Targovax — Positive signals from Phase I/II mesothelioma trial

Targovax (NO: TRVX)

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Research: Healthcare

Targovax — Positive signals from Phase I/II mesothelioma trial

Today, Targovax reported randomised data from the Phase I/II study (n=31) in unresectable malignant pleural mesothelioma. The results confirmed a good ONCOS-102 safety profile. The key clinical response endpoint mPFS was 8.4 months (active arm) vs 6.8 months (control) and above the historical control of 5.7–7.3 months. mPFS results are still early, with many patients not included in the analysis (additional data will serve as a potential catalyst later in 2020). Overall, as we described in our last note, mesothelioma is one of the most difficult cancers to treat, with classic chemotherapy still being the standard of care. While the size of the study limited the analysis for statistical significance (the trial was not designed to check for a statistically significant clinical effect), the mPFS results and the fact that clinical outcomes correlate with a cancer-specific immune response are clearly positive signals. Targovax has presented preliminary plans for the next trial. Our valuation is under review, while we analyse the details of the trial results.

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Healthcare

Targovax

Positive signals from Phase I/II mesothelioma trial

R&D results

Pharma & biotech

22 January 2020

Price

NOK9.74

Market cap

NOK617m

Net cash (NOKm) at end Q319 (excludes government loans)

104.0

Shares in issue

63.4m

Free float

90%

Code

TRVX

Primary exchange

Oslo Stock Exchange

Secondary exchange

N/A

Share price performance

Business description

Targovax is an immunoncology company headquartered in Oslo, Norway, with an oncolytic virus platform, ONCOS. ONCOS-102 is prioritised in several indications including mesothelioma and melanoma. Targovax is also working on next-generation oncolytic viruses in its preclinical R&D pipeline.

Analyst

Jonas Peciulis

+44 (0)20 3077 5728

Targovax is a research client of Edison Investment Research Limited

Today, Targovax reported randomised data from the Phase I/II study (n=31) in unresectable malignant pleural mesothelioma. The results confirmed a good ONCOS-102 safety profile. The key clinical response endpoint mPFS was 8.4 months (active arm) vs 6.8 months (control) and above the historical control of 5.7–7.3 months. mPFS results are still early, with many patients not included in the analysis (additional data will serve as a potential catalyst later in 2020). Overall, as we described in our last note, mesothelioma is one of the most difficult cancers to treat, with classic chemotherapy still being the standard of care. While the size of the study limited the analysis for statistical significance (the trial was not designed to check for a statistically significant clinical effect), the mPFS results and the fact that clinical outcomes correlate with a cancer-specific immune response are clearly positive signals. Targovax has presented preliminary plans for the next trial. Our valuation is under review, while we analyse the details of the trial results.

Year end

Revenue (NOKm)

PBT*
(NOKm)

EPS*
(NOK)

DPS
(NOK)

P/E
(x)

Yield
(%)

12/17

0.0

(122.3)

(2.6)

0.0

N/A

N/A

12/18

0.0

(147.3)

(2.8)

0.0

N/A

N/A

12/19e

0.0

(136.2)

(2.4)

0.0

N/A

N/A

12/20e

0.0

(120.7)

(1.9)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding exceptional items.

The exploratory, randomised, open-label trial (n=31) compared oncolytic virus ONCOS-102 plus standard of care (pemetrexed/cisplatin; n=20) versus standard of care treatment (n=11) in first- and second-line settings. The primary goal of the study was to evaluate the safety and tolerability of ONCOS-102, which is typical for this stage. Key secondary endpoints evaluated tumour-specific immunological activation and correlation with a clinical response, overall response rate (ORR), median progression-free survival (mPFS) and overall survival (OS, data not mature). In addition to the overall results, first-line and second-line (or later) patient subpopulations were also evaluated. Descriptive patient data showed that the experimental arm had generally more advanced patients, implying a higher hurdle for ONCOS-102.

Overall mPFS in the experimental arm was 8.4 months vs 6.8 months in the control group. In first-line patients, the mPFS was 8.9 months vs 6.8 months (second-line group data not mature enough for analysis). mPFS was the clearest efficacy signal, which compares well with historical controls (5.7–7.3 months). The ORRs in first-line patients were 30% in the experimental arm vs 33% in the control arm (the experimental arm had more advanced patients). The ORRs in second-line patients were 11% in the experimental arm (n=9) vs 60% (n=5). The response in the control arm is clearly unusually high and likely the result of a small sample. This skewed analysis of the ORRs in the overall population. Still, such ORR data compare well to historical controls of c 20% (one trial reported an ORR of 41%, but the FDA disputed that). Targovax has introduced the potential design for the next trial (which could become a pivotal programme).

General disclaimer and copyright

This report has been commissioned by Targovax and prepared and issued by Edison, in consideration of a fee payable by Targovax. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Targovax and prepared and issued by Edison, in consideration of a fee payable by Targovax. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2020. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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