treatments is not yet in place and may not be for quite some time. In the case of cancer vaccines, which aim to target larger patient populations across a broad range of indications, we believe more universal approaches looking to provide timelier, upfront access to treatment for patients offer significant potential to differentiate in the market. With the advantages that ‘off-the-shelf’ therapies such as UV1 might possess with lower production costs, a shorter ‘vein-to-vein’ time and wider patient access, we believe this makes the upcoming readouts from the INITIUM study of even greater significance. Should UV1 demonstrate statistically significant improvements in PFS versus the nivolumab/ipilimumab combination, it not only may potentially disrupt existing first-line ICI treatment regimens, but, in our view, could provide UV1 with a distinct competitive advantage over personalised vaccine approaches such as mRNA. However, we note that UV1 is being investigated in a different melanoma patient population to Merck/Moderna’s mRNA-4157/V940 avoiding potential direct competition and commercial overlap. Positive clinical data may also heighten the interest of BMS, whose ICI combination, nivolumab plus ipilimumab, is being used alongside UV1 in the INITIUM trial. BMS has publicly voiced support for the continued development of cancer vaccine technology and, if BMS looks to compete with Merck and Moderna’s mRNA candidate in melanoma, UV1 may be viewed as an attractive asset, provided upcoming clinical study readouts are positive.

To our knowledge, UV1 represents one of the most advanced cancer vaccines being investigated for the treatment of melanoma, Exhibit 1. The closest ‘off-the-shelf’ competitor to UV1 is IO-Biotech’s peptide vaccine, IO102-IO103, in Phase III studies. However, IO102-IO103’s mechanism of action (MoA) stimulates T cell responses that target indoleamine 2,3-dioxygenase (IDO) and PD-L1 associated antigens present on tumour cells and immune cells in the tumour microenvironment. UV1 therefore has a differentiating therapeutic MoA in targeting hTERT, primarily expressed in a subpopulation of cancer cells called cancer stem cells (CSCs). CSCs are often resistant to conventional cancer treatments, leading to metastasis and tumour resistance, making hTERT an attractive target for cancer vaccine development, in our view.

Although IO102-IO103 may be slightly further ahead in development, the most significant clinical results, to date, have come from a Phase I/II (n=50) investigator-sponsored study. Patients from cohort A of the study (n=30), who were PD-1 ICI naive and treated with IO102-IO103 in combination with nivolumab, reported a mPFS of 26 months. However, as this was an early-stage study, we caution interpretation of the clinical significance of this result compared to those to be reported from more rigorous trial designs such as INITIUM.

What we believe represents one the most significant clinical validations of Ultimovacs’ technology shown to date, are the encouraging long-term survival data reported from the open-label Phase I study (UV1-103) in metastatic melanoma. The trial is investigating UV1 in combination with Merck’s ICI, pembrolizumab (Keytruda), in a first-line setting with study split into two study cohorts (n=30) receiving different doses of UV1 adjuvant (37.5µg versus 75µg). The one- and two-year OS rates from the two cohorts combined were 87% (26/30) and 73% (22/30) respectively, Exhibit 4. Additionally, a three-year OS rate of 71% has been reported from patients in cohort one (12/17).

Of note, the three-year OS rate from the KEYNOTE-006 study investigating pembrolizumab as a monotherapy in first-line patients with metastatic melanoma was 51%. The UV1-103 study also reported a mPFS of 18.9 months (Exhibit 5), an improvement on the mPFS of 16.9 months in ICI-naïve patients reported from a separate study for pembrolizumab, KEYNOTE-001. However, we caution there may be limitations in cross-trial comparisons given the differences in study designs, controls and trial populations.

It is worth highlighting that pembrolizumab appears to have a more beneficial clinical profile compared to the combination of ipilimumab/nivolumab in advanced melanoma (mPFS from KEYNOTE-001: 16.9 months vs mPFS from CheckMate-067: 11.5 months), which is being investigated in INITIUM. This means that, from a clinical perspective, the UV1/ ipilimumab/nivolumab combination would need to see an improvement in mPFS by at least 50% to be classified as best in class first line ICI treatment. However, we note that ipilimumab is currently a blockbuster drug in the melanoma market (2022 melanoma sales: $1.9bn, EvaluatePharma) with sales figures competing with that of pembrolizumab (2022 melanoma sales: $2.3bn, EvaluatePharma). Additionally, sales of ipilimumab in melanoma are estimated to surpass those of pembrolizumab by 2028 ($2.8bn vs $2.4bn, EvaluatePharma), which, in our view, provides evidence for the demand of ipilimumab and potential combinations in the melanoma treatment market.

The re-emergence of cancer vaccine technology has seen the signing of some notable licensing deals in recent years, Exhibit 6. In our view, a comparable deal of note is the worldwide licensing agreement signed in 2020 between Roche and Nykode worth up to $715m for the Scandinavian biotech’s personalised cancer vaccine, VB10.NEO. At the time of the agreement VB10.NEO was in the Phase I portion of a Phase I/II basket trial that included patients with advanced or metastatic melanoma, non-small-cell lung carcinoma, clear renal cell carcinoma urothelial cancer or squamous cell carcinoma of the head and neck. The study is ongoing and Roche will assume full development responsibilities after the conclusion of the Phase I portion of the trial. However, we acknowledge the upfront payment of $200m received by Nykode is at the upper end of the industry average.

In our view, positive readouts from both the INITIUM and NIPU studies would support the body of growing evidence demonstrating UV1’s clinical utility while significantly enhancing the asset’s value and potential deal value that could be commanded from future licensing opportunities. Additionally, UV1 is being investigated across five ongoing Phase II trials in advanced melanoma, MPM, head and neck cancer, ovarian cancer and non-small-cell lung cancer, and this broader application may add further value to UV1 in the eyes of potential licensing partners.

There are no significant changes to our operating expense forecasts (see our Q422 report for details) and adjustments in our valuation have been realised by rolling our model forward and updating our FX assumptions to NOK10.18/$. Our long-term assumptions remain unchanged and a breakdown of our rNPV calculation can be seen Exhibit 7. We note that the top-line readouts from the upcoming INITIUM and NIPU studies are likely to have a material impact on our assumptions of Ultimovacs, which we will look to revise our valuation after the results.

Because our model assumes an out-licensing deal by end-2024, we estimate that the company would be required to raise c NOK150m in funds in H224. We account for this raise as illustrative debt in our model. Alternatively, if the funding is realised through an equity issue instead (assuming at the current trading price of c NOK130/share), Ultimovacs would have to issue 1.15m shares, resulting in our per share valuation coming down to NOK226 from NOK234 (shares outstanding would increase from 34.4m to 35.7m). However, we do not expect Ultimovacs to be fully revenue generating and self-sustaining until the launch of UV1, which we forecast in 2028.