OSE Immunotherapeutics — Solid new details from Step 1 of Tedopi Ph III trial

OSE Immunotherapeutics (PAR: OSE)

Last close As at 04/11/2024

EUR10.24

0.18 (1.79%)

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Research: Healthcare

OSE Immunotherapeutics — Solid new details from Step 1 of Tedopi Ph III trial

On 21 September 2020, OSE presented additional data from step one of the Phase III Atalante 1 trial at the virtual ESMO conference. This followed the first announcement in April 2020. The totality of data now points to a favourable benefit/risk ratio of Tedopi treatment in patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) after failed checkpoint inhibitor treatment. Due to the COVID-19 pandemic, OSE has decided to terminate enrolment into step two of the trial, as NSCLC patients are vulnerable to coronavirus infections and there was therefore a substantial risk of data loss. OSE will focus on regulatory interactions and partnering discussions, given the availability of new data. Our valuation is marginally higher at €240m or €16.0/share (from €15.3).

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Written by

Healthcare

OSE Immunotherapeutics

Solid new details from Step 1 of Tedopi Ph III trial

R&D update

Pharma & biotech

28 September 2020

Price

€6.14

Market cap

€92m

Gross cash (€m) at end-H120 (government debt not included)

22.9

Shares in issue

15.0m

Free float

25%

Code

OSE

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.9)

3.4

60.7

Rel (local)

(3.6)

6.7

88.9

52-week high/low

€7.48

€3.0

Business description

OSE Immunotherapeutics is an immunotherapy company based in Nantes and Paris, France, and listed on the Euronext Paris exchange. OSE is developing immunotherapies for the treatment of solid tumours and autoimmune diseases and has established several partnerships with large pharma companies.

Next events

Update on Tedopi development/ partnering

H220

Initiation of Phase II trials with OSE-127

H220

Update on BiCKI platform

H220

Analyst

Jonas Peciulis

+44 (0)20 3077 5728

OSE Immunotherapeutics is a research client of Edison Investment Research Limited

On 21 September 2020, OSE presented additional data from step one of the Phase III Atalante 1 trial at the virtual ESMO conference. This followed the first announcement in April 2020. The totality of data now points to a favourable benefit/risk ratio of Tedopi treatment in patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) after failed checkpoint inhibitor treatment. Due to the COVID-19 pandemic, OSE has decided to terminate enrolment into step two of the trial, as NSCLC patients are vulnerable to coronavirus infections and there was therefore a substantial risk of data loss. OSE will focus on regulatory interactions and partnering discussions, given the availability of new data. Our valuation is marginally higher at €240m or €16.0/share (from €15.3).

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/18

24.5

4.8

0.38

0.0

16.2

N/A

12/19

26.0

(1.2)

(0.30)

0.0

N/A

N/A

12/20e

9.0

(13.9)

(0.66)

0.0

N/A

N/A

12/21e

9.0

(14.1)

(0.94)

0.0

N/A

N/A

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

New details from step one of Tedopi Phase III trial

One the most interesting new details was the median over survival (mOS) reaching statistical significance in the Tedopi vs chemotherapy arm of the per-protocol (mPP) analysis. This is particularly encouraging as, due to the early end of the trial, the cross-arm comparison is limited. The time to ECOG deterioration (general health status of a patient) was also significantly longer in the Tedopi group, indicating better quality of life. Step one was primarily a futility analysis, with the primary endpoint of 12-month survival in the Tedopi arm reaching 46% in modified intention-to-treat analysis (mITT), significantly higher than the pre-specified boundary of 25%. The newly released mPP analysis confirmed this result.

Upcoming newsflow

Our most recent review of the developments with OSE’s clinical-stage assets can be found in the report published in July 2020. A Phase I study with BI 765063, antagonist of SIRP, in solid tumours is ongoing in partnership with BI and the first results are expected in H121. Two Phase II trials with OSE-127, an anti-IL-7Rα antibody, are planned to start in H220 in ulcerative colitis (sponsored by OSE) and Sjögren’s syndrome (sponsored by Servier), although the pandemic may affect the start dates. The new project CoVepiT, a potentially prophylactic vaccine against the SARS-CoV-2 virus, is progressing as well, with the first preclinical data published in August 2020. The Phase I study is expected to start by end-2020 or early in 2021.

Valuation: €240m or €16.0/share

Our valuation of OSE is marginally higher at €240m or €16.0/share, as the lower cash position was offset by rolling our model forward. We make no changes to our rNPV model for Tedopi for the moment. However, some modifications to our model will be warranted once OSE releases more information.

Second Phase III Atalante 1 trial update

As a reminder, this was a Phase III trial with Tedopi, an off-the-shelf cancer vaccine, as second- or third-line treatment versus standard of care (docetaxel or pemetrexed) in HLA-A2-positive patients (c 45% of the total population) with locally advanced (stage IIIB), or metastatic (stage IV) NSCLC. Patients who have failed post-checkpoint inhibitor treatment represent an area where no novel treatment has been approved yet. In total, 103 patients were randomised and received follow-up care for at least 12 months. The results of the predefined step one assessment were published for the first time in April 2020 and included:

mITT analysis: the 12-month survival rate in the Tedopi arm was 46%. The predefined futility threshold was 25%, while the obtained confidence interval at 95% of the significance level was 33–59%, a statistically strong result.

mITT analysis: the 12-month survival rate in the chemotherapy control arm was 36%.

On 21 September 2020, OSE released additional data at the virtual ESMO conference. These included:

mPP analysis: 12-month survival rate in the Tedopi arm was 47.5% (95% CI: 34.3%, 60.9%), confirming the previous result in the mITT analysis.

mPP analysis: 12-month survival rate in the chemotherapy arm was 34.4%.

ITT analysis: mOS in the Tedopi arm was 9.8 months versus 8.7 months in the chemotherapy arm (HR: 0.71 [95% CI: 0.44, 1.16]; p = 0.17).

PP analysis: mOS in the Tedopi arm was 11.1 months versus 8.7 months in the chemotherapy arm reaching statistical significance with p = 0.037 (HR: 0.57 [95% CI: 0.34, 0.97]).

Regarding the safety/tolerability profile, the new data showed that:

time to ECOG deterioration was significantly longer in the Tedopi arm (8.4 versus 4.4 months; p = 0.002); and

significantly fewer severe treatment emergent adverse effects were reported in the Tedopi arm, 14% versus SoC 43%, p < 0.001.

Our view

Step 1 was primarily a futility analysis, with the primary endpoint of 12-month survival in the Tedopi arm being better than the pre-specified boundary of 25%. In the mITT analysis (more conservative than mPP), the 12-month survival rate in the Tedopi arm was 46%, with the confidence interval of 33–59% at 95% of the significance level, a statistically strong result. The newly released mPP analysis confirmed this result.

The difference between ITT and PP methods is that in an ITT analysis all randomised patients are included in the final analysis. ITT is the gold-standard approach in large registrational trials, as it is a more conservative approach and potentially better reflects the real world. The drawback of this method is that it can overly punish the investigational drug (by underestimating the efficacy). For example, if an unusually high number of patients decided to stop the treatment early for various non-drug-related reasons, they would normally still be included in the ITT analysis, as long as they received at least one dose. In large trials, the rationale is that these deviations would not obscure the overall data; drop-outs can happen in the control arm, too. In smaller trials, however, it is enough for just a few patients to significantly deviate from the protocol and this can substantially skew the ITT analysis against the drug. For this reason, in smaller trials it is important to consider PP analysis, ie the effect of a drug in optimal conditions if all patients followed the protocol as designed. Both ITT and PP methods can be modified and adapted to the specific needs of a clinical trial, hence mITT and mPP.

Keeping all this in mind, one of the most interesting new details for us was the mOS reaching statistical significance in the Tedopi versus chemotherapy arm in the PP analysis. This is particularly encouraging as, due to the early end of the trial, the cross-arm comparison is limited. The time to ECOG deterioration was also significantly longer in the Tedopi group, indicating better quality of life.

Next steps

OSE planned to expand the Phase III trial and was ready to open more recruitment centres if the step-one analysis was positive. However, as reported in April 2020, the company, together with the Independent Data Monitoring Committee and the Steering Committee, reviewed the prospects for continuation of the trial, given the COVID-19 pandemic. Due to underlying conditions and immunosuppression from other treatments, NSCLC patients are vulnerable to coronavirus infections. Therefore, there was a substantial risk that the trial data could be significantly affected by the outbreak. OSE has, therefore, decided not to expand the trial into step two.

For the next steps, OSE indicated that it would like to discuss these results with the regulatory authorities and agree the best options for further development. In addition to regulatory interactions, OSE indicated that it will actively explore potential partnership opportunities for Tedopi. As is typical in these situations, the timelines for any partnership deals are uncertain. We do not expect any major announcements until the COVID-19 pandemic subsides. Once that happens, updates on partnering discussions and regulatory interactions will be of primary interest.

Financials and valuation

OSE reported a top line of €5.8m in H120, due to the reinvoicing of development costs of BI 765063 to the partner BI, the sales of OSE-127 vials to its partner Servier and the spreading of a milestone payment after the exercise of option one under the two-step option agreement with Servier. Total H120 operating expenses were €12.9m (77% related to R&D) versus €12.1m in H119 and largely in line with our expectations. Our updated top line forecasts for both FY20 and FY21 now stand at €9m to reflect the ongoing income from partners. This still does not include expected R&D related milestones payments if certain conditions are met (as per our principles), so the total income from OSE’s partners could be higher in 2020/2021. Our higher revenue estimates have resulted in lower losses for FY20/21 (see Exhibit 2).

As of end-H120, OSE had cash, cash equivalents and financial assets of €22.9m, which is sufficient until Q321, according to the company. The balance sheet also includes debt of €16.2m, mainly government loans.

Our valuation of OSE is marginally higher at €240m or €16.0/share, compared to €230m or €15.3/share previously, due to a lower cash position, which was offset by rolling the model forward. We make no other changes to our assumptions, described in detail in our previous reports, in particular the initiation report. In the near term, we will be focusing on:

Any potential updates on further Tedopi programmes, either partnering discussions or interactions with regulators. We make no changes to our rNPV model for Tedopi for the moment. However, we previously assumed that step two of the trial would start in 2020, so some modifications to our model will be warranted, once OSE releases more information.

Updates on the COVID-19 effects on the ongoing clinical trial (Phase I with BI 765063 in multiple cancer indications) or those that were about to start (two Phase II trials with OSE-127 in Sjögren’s syndrome and ulcerative colitis).

Preclinical updates on the BiCKI platform.

Exhibit 1: Sum-of-the-parts OSE valuation

Product

Launch

Peak sales
($m)

Unrisked NPV (€m)

Unrisked NPV/share (€)

Probability
(%)

rNPV
(€m)

rNPV/share
(€)

Tedopi – NSCLC

2023

657

311.1

20.7

25%

74.0

4.9

OSE-127 – ulcerative colitis

2027

843

196.1

13.1

15%

39.7

2.6

OSE-172 – multiple cancer indications (TNBC)

2027

1,801

291.1

19.4

10%

41.3

2.8

FR104 – rheumatoid arthritis

2026

1,056

258.9

17.3

15%

62.4

4.2

Cash, last reported*

22.9

1.5

100%

22.9

1.5

Valuation

1,080.2

72.0

240.2

16.0

Source: Edison Investment Research. Note: WACC = 12.5% for product valuations. Note: *OSE’s debt, not shown above, consists of government loans, which are typically repayable on commercial success only.

Exhibit 2: Financial summary

€'000s

2018

2019

2020e

2021e

December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

24,456

25,952

9,000

9,000

Cost of Sales

0

0

0

0

Gross Profit

24,456

25,952

9,000

9,000

Research and development

(15,057)

(21,655)

(17,000)

(17,000)

EBITDA

 

 

4,963

(897)

(13,838)

(14,026)

Operating Profit (before amort. and except.)

 

 

4,847

(1,220)

(13,939)

(14,117)

Intangible Amortisation

0

(251)

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

4,847

(1,471)

(13,939)

(14,117)

Net Interest

0

8

(6)

(12)

Profit Before Tax (norm)

 

 

4,847

(1,212)

(13,945)

(14,129)

Profit Before Tax (reported)

 

 

4,847

(1,463)

(13,945)

(14,129)

Tax

783

(3,188)

4,094

0

Profit After Tax (norm)

5,630

(4,400)

(9,851)

(14,129)

Profit After Tax (reported)

5,630

(4,651)

(9,851)

(14,129)

Average Number of Shares Outstanding (m)

14.6

14.9

15.0

15.0

EPS - normalised (€)

 

 

0.38

(0.30)

(0.66)

(0.94)

EPS - normalised fully diluted (€)

 

 

0.36

(0.30)

(0.66)

(0.94)

EPS - reported (€)

 

 

0.38

(0.31)

0.0

0.0

Dividend per share (€)

0.0

0.0

100.0

100.0

Gross Margin (%)

100.0

100.0

100.0

100.0

EBITDA Margin (%)

20.3

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

19.8

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

53,879

55,871

55,770

55,679

Intangible Assets

52,600

52,600

52,600

52,600

Tangible Assets

904

1,009

908

817

Investments

375

2,262

2,262

2,262

Current Assets

 

 

14,687

26,589

25,350

12,823

Stocks

0

0

0

0

Debtors

2,253

747

747

747

Cash

9,573

25,842

24,603

12,076

Other

2,861

0

0

0

Current Liabilities

 

 

(9,075)

(14,330)

(14,330)

(14,330)

Creditors

(8,447)

(13,782)

(13,782)

(13,782)

Short term borrowings

(628)

(548)

(548)

(548)

Long Term Liabilities

 

 

(6,075)

(16,067)

(23,067)

(23,067)

Long term borrowings

(3,832)

(9,211)

(16,211)

(16,211)

Other long term liabilities

(2,243)

(6,856)

(6,856)

(6,856)

Net Assets

 

 

53,416

52,063

43,723

31,105

CASH FLOW

Operating Cash Flow

 

 

1,860

5,989

(12,327)

(12,515)

Net Interest

0

0

(6)

(12)

Tax

(783)

3,148

4,094

0

Capex

(593)

0

0

0

Acquisitions/disposals

0

0

0

0

Financing

(37)

0

0

0

Other

(95)

2,288

0

0

Dividends

0

0

0

0

Net Cash Flow

352

11,425

(8,239)

(12,527)

Opening net debt/(cash)

 

 

(4,761)

(5,113)

(16,083)

(7,844)

HP finance leases initiated

0

0

0

0

Other

(0)

0

0

0

Closing net debt/(cash)

 

 

(5,113)

(16,538)

(7,844)

4,683

Source: OSE Immunotherapeutics, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by OSE Immunotherapeutics and prepared and issued by Edison, in consideration of a fee payable by OSE Immunotherapeutics. 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.

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

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

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New Zealand

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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.

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Frankfurt +49 (0)69 78 8076 960

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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London +44 (0)20 3077 5700

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London, WC1V 7EE

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New York +1 646 653 7026

1185 Avenue of the Americas

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Level 4, Office 1205

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General disclaimer and copyright

This report has been commissioned by OSE Immunotherapeutics and prepared and issued by Edison, in consideration of a fee payable by OSE Immunotherapeutics. 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.

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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

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Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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Research: Healthcare

Oryzon Genomics — Final update from Phase IIa CLEPSIDRA trial

On 17 September Oryzon presented an update from its Phase IIa CLEPSIDRA trial with iadademstat, a selective LSD1 inhibitor, in combination with platinum/etoposide at the virtual ESMO congress. CLEPSIDRA was an open-label, single-arm Phase II study. It enrolled 14 patients, 10 of which were evaluable for efficacy as per protocol. The patients had relapsed, extensive disease small cell lung cancer (ED-SCLC). The safety profile did not allow for this combination to proceed in the second line (2L) ED-SCLC despite attempts to modify the dosing regimen. However, efficacy rates compare well with other therapies in this setting. Oryzon will explore iadademstat combinations with non-haematotoxic agents in SCLC. Our post private-placement valuation is €527m or €9.9 per/share versus €496m or €10.8 per/share previously.

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