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Trinity Delta view: The first launch of Eroxon marks the start of what should be a pivotal year for Futura Medical. Cooper is known to have high expectations for Eroxon’s commercial potential and its roll-out across Europe is keenly anticipated. The slippage of the expected FDA approval into Q223 is not unexpected, such novel products are often subject to requests for clarification. The more important aspect is that management reports these discussions as active and constructive. As we have noted previously, the market opportunity as the first clinically proven erectile dysfunction (ED) treatment available OTC (over-the-counter) and with a differentiated and rapid onset of action (ahead of typical oral PDE5 treatments) could be significant. Even modest success would be transformational for Futura Medical. Our valuation is £264m, equivalent to 94p per share.
Lighthouse
14 March 2023
Price | 44.96p |
Market Cap | £132.3m |
Primary exchange | AIM |
Sector | Healthcare |
Company Code | FUM |
Corporate client | Yes |
Company description
Futura Medical is an R&D driven small pharma company, with a novel DermaSys transdermal delivery platform. The lead programme, a topically applied gel (MED3000), has been approved as an OTC product for ED (erectile dysfunction) in Europe, and is under FDA review in the US.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Disclaimer
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ANGLE successfully navigated a number of regulatory and clinical hurdles during 2022, including breakthrough FDA product clearance for Parsortix, and highly positive ovarian cancer data. Key elements are now largely in place to help deliver on Parsortix’s significant potential within the evolving liquid biopsy field. To realise this, ANGLE is pursuing a multi-pronged strategy to make Parsortix broadly available to industry and patients. The near-term focus is on growing the Pharma services business, attracting industry partnerships for downstream analysis, and completion of the remaining LDT development work. Any one of these could be transformational if successfully executed, and together should lead to multiple layers of future revenue growth. Our updated DCF-based valuation is £253m, equivalent to 97p per share.
Year-end: December 31 | 2020 | 2021 | 2022E | 2023E |
Revenue (£m) | 0.8 | 1.0 | 1.1 | 3.0 |
Adj. PBT (£m) | (14.1) | (18.7) | (28.8) | (29.2) |
Net Income (£m) | (11.6) | (15.0) | (22.1) | (23.1) |
Adj. EPS (p) | (6.8) | (7.2) | (10.4) | (10.3) |
Cash (£m) | 28.6 | 31.8 | 32.1 | 12.0 |
EBITDA (£m) | (12.3) | (15.7) | (23.2) | (23.4) |
Outlook
13 March 2023
Price | 24.62p |
Market Cap | £67.1m |
Enterprise Value | £35.0m |
Shares in issue | 260.6m |
12 month range | 24.0-163.8p |
Free float | 96.6% |
Primary exchange | AIM |
Other exchanges | OTC QX |
Sector | Healthcare |
Company codes | AGL |
Corporate client | Yes |
Company description
ANGLE is a specialist diagnostics company. Its proprietary Parsortix technology can capture and harvest very rare cells, including CTCs (circulating tumour cells), from a blood sample. The FDA product clearance for its clinical use to guide precision cancer care should open up multiple commercial opportunities.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
ANGLE is a liquid biopsy company, developing tests and assays on its proprietary Parsortix cell capture platform. This elegant, versatile and simple system employs microfluidics to physically separate viable cells from a standard blood sample. Applications could be broad, but ANGLE is focused on harvesting circulating tumour cells (CTCs). FDA clearance was secured for Parsortix in May 2022 as the first ever tool to harvest CTCs from patients with metastatic breast cancer for subsequent downstream analysis. A multi-pronged strategy is in place to capture a number of distinct diagnostic market segments, with near-, mid- and longer-term prospects. ANGLE is listed on the LSE AIM and employs c 150 people across the group with headquarters at the Surrey Research Park in Guildford, UK, and with operations also in the US. To date, ANGLE has raised c £148m, including c £20m (gross) in July 2022 in order to develop the technology and commercial activities.
Our three-phase DCF model is based on detailed medium-term forecasts to 2032, followed by a five-year trending period, and a 2.0% terminal growth rate. These income streams are discounted back and netted against the net cash position, resulting in a valuation of £253m, or 97p per share. FDA approval of the first clinical indication reduces development risks, but some still remain (LDTs for prostate and ovarian cancers). Nonetheless, the emphasis has clearly shifted from development activities to commercial execution. The market opportunities are sizeable and even modest success in any one area could be transformational.
January’s business update confirmed December 2022 cash resources would be c £32m in-line with consensus (June 2022: £20.5m, December 2021: £31.8m), being boosted by the £20.1m gross (£18.9m net) share placing in July 2022. FY22 revenues are expected to be just above £1m, with c £0.5m of anticipated revenues having been delayed into 2023. FY23 revenues are expected to grow significantly but be materially lower than prior consensus of c £5m owing to adverse market conditions. Existing cash, coupled with the revised revenue streams, R&D tax credits, and expected cost savings from the closure of Canadian operations, suggests a cash runway into H224.
In common with most innovative healthcare companies, ANGLE’s three main sensitivities relate to development/regulatory aspects, execution of commercialisation plans, and the financial resources required to accomplish these. With the important first FDA clearance secured, the focus has shifted to successfully delivering on Parsortix’s commercial potential. Adoption of a novel medical device technology can take time and significant investment. Hence the onus is on management to effectively capitalise on Parsortix’s first mover advantage in order to drive future clinical uptake by securing new partners, expanding Pharma services and launching LDTs (laboratory developed tests).
ANGLE’s focus since the pivotal FDA product clearance of its proprietary Parsortix cell capture system is to deliver on Parsortix’s commercial promise. ANGLE has identified several potentially significant opportunities to make Parsortix broadly available to the healthcare industry and patients via a multi-pronged strategy, which should provide multiple layers of revenue growth over the near-, mid-, and longer-term. These include the Pharma services business, already displaying positive momentum, continued progression in the development of laboratory developed tests (LDTs), and securing corporate partnerships to drive Parsortix use in the clinic. The long-awaited FDA product clearance should expedite these opportunities by providing gold standard external validation, reducing the perceived novel technology risk for potential new customers, whilst also facilitating clearance for future uses. Broad adoption of a novel medical device can require a paradigm shift, with sales subsequently taking time to materialise. Hence, the challenge will be for ANGLE to capture these opportunities in an effective and systematic manner. Our updated DCF-based valuation is £253m ($304m), or 97p/share, which could rise as visibility on commercialisation initiatives and Parsortix’s positioning become clearer.
ANGLE’s primary focus in recent years has been securing first FDA product clearance for its Parsortix cell capture system. Parsortix is an elegant and versatile technology platform for capturing circulating tumour cells (CTCs) from a simple blood sample. CTCs can provide unique diagnostic information, giving a complete picture of a cancer, hence enabling optimal treatment specific to the cancer’s profile. CTCs also allow longitudinal monitoring that can prompt treatment adjustments as the cancer evolves, a level of insight that is not usually possible with current cancer diagnosis and analysis. The combination of innovative targeted cancer therapies, together with novel diagnostic solutions such as Parsortix, could revolutionise future cancer treatment. With FDA clearance granted, ANGLE has first mover advantage in CTC liquid biopsies.
Given the promise that Parsortix holds in cancer diagnosis and treatment, the focus has shifted to executing on the multitude of opportunities, ranging from Pharma services for cancer drug trials, to clinical tests to support patient management. Without unlimited resources, the challenge will be to appropriately prioritise and target these opportunities to crystallise value in an effective manner.
ANGLE has made first strides in the potentially lucrative Pharma services business, which provides tools for oncology trials. This is expected to be the near-term growth driver, with the FDA clearance potentially facilitating the onboarding of new customers. The establishment of accredited laboratories and availability of in-house LDTs (laboratory developed tests) will provide future layers of growth. The most significant opportunity will be from future broad clinical uptake, albeit this will likely take time. Even a relatively small share of any of these opportunities would be transformative for ANGLE.
End-December 2022 cash is expected to be c £32m, which should provide a runway into H224. Funds will be used to capitalise on momentum from the FDA clearance, specifically to expand the Pharma services business, continue development of the prostate and ovarian cancer LDTs, and to secure corporate partnerships to drive clinical uptake.
The Parsortix system is a practical and straightforward platform to harvest circulating tumour cells (CTCs) from a blood sample. CTCs originate from a solid tumour and are shed into the bloodstream. CTCs harvested using the Parsortix system are intact living cancer cells which can provide unique, relevant, and up-to-date insights into the properties and characteristics of the underlying solid tumour, helping to guide treatment. Given that only a blood sample is required, Parsortix can be employed at multiple points in emerging cancer treatment pathways, providing actionable decision-making information. This can range from the initial diagnosis through to therapy selection, plus monitoring, recurrence monitoring and potentially, in the longer-term, patient screening. This versatility, coupled with Parsortix’s ability to be used with almost any downstream assays, means there are a wide range of potential commercial opportunities over the near-, mid-, and longer-term.
Management’s aim is to make Parsortix broadly available to the healthcare industry and for it to eventually form part of routine patient care in order to transform cancer treatment. A strategy is in place to maximise the uptake of Parsortix, which is focused on three key business areas:
CTCs harvested with Parsortix can have nucleic acids and proteins analysed via a variety of downstream analysis platforms. ANGLE had been developing an in-house molecular analysis platform, HyCEAD Ziplex, but made a recent decision to instead focus on the use of third-party platforms for DNA and RNA sequencing. This is due to several factors, including the increased sensitivity and reduced cost of external technologies, such as digital PCR and NGS (next-generation sequencing), respectively, coupled with the increasing availability of these external technologies. This contrasts with the likely significant costs required to fully develop HyCEAD Ziplex for use outside of ANGLE’s own laboratories as part of a Parsortix product solution. Although an internally developed complete “sample-to-answer” approach would retain more value, in order to realise the commercial potential a meaningful installed base would need to be established, which would take time and require substantial additional investment. Third-party platforms provide an existing large installed base that ANGLE can more rapidly leverage by providing content, leading to a more pragmatic commercial approach.
There are five key components which are expected to drive uptake in the targeted business areas:
Together these elements are expected to deliver multiple, staged layers of revenue growth. As shown in Exhibit 1 some are already generating revenues including from existing Research Use sales to translational researchers and the growing Pharma services business. From 2024, modest first sales from LDTs currently in development are anticipated, with these expected to grow in the mid-term as reimbursement codes and payor coverage is achieved and use becomes more entrenched. Longer-term, we expect broader clinical uptake and use, potentially as a companion diagnostic, which should be the culmination of a number of near- and mid-term endeavours.
The May 2022 FDA product clearance has already driven an acceleration in discussions with potential partners for Parsortix, in particular with medtech companies, whilst in Pharma services, discussions with >20 potential customers are ongoing, including with large Pharma companies. Achieving a gold standard regulatory clearance is also expected to bring awareness of Parsortix to a wider audience, which could potentially broaden existing Research Use Only (RUO) and in turn, generate further original papers and applications helping to cement Parsortix’s position as a leading CTC harvesting platform. Whilst RUO is not a major revenue source, in our view, it should help to identify new applications for the technology, and to leverage published study data to access a broader physician market that could incorporate Parsortix-based analysis into treatment decisions, which should be a much larger commercial opportunity.
Published evidence, often via collaborations with leading academic centres and physician Key Opinion Leaders (KOLs), on clinical studies utilising Parsortix provides ANGLE with an efficient and economical route towards identifying and refining potential clinical applications, whilst also raising awareness of the Parsortix system. The publication of peer-reviewed papers should provide the larger patient treating physician community with a greater understanding and appreciation of Parsortix.
Research use, together with the Pharma services business, discussed in more detail later in this report, comprise the underlying translational research revenues. Pharma services offers clinical trial tools to pharmaceutical and biotech companies, notably in oncology, for patient targeting and monitoring. Four customers are already secured, two of which have already expanded contracts to include new trials. Pharma services revenues could reach $50m-$100m, based on an average $1,000-$2,000 test price and the number of samples that can be processed each year within the existing laboratory capacity, and is expected to be the main driver of near-term revenue growth, through a combination of:
As Parsortix becomes more established as an exploratory tool in clinical trials via the Pharma services offering, this could also lead to development of companion diagnostic tests for new drugs. Availability of a companion diagnostic is likely to become more important for securing regulatory approvals of novel targeted therapies in order to ensure that patients most likely to benefit receive the most appropriate treatment. Whilst development of a companion diagnostic could take several years, this should come at limited direct expense to ANGLE as efforts will be largely funded by the drug developers running the clinical trials. The FDA clearance of the Parsortix platform should facilitate the regulatory review of any novel drugs using a Parsortix-based companion diagnostic, likely making Parsortix more attractive to potential new customers.
ANGLE is also developing a pipeline of Laboratory Developed Tests (LDTs), which it plans to offer to physicians to aid in patient management. Once development is complete, these LDTs will be available from ANGLE’s own laboratories in the UK and US. Both laboratories have completed all the necessary administrative steps towards achieving the relevant accreditations, with availability of the first LDT needed to secure formal CLIA accreditation in the US, permitting provision of commercial services. The first LDTs could become available during 2024: (1) a prostate cancer LDT to assess the presence and severity of prostate cancer; and (2) an ovarian cancer pelvic mass triage LDT. The commercial opportunity for each of these LDTs could be substantial, as outlined later.
Availability of LDTs through ANGLE’s own labs is key to accessing broader clinical use sales. Firstly, the clinical laboratories in the UK and US would act as demonstrators of the services that can be offered, providing important proof of concept for the larger CLIA laboratory networks. Secondly, these will allow discussions with US payors, ahead of formal FDA IVD (in vitro diagnostic) product clearance, to establish dedicated reimbursement codes, which are an essential step in driving widespread adoption and becoming established clinical practice.
In parallel with these activities, ANGLE is aiming to work with a wide range of industry partners in order to make Parsortix broadly available to physicians and patients, and to capture various revenue opportunities without the need for a large in-house patient-centric commercial infrastructure. These include medtech companies, pharma and biotech companies, clinical laboratories, CROs (contract research organisations), reference labs, and screening companies. In addition, ANGLE is seeking to establish a global sales and distribution network to expand Parsortix’s reach through agreements with regional distribution partners. The first such agreement was executed in the Czech Republic in October 2022 with Promedeus, a specialist medical equipment distributor with a focus on oncology. ANGLE has since signed similar distribution agreements covering territories in Europe, the Middle East, China, and India.
Discussions have been held with major diagnostic players such as Abbott, Philips, and Qiagen to explore the development of clinical products. For example, Abbott’s PathVysion HER-2 FISH Probe kit was used in the metastatic breast cancer studies required for FDA clearance. ANGLE continues to discuss potential commercial options with Abbott, alongside other potential partners, to offer a Parsortix-based HER-2 test from a routine blood draw.
To make Parsortix available to as many potential end-users as possible, ranging from hospitals, through to Pharma and/or various industry partners, ANGLE offers Parsortix to customers both as a product/equipment supplier, and as a service provider, with these allowing access to various market opportunities:
A key component of the service-led approach is ANGLE’s clinical laboratory offerings, with laboratories opened in the UK (Guildford, Surrey) and in the US (Plymouth Meeting, Pennsylvania) in Q121. These are already supporting the Pharma services business. The aim is also to offer validated clinical tests, including the market relevant LDTs that ANGLE is currently developing for ovarian and prostate cancer. Processing of patient samples for clinical purposes requires appropriate laboratory accreditations, which are essentially a regulatory approval that the laboratory has the technical competence to produce reliable, accurate, and precise results for specific patient tests. Laboratory accreditation in the UK is via UKAS and in the US it is CMS (Centers for Medicare & Medicaid Services) that regulates all laboratory testing (excluding research testing) through CLIA (Clinical Laboratory Improvement Amendments).
In both the US and the UK, all elements towards securing accreditations have been completed and ISO 15189 accreditation has been received in the US and is expected shortly in the UK. This accreditation, which involves an independent lab assessment, is the gold standard for medical labs and ensures international quality and competence standards and is highly regarded by Pharma services customers. In the US, the additional CLIA accreditation required for patient management can only be received once the first LDT is being offered from the labs.
ANGLE received the first ever FDA clearance of the Parsortix system in May 2022, specifically as a De Novo Class II medical device for harvesting CTCs for subsequent user validated downstream analysis in metastatic breast cancer (mBC). This was a long-awaited event and an area of considerable focus for ANGLE over recent years, with the original regulatory package submitted in September 2020 and a full response to the FDA’s Additional Information Request announced in early June 2021. Given there was no predicate device to benchmark, the outcome and timings were uncertain, hence receipt of formal clearance was a key de-risking event, in our view. The FDA clearance is important for several reasons, all of which should help to drive future potential revenues, including:
The FDA clearance for use in mBC enables ANGLE to sell Parsortix for this specific indication. However, large scale future sales will be dependent on downstream assays to interrogate the CTCs and reimbursement being in place to pay for the tests, both aspects now key areas of focus for management. ANGLE is seeking to capitalise on this opportunity through partnerships with medtech companies, for example with Abbott or other partner(s) for a Parsortix-based HER-2 test. According to ANGLE, the number of discussions with potential industry partners have expanded since the FDA clearance and from new therapies to treat low HER-2 as well as HER-2 positive breast cancer patients.
Hence, mBC represents only one aspect of a multi-faceted approach to address the various opportunities that should drive growth across multiple revenue streams. As outlined earlier, Pharma services is likely to be the near-term revenue growth driver, with sales of in-house LDTs via the accredited laboratory facilities likely to be the next layer of growth. Nevertheless, whilst sales in mBC may not be immediate, the commercial opportunity could be substantial, particularly if ANGLE, together with a partner, can develop an assay for mBC.
Near-term revenue growth is likely to be driven by the Pharma services offering. This business was only established during 2021 and has already completed work for one customer for a bespoke assay, and has ongoing contracts with four customers, two of which have expanded contracts to include further clinical trials. Multiple new customers and projects are in the pipeline, including with major pharma companies, with expanded discussions and opportunities coming to the fore following the FDA clearance.
Pharma services offers clinical trial tools, including assay development and clinical trial support, to oncology focused pharmaceutical companies for patient targeting and monitoring. Over time this could be a sizeable revenue stream, in our view, with growth not only from new potential customers, but also from existing customers, firstly as current contracts for clinical trials progress to a later stage, but also as existing customers expand to other trials. While the FDA clearance has facilitated discussions, the cost-focused environment and challenging financial markets have prolonged already lengthy sales processes, particularly among the earlier stage biotech companies, which are often the drug discovery engine room for large pharma. Nevertheless, the overall opportunity remains intact.
Pharma services revenues are currently small, less than c £0.3m per annum, which is unsurprising given the business is relatively new. However, over time and assuming a robust and useful service is delivered, we believe these will grow, both from new customers, and as existing contracts progress and customers expand into new opportunities. In addition, once Parsortix is better entrenched within clinical trials, which could lead to it becoming established as a companion diagnostic, these revenues are likely to be relatively sustainable, providing a long-term solid base.
Pharmaceutical companies developing cancer therapies are seeking better liquid biopsy biomarkers for use in their clinical trials. The growing understanding of how genetically targeted immunotherapies work means the appropriate selection of patients that are expected to respond to the drugs under evaluation is a critical determinant of a trial’s likely success. For instance, knowing the PD-L1 status of a tumour is an increasingly common requirement that is typically established by tissue biopsy. However, accessing the primary tumour is often difficult and becomes even more so when dealing with metastatic disease. The tumour’s status often changes materially during the course of the disease, and solid tumour biopsies seldom allow for the longitudinal monitoring that is increasingly desired.
Parsortix can offer exactly these sorts of unique insights, with the clinical laboratories ANGLE has established in the UK and US well placed to provide these types of services. The tools and services on offer include custom assay development (detecting proteins of interest expressed by CTCs), through to longitudinal monitoring during clinical trials, allowing analysis at multiple time points ie before, during and after investigational drug treatment to monitor and analyse responses. If this sort of analysis is employed in Phase I studies, it seems likely that liquid biopsies would be utilised through to the later clinical stages, with the number of samples growing to reflect the greater patient numbers and longer trial durations. Longer term, assuming successful clinical trial outcomes, these could help establish Parsortix as a routine test for patients, or as a companion diagnostic to aid in therapy selection once the drug candidate has been approved.
Management is flexible in how these clinical trial CTC analyses are delivered; it can be either a direct service or as white label for the CROs to offer and bill. The creation of bespoke assays appears to be a particularly attractive proposition, with the opportunity of selecting the protein targets on a CTC that correspond with a drug’s mechanism of action is a valuable differentiator for ANGLE’s offering. Importantly, any such bespoke assays that are developed remain ANGLE’s intellectual property.
If a service is employed, blood samples from study patients are sent to either lab, with the analyses ranging from simple enumeration, to imaging and/or gene expression. As these services are research use only, no external accreditation or regulatory approval is required. Given the potential importance of the service to customers, the sales process requires extensive validation of the testing chain and evidence of the consistency and reproducibility of the diagnostic results. ANGLE has already secured four customers, of which two have already generated “repeat” business with additional contracts. Work to date includes:
Discussions are progressing with >20 additional potential customers, including several global pharmaceutical companies, and external enquiries have increased following the May 2022 FDA approval, according to management. The majority of discussions are focused on bespoke assay development. We believe there could be an acceleration over time, as once a number of pharma companies have access to these additional insights, other companies operating in related research fields may also seek to include similar analyses in their trials in order to remain competitive. Business development activities are also targeting companies involved in the oncology programmes, including the CROs running the trials.
The commercial opportunity could be sizeable as oncology trials are set to remain one of the most prolific areas of clinical activity. Capacity within ANGLE’s labs is for 50,000 samples per annum, with a baseline price of $1,000, and the potential for this to reach up to $2,000 per sample, depending on the level of complexity and the degree of evaluation desired. This equates to total potential revenues, assuming full utilisation of capacity, of $50-100m. Capacity could be easily increased through shift working. This alone could be transformational for ANGLE and represents only a proportion of even just a subset of oncology trials, with a potential multi-blockbuster opportunity for just a handful of cancers, as shown in Exhibit 2.
ANGLE is developing a pipeline of Laboratory Developed Tests (LDTs) which it plans to offer to physicians to aid in patient management. These LDTs will be available as a service from ANGLE’s own laboratories in the UK and US once the development work is complete. LDTs are in vitro diagnostic tests that are designed, manufactured, and used within a single laboratory. Availability of an LDT will allow dialogue with US payors, ahead of formal product clearance, to establish dedicated reimbursement codes (CPT codes), which are an essential step in driving widespread adoption and becoming established clinical practice.
The Parsortix system is agnostic as to the cancer type the CTCs originate from; however, management has carefully selected the indications for its initial clinical development. All the principal programmes pursued are in areas where there is a specific need that cannot be easily addressed by potential alternative technologies. The criteria employed to select which clinical indications to progress are broad and comprehensive, including factors such as:
A prostate cancer LDT to assess the presence and severity of prostate cancer is currently in clinical trials, whilst the ovarian cancer pelvic mass triage LDT has completed clinical trials and a suitable third-party molecular analysis platform is being sought. Both of these LDTs could be available during 2024, with the opportunity for each outlined below.
ANGLE has identified prostate cancer as a commercially important and patient relevant opportunity for Parsortix and is pursuing a LDT as a triage test. There is currently a significant male population that undergoes invasive biopsies as part of the prostate cancer diagnosis paradigm. These are often unnecessary and are associated with complications, which could potentially be avoided with a blood test that can detect the presence and severity of the prostate cancer. The commercial potential could be vast, with ANGLE estimating that the addressable market in the US alone is c $6.8bn. A clinical study was recently initiated and is expected to complete in 2023. This is being conducted in partnership with a US-based urology group, which is particularly powerful as it also allows a rapid and economical potential first route to market.
Prostate cancer is the most common cancer in males in the developed world, with the American Cancer Society estimating c 288k new cases of prostate cancer in the US in 2023. It is the second leading cause of cancer death (behind lung cancer), with around 34,700 deaths annually in the US. It generally affects older males, with 60% of cases in men older than 65, whilst it is rare in males under 40 years of age; around one in eight men will be diagnosed with prostate cancer during their lifetime.
In most diagnosed cases, prostate cancer is a slow-growing disease (indolent) that often does not require immediate treatment. On average, prostate cancer has a five-year relative survival of 96.8%. However, the difference in five-year survival rates between local (or regional) prostate cancer (confined to the prostate and nearby organs), and metastatic prostate cancer (which has spread to other organs), is vast, with nearly 100% for local/regional vs only 31% for metastatic cancer.
Given this disparity, while it is important to establish whether a patient has prostate cancer, it is also important to stage and grade the cancer in order to determine appropriate treatment options, which could include watchful waiting for indolent cancers. Current common diagnostic tests are not even definitive in establishing if a patient has prostate cancer, and therefore suspected cases require additional invasive procedures to confirm the presence of cancer and to stage and grade the cancer. The two most common tests for prostate cancer are:
If a PSA test and/or DRE are abnormal, then further tests are needed to confirm if a patient has prostate cancer. Whilst medical imaging may be used, this is often done in conjunction with a biopsy. A biopsy is the gold standard diagnosis and the only current way to confirm the presence of cancer, although it cannot reliably distinguish aggressive from indolent tumours. Other limitations are a high c 35% incidence of false-negatives (missing the cancer), which occur if the needles miss the tumour. In addition, biopsies are invasive procedures that can have complications, ranging from pain, discomfort, bleeding, and erectile dysfunction, through to serious infections, which can require hospitalisation.
There are more than one million prostate cancer biopsies in the US each year to confirm a suspected case of prostate cancer. Of these, only 20-25% diagnose a prostate cancer reflecting ‘overuse’. Hence there is a large pool of patients undergoing invasive biopsies that are not necessary and could be avoided if a blood test could accurately confirm the presence of cancer and assess severity.
Exhibit 3 provides an overview of ANGLE’s assessment of the addressable US market. This includes use beyond initial screening and diagnosis to include watchful waiting (active surveillance) in males where indolent cancer has been diagnosed to monitor for any clinically relevant change in status, therapeutic decision making and, more materially, remission monitoring for those that have had prostate cancer and where there is a risk of recurrence.
In order to advance towards the availability of a prostate cancer LDT, ANGLE has partnered with MidLantic Urology in the US to conduct the initial assay development study investigating Parsortix in the detection of prostate cancer and to predict severity. MidLantic Urology is an affiliate of Solaris Health Partners, one of the largest urology providers in the US.
The study, which was recently initiated, is funded by ANGLE, and includes 100 males scheduled for a prostate biopsy, based on an elevated PSA and/or an abnormal DRE. The study aims to assess the potential to predict the presence of a clinically significant prostate cancer and to correlate assessed disease severity with the Gleason score (the generally accepted grading for prostate cancer). The trial is expected to complete during 2023. Blood samples will be collected and sent to ANGLE’s US laboratory for processing by Parsortix and then evaluation by imaging and molecular analysis. We note that molecular analysis for the trial was always planned to be conducted on a third-party platform, hence timelines are not impacted by the decision regarding HyCEAD Ziplex, outlined earlier in this report.
Data from this study could form the basis of a prostate cancer LDT, which ANGLE could then offer from its laboratories in both the US and UK. The partnership with MidLantic Urology also includes an agreement with Solaris Health for a potential rapid first route to market. Solaris Health is a national healthcare platform that offers access to specialty healthcare through 600+ providers that treat >850,000 patients annually. Hence this agreement could deliver not only the data needed for an LDT, but also immediate access to a significant patient group, without the need for a new commercial infrastructure. In the longer-term, pursuit of an approval as a clinical product would require a larger clinical verification study.
Supporting evidence for the utility of Parsortix in prostate cancer is available from the pilot study run by Barts Cancer Institute, published in Clinical Cancer Research. This demonstrated that CTCs can be used to detect the presence of prostate cancer and also risk stratify patients for intervention or further surveillance. The Barts study was in 81 prostate cancer patients and included 34 with castration-resistant prostate cancer (CRPC) and 38 with localised cancer. CTCs were found in all CRPC cases and in 79% of localised patients.
The aim of the ovarian cancer LDT is to triage women set to undergo surgery for an abnormal pelvic mass. It has the potential to be a best-in-class test for discriminating between benign pelvic masses and ovarian cancer and informing next surgical steps. Following highly positive data from the ovarian cancer clinical validation study, ANGLE is now seeking to optimise the assay using a third-party molecular analysis platform. This is expected to provide access to a large installed base in order to maximise the commercial potential, with ANGLE estimating that the addressable market in the US alone is c $1.3bn.
Approximately one in five women will develop a pelvic mass sometime in their life, yet only one in 72 will have ovarian cancer (Siegel R et al). In the US, a woman has a 5-10% lifetime risk of undergoing surgery for suspected ovarian cancer, of which 13-21% are found to have ovarian cancer (ACOG Practice Bulletin); other Western countries are similar. Hence there is a need to accurately differentiate between a benign vs a malignant mass, to avoid unnecessary surgery.
Women with benign masses can generally be treated in local non-specialist units with conservative surgery (typically laparoscopy) which is associated with lower morbidities and shorter hospital stays. However, for those patients with a malignant mass, the most important prognostic factors are accurate surgical staging, cytoreductive surgery, and the expertise of the gynaecological oncologist who performs the operation. Hence, these women should be referred directly to specialist centres.
Early diagnosis can improve survival, with a diagnosis at Stage I having a 93% five-year survival, decreasing to 68% for Stage II, whilst Stage III and Stage IV drop to 27% and 13%, respectively. Hence, a diagnostic test that could allow for early detection could be key for transforming patient outcomes. A cost effective, simple, and non-invasive test could also be particularly valuable for screening programmes, notably if it can correctly identify women with ovarian cancer (true positives) and is also able to avoid incorrectly identifying the presence of cancer (false positives), with the latter a particular limitation of currently available tests.
Recent headline data from the Wilmot ovarian cancer clinical validation study suggest that ANGLE’s test has the potential to be best-in-class, with both a high sensitivity (correctly detecting cancer) and a high specificity (correctly detecting no cancer). In this study, the EMBER trial, 144 women with a diagnosed pelvic mass and scheduled to undergo a pathological evaluation of the mass (imaging guided biopsy, surgical biopsy, or surgical excision) had a blood sample sent to ANGLE for processing and evaluation. Cells were captured and harvested with Parsortix, which then underwent multiplexed gene expression analysis using ANGLE’s Landscape+ (molecular analysis) ovarian assay. This was combined with clinical information, including the physician’s initial cancer risk assessment and the patient’s age, into an algorithm for the prediction of benign vs malignant disease.
Data are summarised in Exhibit 4, clearly demonstrating that the Parsortix Landscape+ ovarian assay has both a high sensitivity and high specificity, and a 95.4% ROC-AUC (area under the receiver operating characteristic curve, a measure of accuracy) which is classified as “Excellent”. This is in-line with the prior study of 95.1%. The test was more accurate than physician assessment, reducing both the false positive and false negative rate by at least 50%.
For context, the most useful comparator is the OVA1 commercial test, which combines CA-125, transthyretin, transferrin, β-microglobulin, and apolipoprotein A1 and generates a single-number result. According to published data, the combination of OVA1 test and physical assessment had a sensitivity of 96% in predicting malignancy, compared to only 75% for physical assessment alone and 93% for OVA1 test alone. However, specificity was lower, at between 35% and 55% for OVA1 and combined OVA1 test and physical assessment.
Various approaches have been tried to make an effective differential diagnosis, with physical examination, CA 125 and HE4 levels (ROCA scores), OVA1 testing, and ultrasound examination (trans-vaginal and colour Doppler sonography) most commonly used. All have limitations and no system, or combination of approaches, performs to the desired standards in terms of specificity and/or sensitivity. Hence, there is a need for an accurate pre-operative assessment in order to avoid unnecessary operations in a specialist centre in those women with a benign mass, and to ensure patients with a malignant tumour are sent to specialist centres to receive optimum treatment with a likely better prognosis.
ANGLE is now in the process of assessing several third-party molecular analysis platforms on which to optimise the Landscape+ ovarian assay. Stored samples from the clinical study will be used to validate the platform. Once this work is complete, this will provide ANGLE with access to a potentially large installed base of the third-party platform(s) onto which ANGLE can supply content. This could be important for maximising the commercial potential, given the size of the addressable market.
Exhibit 5 provides an overview of ANGLE’s assessment of the addressable US market. The market opportunity increases materially beyond the initial triage diagnostic testing (notably for the watchful waiting monitoring, where the numbers of test opportunities are significantly larger). These estimates are broadly in-line with those provided by Aspira Women’s Health regarding the opportunity outlined for their OVA ovarian cancer test products. There were around 17k OVA1 tests performed in 2021 and around 21k in 2022. The CPT reimbursement price for OVA1 is set at $897 (the related OVERA test is $950).
Regardless of the choice of third-party molecular analysis system(s), ANGLE plans to initially offer the ovarian cancer triage test as an LDT to private payers via clinicians. This could follow a similar model to the Solaris agreement for the prostate cancer LDT, but with a suitable gynaecology-focused partner. Data generated via ANGLE’s own laboratories will act as a demonstrator to other larger labs and clinics and will be leveraged to obtain reimbursement codes for Parsortix clinical applications. Subject to supportive clinical verification studies, the LDT could also be applied to monitoring in watchful waiting (of pre-surgical pelvic masses) or disease remission monitoring.
The Parsortix system is an elegantly simple system that effectively and affordably solves the challenges of harvesting CTCs (circulating tumour cells) typical of membrane- and antibody-based systems. Historically, CTC capture technologies have been limited by complex sample processing, poor scalability, low sample purity, reliance on cell surface proteins for isolation, and dilute output volumes that require additional cell concentration steps. The ability of Parsortix to isolate CTCs without damaging the cells in the process is increasingly important, notably for personalised medicine applications when detailed genomic analysis may be desirable. These developments underpin the shifts that should see cancers treated according to tumour status rather than tissue location.
CTCs can offer unique levels of insight over other liquid biopsies, such as circulating tumour DNA (ctDNA, fragments of DNA from dead cancer cells), as shown in Exhibit 6. Whilst both ctDNA and CTCs can provide mutation analysis, CTCs can also be used to allow RNA and protein expression and hence can give a more complete picture of the cancer to make appropriate treatment decisions, for example if patients are responding to therapy or resisting treatment, insights which cannot be gleaned from ctDNA. For a more detailed overview of CTCs and their utility, and the potential role of liquid biopsies in cancer diagnoses please see our May 2021 Initiation report.
Liquid biopsies offer several advantages over more traditional solid tumour biopsies (Exhibit 7), which are invasive, often painful, procedures, with risks attached. Solid tumour biopsies can provide a single snapshot, with analysis limited to the cells collected, and therefore can miss mutations. Liquid biopsies use a standard blood sample, the simplicity of which should not be underestimated, as evidenced during the COVID-19 pandemic. Lockdowns and restrictions on movement caused delays in cancer diagnosis and treatment as patients were reluctant or unable to attend medical facilities.
Parsortix employs a standardised cassette, intentionally sized to be the same as a routine microscope slide, to separate circulating cells from a blood sample. The process has been engineered to rapidly collect highly enriched CTCs, undamaged by labels or reagents. At its heart is a disposable plastic casing enclosing a series of three-dimensional steps through which blood is channelled. The patented technology uses microfluidics to capture and then harvest CTCs based on their larger size and less deformable nature compared to other blood components.
The system consists of a compact, fully automated benchtop machine that processes a blood sample, ranging from >1ml to 50ml, without any additional reagents or stages. A standard 10ml sample takes 60 to 90 minutes to process. The CTCs can be harvested with a simple reverse flush into any external container. There is extensive patent protection around key elements.
The process has been deliberately designed to be straightforward so that limited technical expertise is required for routine operation. Although Parsortix can be used in central laboratories, the system is intended to be easily placed alongside other analytical equipment in a hospital laboratory. This offers the potential to retain the diagnostic test reimbursement within the clinic.
The Parsortix platform can capture all types of CTCs, including mesenchymal and cell clusters, which has challenged other microfluid-based systems. The harvested CTCs tend to be of high purity, with minimal white blood or other cellular contamination, and ready for further downstream processing (eg morphological and cytological examination, immunofluorescence, FISH, DNA, RNA, and protein expression). Importantly, the recovered CTCs are intact, undamaged, and viable and so allow for great flexibility in subsequent testing.
The Parsortix CTC capture process has already been the subject of 77 peer reviewed publications from independent cancer centres, as well as numerous posters, articles, and presentations. These highlight the breadth of potential applications and demonstrate how harvesting viable CTCs can provide invaluable information about even remote tumours and guide treatments. The most recent report states a current installed base of more than 230 Parsortix systems in active use and >155k samples have been processed (to end June 2022).
In common with most innovative healthcare companies, the three main sensitivities relate to development and regulatory aspects, execution of commercialisation plans, and the financial resources required to accomplish these. With the first FDA clearance now secured, the emphasis shifts to commercial execution, albeit development risks remain for individual programmes.
The specific sensitivities, both on the upside and downside, are as follows:
In our view ANGLE has a noteworthy advantage over other CTC players; however, the liquid biopsy space in general is a complex, crowded, and competitive arena and there is a material risk that advances in technology could leapfrog Parsortix and bypass or reduce the need for a CTC capture platform.
Whilst Parsortix has been the subject of many positive publications, posters, articles and KOL endorsements, its true commercial value lies in its adoption in clinical practice. FDA approval does provide invaluable validation of the platform and should facilitate future use in routine clinical settings (where even a small overall share represents sizeable volumes). However, adoption of a novel technology can take time before meaningful revenues and profits are realised.
Accessing the clinical setting requires a multi-faceted approach. A critical step in the important US healthcare system is obtaining suitable reimbursement codes. Whilst some applications and LDTs may be initially reimbursed under existing codes, the novel and likely more fruitful applications will likely require new codes. This can be a lengthy process, possibly requiring economic models that demonstrate compelling benefit. Although the clinical outcomes are, in our view, clear, the administrative processes will need to be navigated.
Parsortix’s mode of action is elegantly simple and effective. ANGLE has employed a multi-layer IP strategy, having filed numerous patents covering the cassette and key elements of the platform and with some in the process of being granted. Nevertheless, as is common in this field, IP and litigation risk remains a sensitivity.
Addressing large and competitive markets with novel technologies requires relevant clinical programmes to validate and support the technology, together with sizeable commercial teams to perform initial launches and indication roll outs. Such efforts are time consuming and expensive, with competitors often being larger and well-funded. The concern is that unless rapidly partnered, Parsortix may struggle to gain traction in its varied applications.
However, these risks, whilst tangible, are in our view containable. Importantly, the commercial opportunity, even if capturing only a small fraction of the overall market potential, is sufficiently attractive to merit attention.
As ANGLE transitions from development of the Parsortix platform to execution of its commercial strategy, our preferred valuation methodology shifts from an rNPV approach to a DCF model. We employ a three-stage DCF based on comprehensive cash flow forecasts to 2032, followed by a five-year trending period, and a modest 2.0% terminal growth rate. We separately forecast revenues for the main business lines (Research use, Pharma services, LDTs, and broader clinical products) to reflect the differing markets, revenue potential and growth profiles. These are summed and netted against the central costs of running the business in terms of R&D and S&M spend, and netted against current net cash/debt. Using conservative assumptions throughout, our model generates a valuation of £253m, equivalent to 97p per share (Exhibit 9).
CTC-based diagnostics are likely to be employed across multiple clinical segments including as non-invasive assays for early detection of cancer; as prognostic tools for cancer survival and the prediction and monitoring of response to therapies; and in the development of new drugs for cancer. These are broad indications and large market opportunities but, as discussed earlier, the field is still immature, crowded, and no industry standard has yet emerged. As the clear leader, Parsortix should be well placed to capture meaningful share of these indications, however, in line with our conservative philosophy, we employ modest assumptions throughout our modelling.
Our forecasts include revenue potential from ANGLE’s existing capacity within its own laboratories, and also includes undemanding longer-term broader clinical uptake likely via partners. The latter opportunity could be particularly significant if ANGLE and potential future partners can establish Parsortix as routine in cancer care. If this transpires, then our forecasts are arguably overly cautious, however, this does leave scope for significant potential valuation upside as visibility increases with the execution of the commercialisation and partnering strategy.
ANGLE’s FY21 revenues of £1.0m (FY20: £0.76m) consisted mainly of Research-Use Only product sales (Parsortix systems and disposables) coupled with nascent, albeit rising, Pharma services income from both clinical trial services and bespoke assay development. FY21 operating costs of £18.0m (FY21: £14.4m) reflected the continued investment in development and validation of Parsortix’s clinical application and commercial uses as well as phased investment into the new clinical laboratories and capacity for the Pharma services business. Net loss for the full year FY21 was £15.0m (FY20: £11.6m).
For H122, ANGLE delivered revenues of £0.4m (H121: £0.3m) which, with operating costs of £10.6m (H121: £8.9m) translated into a net loss of £9.2m (H121: net loss of £7.7m). Cash and short-term deposits of £20.5m at end-June 2022 (end-December 2021: £31.8m) were further boosted by the £20.1m gross (£18.9m net) share placing to new and existing UK and US institutional investors post-period (July 2022 Lighthouse).
In line with the company’s tight focus on growing revenues, controlling costs, and maximising the cash runway while seeking to deliver on key commercial milestones, ANGLE announced the closure of its Canadian operations in October 2022. The orderly closure of its Toronto facility and transfer of certain operations to the UK was expected to incur additional one-off cash costs of c £0.5m vs the FY22 operating costs budgeted. For FY23 net savings of c £2.6m are anticipated, rising to £4.0m in subsequent years.
The January 2023 business update confirmed ANGLE’s end-December 2022 cash is expected to be c £32m, which provides funding into H224. FY22 revenues are expected to be just above £1m, with c £0.5m of previously anticipated revenues delayed into 2023. FY22 loss is estimated to be around £22m. FY23 revenues are expected to grow significantly but are likely to be materially lower than the £5m consensus at the time, reflecting adverse market conditions and later than expected FDA clearance. Updated forecasts are presented in Exhibit 10.
ANGLE’s positioning as both an equipment supplier and a service provider mean that it is well placed to exploit multiple segments of the liquid biopsy market. The Parsortix platform is highly attractive and has already been significantly de-risked; the company is now focused on commercialisation with the goal of building a sizeable business.
10 Nugent Road
The Surrey Research Park
Guildford
Surrey
GU2 7AF
United Kingdom
% holding | |
Conifer Management LLC | 7.67% |
Baillie Gifford & Co | 6.02% |
Global Frontier Partners, LP | 5.32% |
Dermot Keane | 4.90% |
Fidelity International Ltd | 3.36% |
Top institutional investors | 27.27% |
Other shareholders | 72.73% |
Total shareholders | 100.00% |
Person | Position | Biography |
Garth Selvey | Non-Executive Chairman | Appointed Chairman in 2007, having joined as a non-executive director in 2006. Previously Group Chief Executive of Comino Group plc from 1997 until its sale to Civica plc in 2006. Prior roles include Managing Director of TIS Applications Ltd from 1984 until its sale to Misys plc in 1989. |
Andrew Newland | CEO | Founded ANGLE in 1994. Over 28 years’ experience in building technology-based businesses. Founded Acolyte Biomedica (medical diagnostics) spun out of the Defence Science and Technology Laboratory Porton Down, and Provexis (specialist nutraceuticals) spun of the Rowett Institute. From 1982 to 1994 worked for KPMG. Holds an MA in Engineering Science from the University of Cambridge and is a Chartered Accountant. |
Ian Griffiths | Finance Director | Joined in 1995. Previously KPMG for seven years, both within the accountancy practice and High Technology Consulting Group. Holds a BSc in Mathematics with Management Applications from Brunel University and is a Chartered Accountant. |
Disclaimer
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.
Trinity Delta view: The first data from the ongoing RXC004 Phase II programme suggest that RXC004 monotherapy treatment alone is not sufficiently effective to warrant further development in BTC. However, a better indication of RXC004’s potential efficacy should arise from combination studies with CPIs Keytruda and Opdivo during H223. Some tumours do not respond to Keytruda and Opdivo and it is RXC004’s immune-enhancing mechanism that could overcome this resistance.
Our Redx Pharma valuation and forecasts remain suspended following the recommended all share business combination with Jounce Therapeutics.
Redx Pharma is a research client of Trinity Delta Research Limited and for the purposes of the Takeover Code, Trinity Delta is deemed to be connected with Redx Pharma.
Lighthouse
8 March 2023
Price | 41.0p |
Market Cap | £139.0m |
Primary exchange | AIM London |
Sector | Healthcare |
Company Code | REDX |
Corporate client | Yes |
Company description
Redx Pharma specialises in the discovery and development of small molecule therapeutics, with an emphasis on oncology and fibrotic diseases. It aims to initially progress them through proof-of-concept studies, before evaluating options for further development and value creation.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Disclaimer
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.
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Trinity Delta view: HUTCHMED’s strategy to accelerate its path to profitability and bring first-in-class and best-in-class targeted therapies to the market globally has been boosted by the Takeda fruquintinib partnership. This broadens fruquintinib’s development and commercial potential and gives HUTCHMED greater bandwidth to further maximise the commercial traction underway in China, and to progress its late-stage pipeline. Our last published HUTCHMED valuation was $5.51bn ($31.89 per ADS), £4.6bn and HK$43.1bn (531p or HK$49.83 per share), which was pre the Takeda deal and does not reflect FY22 results.
Lighthouse
2 March 2023
Price (US ADS) (UK share) (SEHK share) | US$17.52 297p HK$27.95 |
Market Cap   | US$3.03bn £2.56bn HK$24.17bn |
Exchanges | NASDAQ AIM London SEHK |
Sector | Healthcare |
Company Codes | HCM HCM.L 0013.HK |
Corporate client | Yes |
Company description
HUTCHMED is a Hong Kong headquartered biopharma focused on discovering, developing and commercializing innovative targeted therapeutics and immunotherapies to treat cancer and autoimmune diseases. It has a diverse pipeline of first-in-class/best-in-class selective oral TKIs in development for the China and global markets.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Disclaimer
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.
Trinity Delta view: Following the recommended all share business combination with Jounce, in line with our usual practice, we suspend our Redx Pharma forecasts and valuation.
Redx Pharma is a research client of Trinity Delta Research Limited and for the purposes of the Takeover Code, Trinity Delta is deemed to be connected with Redx Pharma.
Lighthouse
1 March 2023
Price | 42.5p |
Market Cap | £142.3m |
Primary exchange | AIM London |
Sector | Healthcare |
Company Code | REDX |
Corporate client | Yes |
Company description
Redx Pharma specialises in the discovery and development of small molecule therapeutics, with an emphasis on oncology and fibrotic diseases. It aims to initially progress them through proof-of-concept studies, before evaluating options for further development and value creation.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Disclaimer
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.
Scancell’s Modi-1 has successfully completed the monotherapy arm of the ModiFY Phase I/II trial, generating important results for the Moditope oncology vaccine platform. The first element of ModiFY showed Modi-1 was safe and well tolerated. There were encouraging, albeit early, signals of efficacy despite the advanced disease status of all patients. 23 patients have been treated to date, with 14 patients evaluated; of these 14, one has had a partial response and seven have stable disease. These data are particularly promising and support continuation into the monotherapy expansion phase and, importantly, the initiation of the checkpoint inhibitor (CPI) combination arm. The outcome of combination treatment cohorts will help define Modi-1’s clinical and commercial positioning. These data drive increased confidence in the Moditope platform, leading to an uplift in our rNPV valuation to £300.1m, or 36.7p (from £269.6m, or 32.9p/share previously).
Year-end: April 30 | 2021 | 2022 | 2023E | 2024E |
Revenues (£m) | 0.0 | 0.0 | 5.3 | 0.0 |
Adj. PBT (£m) | (17.7) | (11.9) | (17.6) | (24.0) |
Net Income (£m) | (15.5) | (2.1) | (15.7) | (21.9) |
EPS (p) | (2.28) | (0.25) | (1.93) | (2.68) |
Cash (£m) | 41.1 | 28.7 | 17.8 | 20.2 |
EBITDA (£m) | (8.6) | (12.6) | (13.8) | (20.2) |
Update
21 February 2023
Price | 18.00p |
Market Cap | £147.3m |
Enterprise Value | £124.4m |
Shares in issue | 818.4m |
12 month range | 10.5p-29.4p |
Free float | 54.4% |
Primary exchange | AIM London |
Other exchanges | N/A |
Sector | Healthcare |
Company Code | SCLP.L |
Corporate client | Yes |
Company description
Scancell is a clinical-stage immuno-oncology specialist that has four broadly applicable technology platforms. Two are therapeutic vaccines, Moditope and ImmunoBody, and two are antibody based, GlyMab and AvidiMab.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 20 3637 5042
Disclaimer
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This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.
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Scancell is a clinical stage immunology specialist. It has two promising oncology vaccine platforms, Moditope and ImmunoBody, and two antibody technologies, GlyMab (anti-glycans) and AvidiMab, with the potential to treat many solid cancers, either as monotherapy or in combination. Modi-1, the first Moditope programme, is progressing in a Phase I/II trial targeting hard-to-treat tumours with results due through 2023. The lead ImmunoBody programme, currently SCIB1, is in a Phase II study in metastatic melanoma. The broad acting GlyMab antibodies are generating exciting preclinical data, which led to a partnering deal with Genmab. Further such deals are expected. AvidiMab technology will be increasingly employed to enhance avidity and potency. Updating our risk adjusted NPV lifts our Scancell valuation to £269.6m, or 32.9p/share, from £237.4m, or 29.1p/share, previously.
Year-end: April 30 | 2021 | 2022 | 2023E | 2024E |
Revenues (£m) | 0.0 | 0.0 | 5.3 | 0.0 |
Adj. PBT (£m) | (17.7) | (11.9) | (17.6) | (24.0) |
Net Income (£m) | (15.5) | (2.1) | (15.7) | (21.9) |
EPS (p) | (2.28) | (0.25) | (1.93) | (2.68) |
Cash (£m) | 41.1 | 28.7 | 17.8 | 20.2 |
EBITDA (£m) | (8.6) | (12.6) | (13.8) | (20.2) |
Outlook
15 February 2023
Price | 18.78p |
Market Cap | £156.27m |
Enterprise Value | £133.37m |
Shares in issue | 818.4m |
12 month range | 10.5p-29.4p |
Free float | 54.4% |
Primary exchange | AIM London |
Other exchanges | N/A |
Sector | Healthcare |
Company Code | SCLP.L |
Corporate client | Yes |
Company description
Scancell is a clinical-stage immuno-oncology specialist that has four broadly applicable technology platforms. Two are therapeutic vaccines, Moditope and ImmunoBody, and two are antibody based, GlyMab and AvidiMab.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 20 3637 5042
Scancell is a clinical-stage immuno-oncology specialist. It was founded in 1996 as a spin-out of research led by Professor Lindy Durrant at the University of Nottingham. There are four distinct technology platforms that address oncology vaccines and antibodies: Moditope vaccine effects are mediated via CD4 pathways; ImmunoBody vaccines employ CD8 T cell pathways; the GlyMab platform generates high affinity anti-glycan antibodies; and AvidiMab can enhance the avidity of most antibodies. All the therapeutic platforms should have broad applicability in many forms of solid tumours. The ImmunoBody technology was also employed to create COVIDITY, a second generation COVID-19 vaccine. Scancell initially listed on PLUS in 2008, moving to AIM in 2010. Sizeable investment by Redmile in 2020 transformed Scancell’s ability to fund its activities. Leading shareholders are Redmile (29.7%), Vulpes (14.4%) and Calculus Capital (5.6%). The company is based in Oxford and Nottingham and has >50 employees.
We value Scancell using a sum-of-the parts, where the NPV of the four technology platforms are summed and netted out against forecast operational costs, and risk-adjusted to reflect the stage of development, with the clinical stage platforms assigned higher success probabilities. Conservative assumptions are employed for factors such as timings of clinical studies, market launches, adoption curves, and patient penetration. The antibody platforms may arguably have higher commercial potentials, but their earlier stage means lower success probabilities are used. Despite our cautious approach, we value Scancell at £269.6m, equivalent to 32.9p per share (27.4p fully diluted).
H123 results were boosted by the £5.3m upfront fee from the Genmab deal. This saw the operating loss reduced to £2.0m (H122: £5.4m), despite the higher costs as three clinical trials progress, which saw R&D costs rise to £4.9m (H122: £4.0m). G&A costs were £2.4m (H122: £1.9m) due mainly to an increased share option charge. The interest payable and finance expense lines are impacted by the accounting treatment of the CLNs (see later). The cash balance was £24.0m (FY22: £28.7m), with the cash runway extending through to Q1 2024.
Scancell’s technology platforms, especially the GlyMab antibodies, are at the earlier development stages and, inevitably, carry a higher risk profile. The immuno-oncology sector is increasingly crowded and competitive, with multiple players (ranging from large pharmaceutical groups to biotech companies and even well-funded academic centres) vying to develop the definitive breakthroughs. Equally, the usual industry risks associated with clinical trial results, navigating regulatory hurdles, ensuring sufficient financing is in place, partnering discussions and, eventually, the exit strategy, also apply.
Scancell has assembled four novel technology platforms that split neatly into therapeutic vaccines, ImmunoBody and Moditope, and antibodies, GlyMab (anti-glycan mAbs) and AvidiMab. Whilst vaccines are the most advanced, with key clinical efficacy data expected during 2023 for both the lead Moditope and ImmunoBody programmes, it is the antibodies, notably GlyMabs, that we view as less well understood and certainly under-appreciated. The recent deal with Genmab, a highly respected antibody developer, serves to validate the GlyMab approach and suggests the direct and potent anti-tumour activity seen in preclinical models could translate to the clinic. The next 12 to 18 months should see multiple, diverse, clinical trial results, a number of which could be genuine value inflection points. Whilst not without risks, we believe the current share price fails to reflect the opportunities. Updating our rNPV-based model sees our Scancell valuation rise to £269.6m (32.9p/share), from £237.4m (29.1p/share).
We described the changes in cancer treatments in previous notes (eg Outlook April 2022), detailing the importance of the tumour micro-environment (TME) and the seven steps in how the immune system normally recognises and kills abnormal cells. Checkpoint inhibitors (CPIs) have transformed clinical practice, but their success also highlights their failings. Because CPIs work by removing the “brakes” on the immune system, rather than directly boosting immune function, patients may also benefit from combination therapies that include immune-stimulatory elements. It is here that a therapeutic vaccine could act synergistically, and such thinking underpins why therapeutic cancer vaccines are back in vogue.
Scancell has a lead programme from both the Moditope and ImmunoBody vaccine platforms in clinical trials. Modi-1 consists of three citrullinated tumour-associated peptides. The open label Phase I/II study, ModiFY, is flexible and sees Modi-1 used alone or in combination with CPIs in solid tumours, including triple negative breast (TNBC), ovarian, renal and head and neck (H&N) cancers. The first formal safety and immunogenicity results are expected shortly, with early efficacy data during 2023. We view positive data as a major value inflection point.
SCIB1, the lead ImmunoBody vaccine, is completing a Phase II trial for metastatic melanoma. The study now reflects changes in clinical practice and includes doublet therapy consisting of ipilimumab (Yervoy) plus nivolumab (Opdivo), and with pembrolizumab (Keytruda). The new protocol has also switched the delivery system from electroporation to the PharmaJet needle-free device. If successful, management intends to transition to iSCIB1+, an AvidiMab enhanced version of SCIB1, that should bring increased potency and extend patent life.
However, we feel it is GlyMab, anti-glycan tumour directed antibodies, and AvidiMab, avidity and potency enhancer, that are under-appreciated. The GlyMab platform has generated five preclinical compounds with attractive, and promising, anti-tumour activities that are fostering industry interest. The recent deal with Genmab, worth up to $624m if successful, is valued confirmation of clinical and commercial potential. AvidiMab is employed in the COVIDITY programme, where recent results have validated AvidiMab as an immune response booster. Our rNPV model has to place more emphasis on later stage programmes, yet we believe these antibody platforms are likely to also provide material value inflection points.
Over the past decade, the role of the immune system in tumour initiation and progression has become better understood, as has the importance of the tumour microenvironment (TME). The recognition of the multiple, and subtle, interactions between the two has seen clinical research and, increasingly, therapy being switched from a tumour-centric to a TME-centric model. The principles underlying the cancer-immunity cycle were explored in our extensive April 2022 Outlook. This also covered how immunotherapy aims to identify and correct the imbalance so that the cycle becomes self-sustaining again; how, unfortunately, tumour cells appear to have intrinsic mechanisms to help evade anti-cancer therapies through bypassing every targeted step of the cycle; and how the research effort has shifted to identifying and developing combination regimens that will boost overall efficacy and limit treatment resistance but do so with manageable side-effects.
In this report we focus on Scancell’s four technology platforms, which can be classified into Antibodies (GlyMab and AvidiMab) and Vaccines (Moditope and ImmunoBody). The vaccine platforms are the most advanced, with three programmes at varying stages of clinical trials. The GlyMab (anti-glycan tumour directed antibodies) and AvidiMab (avidity and potency enhancer) platforms are at earlier stages of development. Exhibit 1 details the programmes that are underway and funded through to value inflection points with current resources.
Modi-1, the lead programme of the Moditope platform, is progressing through the ModiFY Phase I/II study with safety and immunology data from the three initial cohorts expected shortly. Efficacy data from the expansion cohorts, evaluating Modi-1 with current standard of care in renal, head & neck, and triple negative breast cancers, will become available through 2023/24. For the ImmunoBody platform, the SCIB1 melanoma programme is transitioning to the improved iSCIB1+ construct, with the Phase II SCOPE study expected to complete in H225.
Monoclonal antibodies (mAbs) have quietly transformed clinical care for many chronic treatment regimens, being involved throughout the patient journey from initial diagnosis to targeted treatments. Their highly prized specificity makes them particularly suited to precision applications and their ubiquity across many disciplines, from ground-breaking academic research through to consumer pregnancy tests, is testament to their value. However, almost all mAbs target specific peptides or proteins, with few notable exceptions such as dinutuximab (United Therapeutics’ Unituxin), which binds to the glycan GD2 and is used to treat children with high-risk neuroblastoma.
Yet carbohydrate binding antibodies, such as glycans, play key roles in biology; such endogenous antibodies recognise bacterial, fungal, and other microbial carbohydrates to prevent systemic infections and help maintain microbiome homeostasis. Their presence on proteins has major impacts on functions such as bioactivity, folding, trafficking, stability, half-life, signalling, and mediation of cell–cell interactions. Aberrant glycosylation is known to be a common feature of many cancers and plays crucial roles during virtually all steps of tumour genesis and progression. Such aberrant glycosylation may occur in both glycoproteins and glycolipids, leading to the formation of tumour-associated carbohydrate antigens.
Work on how tumours create an immune-suppressive environment (TME) and exploit selective modifications (immunoediting) to evade effective anti-tumour immune responses is clarifying the role of tumour glycosylation in immune evasion. Aberrant tumour glycosylation alters how the immune system recognises the tumour and also induces immunosuppressive signalling through glycan-binding receptors. Tumour cells exploit glycans in a similar manner to pathogens, using their typical “normal” formats and functions to disguise themselves, hijacking the immune system for their own benefit.
These glycosylation alterations take a variety of forms ranging from loss of expression or excessive expression of certain glycans, to increased expression of incomplete or truncated glycans, and, less commonly, the appearance of novel glycans. It is notable that these are not simply the consequence of disordered biosynthesis in cancer cells but highly specific changes that are correlated with malignant transformation and tumour progression. Given that cancer is a “micro-evolutionary” process in which only the fittest cells survive, and that tumours are under immune surveillance pressure, it is likely that these specific glycan changes have a functional role in tumour biology and are selected for during progression.
The key variations between a normal and cancer cell (Exhibit 2) include alterations to mucin expression and synthesis of incomplete or truncated O-glycans (encouraging pro-survival, migratory, and invasive behaviours), raised sialylation (a key step in cell fate decision), increased fucosylation (affecting adhesion molecules and growth factor receptors), and altered branching of N-glycans (profoundly involved in cancer growth, invasion and metastasis through pathways that are not yet fully understood).
Although yet to be fully elucidated, such glycosylation is increasingly recognised as a modulator of the malignant phenotype of cancer cells, where the interaction between cells and the TME is altered to facilitate processes such as drug resistance and metastasis. The glycosylation of tumour proteins generates neo-antigens and these can serve as targets for tumour-specific T cells. The same glycol-epitopes can be present on a range of glycoproteins (GPs) and/or glycolipids (GLs).
Glycosylation is a post-translational modification that occurs inside the cell and results in the addition of glycans (sugar motifs) to proteins and lipids that are, in most cases, destined for the cell surface. These tumour-specific glycosylation patterns determine the immune-inhibitory properties of the tumour and are unlike those of normal cells, which in turn makes targeting of these glycans such an attractive therapeutic opportunity. The challenge has been to produce high affinity monoclonal antibodies that recognise tumour-associated glycans.
Carbohydrate structures are typically not highly immunogenic, unlike most proteins, and tend to result in the formation of IgM antibodies with low binding affinities that are not suitable for therapeutic use. Additionally, it is more difficult to identify and create glycan antibodies that bind specifically to a glycan of interest, in contrast to an antibody that binds explicitly to a protein epitope. Hence, although tumour-associated glycans are typically exquisitely tumour-specific, this explains the challenge in producing high affinity antibodies.
The GlyMab platform has potentially overcome these limitations and is very flexible, consistent, reproducible, and potent. The technology stems from Scancell’s in-house expertise and can be employed to produce many differentiated mAbs that bind selectively to the target tumour-associated glycans.
Preclinical studies have shown GlyMabs have high affinity for glycans which are highly over-expressed on cancer cells. These can directly lyse tumour cells by damaging the cell membrane (oncotic necrosis), without the need for the complement system or immune effector cells, through a form of immunogenic cell death (ICD) that plays a major role in stimulating the dysfunctional anti-tumour immune system. The resulting secretion of damage‐associated molecular patterns (DAMPs) following ICD attracts receptors and ligands on dendritic cells (DCs) and initiates an immune response that should result in long‐lasting protective anti-tumour activity. Potentially these anti-glycan mAbs can help remobilise the full arsenal of the immune system in an otherwise immunosuppressive environment.
The platform is highly flexible as these same glycans can be expressed by a wide range of proteins and lipids. This means each anti-glycan antibody can be developed into multiple products such as antibody drug conjugates (ADC), bispecific antibodies, chimeric antigen receptor T cells (CAR-T), redirected T cell killing both directly and indirectly (via ADCC antibody dependent cell cytotoxicity or CDC complement dependent cytotoxicity), or radioimmunotherapy (Exhibit 3).
Scancell has built a pipeline of differentiated anticancer mAbs and currently has five in early-stage development. In October 2022 Genmab effectively validated the GlyMab platform when it acquired the rights to develop one of these preclinical mAbs, SC129, into multiple novel therapeutic product modalities for all disease areas, excluding cell therapy applications (which are retained by Scancell).
SC129 is in lead candidate selection and targets sialyl-di-Lewisa, with high selectivity for pancreatic tumours (74%), gastric cancers (50%) and colorectal cancers (36%). Genmab has licenced SC129 for antibody drug conjugates (ADC), T cell bispecifics (TCB), and radio-immunotherapy applications. Lewis-based glycans are attractive as they have a very limited distribution on normal tissues and are over-expressed in cancers that occur in epithelial cells. Preclinical testing has shown strong binding affinities for the targeted tumour cells (pancreatic and gastric), with very limited binding to normal tissues. Direct and bystander killing effects were demonstrated by internal and external preclinical studies, including the assessments undertaken by Genmab.
The deal’s potential value could reach up to a maximum of $624m if all the modalities were to be progressed, with Genmab paying Scancell an upfront payment of $6m and potential future milestones of up to $208m for each product. Scancell is also entitled to receive a low single digit royalty on net sales of all commercialised products. Genmab has a proven track record of successful clinical development and commercial execution. Importantly it has ample funds, which should enable rapid progression towards clinical trials.
As context, Genmab is a Danish biotechnology company focused on developing innovative and differentiated antibody therapeutics. Its antibody expertise has resulted in five approved products, notably Darzalex for multiple myeloma, which is marketed by partner Johnson and Johnson (JNJ) and achieved sales of $7.98bn in 2022. In addition, Genmab has a broad pipeline of best- or first-in-class antibodies, which are based on in-house proprietary technology platforms and through strategic partnerships. Genmab aims to become a fully integrated biotech, and recently launched Tivdak for cervical cancer as part of a co-promote with partner Seagen. It is worth highlighting that Genmab is well capitalised, with > $3bn in cash and equivalents, and is sustainably profitable.
Of the other four known programmes, a further three directly target solid tumours. Two are set to be taken into the clinic by Scancell:
We expect the remaining programmes, and other undisclosed ones in earlier stages of preclinical development, will be progressed to preclinical validation points and then also be partnered for further clinical development. The nature of these developments suggests there will be few public indications of likely timings, with partnering progress visibility largely dependent on company disclosure.
The AvidiMab platform can enhance the avidity and potency of any antibody. It is based on specific modifications to the Fc domain of the antibody that result in non-covalent interactions between adjacent Fc regions. The findings arose as part of academic work on glycan antibodies to explore why activity was lost in certain settings. A series of constant region shuffling and subdomain swapping identified the Fc regions involved, with the discovery that introduction of selected residues resulted in retention of the desired effector functions and not only maintained activity but increased it. The initial work was carried out at Nottingham University, with Scancell acquiring the original IP and all rights to the AvidiMab technology in April 2018. Subsequent in-house work has further improved activity, broadened applicability, and created additional IP.
The AvidiMab platform is based on the observation that the mouse IgG3 glycan-targeting mAb often induces direct cell killing in the absence of immune effector cells or complement through a pro-inflammatory mechanism that resembles oncotic necrosis. This was identified as due to a non-covalent association between the Fc regions of neighbouring antibodies, with the inter-molecular cooperativity resulting in enhanced functional affinity and direct tumour cell killing. The effect is caused by key unique sequence residues that are present in the mouse but not seen in the equivalent human antibodies. Essentially AvidiMab can transfer these active residues to any target humanised antibody and so enhance non-covalent interactions between any mAb (or similarly structured) molecules resulting in a material improvement in avidity and potency.
Antibodies are typically described as Y shaped molecules that contain two identical Fab (fragment antigen binding) arms coupled through a hinge to an Fc (fragment crystallisable) domain. The Fab arms provide specificity and mediate target antigen binding, whilst the Fc enables engagement with immune effector functions. Although Fab domains can be therapeutically active, for the majority of effector functions it is Fc that is key. The manner in which Fc interacts can also materially affect an antibody’s therapeutic profile, for instance prolonging half-life and improved binding. Some of the preclinical work on a CD40 antibody enhanced with AvidiMab (named iSEA-CD40) has been presented in two poster sessions (September 2022 and November 2022).
CD40 (cluster of differentiation 40) agonists are a promising area in immuno-oncology as they increase the number and quality of tumour-infiltrating T cells. Theoretically they should be highly effective as a monotherapy or to reverse resistance to checkpoint-blocking antibodies. However, preclinical potency has not yet been replicated in the clinical setting and none of these mAbs have advanced beyond early trial phases. One of the challenges encountered was insufficient immune activation, which resulted in antitumor efficacy only becoming apparent at toxic doses.
SEA-CD40 (Seagen) is in Phase II trials for advanced solid tumours. AvidiMab was used in the Fc region (Exhibit 5) in an IgG1 format, with key residues from murine IgG3 transferred into the human SEA-CD40 IgG1 Fc region. The results for iSEA-CD40 showed higher Fc-Fc self-association, slower off-rate and improved binding to CD40, and better functional affinity than original SEA-CD40. These findings of better performance were also seen in other immune models that rely on clustering and/or increased residence time for activity. Preclinical work continues to highlight the versatility and broad applicability of the AvidiMab platform, with sizable improvements seen across many applications.
AvidiMab technology has been applied to Scancell in-house programmes, notably the anti-glycan mAbs to improve their ability to directly kill tumour cells, without mediation by other elements of the immune system. The AvidiMab platform has also been used to increase the potency of the T cell response in the COVIDITY vaccine programme and, in turn, to the SCIB oncology programmes (named iSCIB, where i stands for improved). With the ImmunoBody vaccines AvidiMab improves the breadth of response, increases potency, provides better long-term protection and immunological memory, and extends patent lifetimes. These programmes should produce evidence of the clinical value AvidiMab provides and could lead to its application in external programmes.
We have previously mentioned how therapeutic cancer vaccines appear to be following a similar pattern to that seen historically with monoclonal antibodies as immunotherapies, and it is clear that interest in such vaccines has undergone a resurgence in the past decade. In part this is driven by a better understanding of the cancer immunity cycle but, arguably just as importantly, improved vaccine design. This has been helped by a better understanding regarding the breadth of tumour-associated antigens, the native immune response, and the development of new technologies for antigen delivery.
Moditope is a novel approach that targets the modified self-antigens induced by cellular stress and exploits the normal immune responses that remove such stressed cells. Unregulated proliferation and the nature of the TME means cellular stress is common in solid tumours; most cancer cells are hypoxic and nutrient deficient. To help survive in this hostile environment, autophagy occurs to recycle unwanted proteins and dispose of damaged ones that could become toxic. Autophagy is highly localised in the centre of a growing tumour, prior to the occurrence of angiogenesis (which stimulates blood vessel formation). During this process, stress-induced post-translational modifications (siPTMs) of proteins and proteolytic cleavage occurs, which results in a selectively higher concentration of these modified peptides within the tumour than in normal tissues (as normal cells are rarely stressed in these ways).
PTMs are mediated by multiple enzymes, some of which are only dysregulated in tumour cells, making them potentially highly tumour-specific. Citrullination, an enzyme driven conversion of arginine to citrulline, and homocitrullination (or carbamylation), where lysine residues are converted to homocitrulline, are examples of such tumour localised stress induced PTMs (Exhibit 6). Citrullination is mediated by activated PAD (peptidylarginine deiminase) enzymes, a family of calcium-dependent enzymes found in a variety of tissues, that modify the digested protein fragments within autophagosomes and convert arginine residues to citrulline. Homocitrullination (or carbamylation) sees MPO (myeloid peroxidase) similarly converting lysine residues to homocitrulline. Citrullination and homocitrullination are selectively raised in cancer cells as a direct result of the continuous environmental stresses and the increased autophagy associated for cancer cells within the TME.
The dysregulated citrullination pathways were initially linked to autoimmune diseases, mainly rheumatoid arthritis. The breadth and depth of the biological functions mediated by citrullination is still poorly understood (especially whether its effects are context driven). However, it is known to affect pathways directly contributing to cancer progression, specifically the Wnt/β-catenin and androgen receptor signalling pathways. It is also implicated in tumour progression, proliferation and metastasis through multiple mechanisms including EMT (epithelial-mesenchymal transition); it influences fundamental cellular processes such as apoptosis and differentiation; it facilitates the entrapment of circulating cancer cells at distant sites; and is associated to the awakening of dormant cells.
These citrullinated proteins are promising antigens for tumour targeting therapies, with α-enolase (ENO1), vimentin (VIM), nucleophosmin (NPM1), matrix metallo-proteinase-21 (MMP21), cytochrome p450 (Cp450), and glutamate receptor ionotropic (GRI) citrullinated peptides being explored in a range of solid tumours. Typically, the MHC (major histocompatibility complex) I peptides, presented to CD8+ or killer T cells, are generated by proteasomal degradation of intracellular proteins. In contrast, MHC II bound peptides, presented to CD4+ or helper T cells, derive from extracellular antigens, phagocytosed by APCs and degraded by lysosomal proteolysis. Importantly, these neo-citrullinated peptides are processed through the MHC-II pathway and present for the direct recognition of stressed cells by cytotoxic CD4 T cells.
The Moditope platform neatly harnesses the normal immune response that uses cytotoxic CD4 T cells to eradicate stressed cells. It is now known immunisation with citrullinated proteins induces long-lasting CD4 T cell responses to tumour cells and, importantly, T cells recognising citrullinated epitopes have no target on normal healthy cells (the effect on cells involved in autoimmune diseases is not believed to be significant).
Exhibit 7 illustrates how the Moditope platform works, using Modi-1 as the example. Citrullinated (or homocitrullinated) peptides are directly conjugated to adjuvant to activate APCs. The citrullinated peptides are taken up, processed, and presented on MHC class II molecules on the APCs. The CD4 T cell receptors bind to the MHC class II molecules and are primed. These CD4 T cells infiltrate the tumour environment, encounter, and recognise the citrullinated peptides expressed on the APCs. The CD4 T cells become activated and release IFN-ϒ, which induces upregulation of MHC II expression by tumour cells. CD4 cells become further activated and kill tumour cells.
Tumour cells typically create a protective anti-inflammatory micro-environment (TME), where MHC II expression is not upregulated, to evade the immune system’s normal response. The secretion of IFN-ϒ and the resultant inflammation could alter the nature of the TME, effectively converting “cold” tumours into “hot” ones, making a tumour visible to other elements of the immune system. Hence, Moditope stimulates the production of killer CD4 T cells which overcome the immune suppression induced by tumours, allowing activated T cells to seek out and kill tumour cells that would otherwise remain hidden from the immune system. This suggests Moditope offers the scope to be used alone, or in combination with other agents (including checkpoint inhibitors), to treat a wide range of currently hard to treat cancers.
Scancell has identified, and patented, a series of these siPTM modified epitopes. Promising preclinical studies show Moditope can generate a potent immune response against many solid tumours. Animal studies using a variety of citrullinated and homocitrullinated peptide combinations confirmed the early work using cancer cell lines and have shown impressive survival in several aggressive tumour models. Interestingly, the effect appears to be long-lasting as tumour rechallenge assays show generation of a strong immune memory. The potency of the anti-tumour response seen suggests tumours have limited defences against an attack from cytotoxic CD4 T cells, unlike one from cytotoxic CD8 T cells.
Scancell is currently progressing two Moditope programmes: Modi-1 and Modi-2. The Modi-1 vaccine consists of two citrullinated vimentin peptides (Vim28 and Vim415) and a citrullinated enolase peptide (Eno241) and is entering Phase I/II clinical trials. Modi-2 is focused on the homocitrullination pathways and is in preclinical evaluations to optimise it for a number of solid tumours.
Modi-1 is the lead vaccine candidate and is composed of two targeting proteins. The first is vimentin, a cytoskeletal protein that is preferentially digested during autophagy. Vimentin plays a pivotal role in EMT and is associated with regulation of attachment, migration, and signalling in many solid tumours. Mesenchymal tumours such as endometrial, renal, sarcomas, lymphomas, and lung tumours express vimentin as their major cytoskeletal protein and, additionally, many epithelial tumours, eg breast, ovarian, renal, head & neck, gastrointestinal and prostate, switch from expression of cytokeratin to vimentin during metastasis.
The second target is α-enolase, a metalloenzyme involved in glycolysis, that contributes to cancer cell proliferation, migration, invasion, and metastasis. Typically, cancer cells rely on aerobic glycolysis (the Warburg effect) for energy production, even when oxygen is not deficient. α-enolase is overexpressed in a range of cancer types, and it plays a key role in regulating tumour metabolism, proliferation, and survival in cancers such as ovarian, renal, head & neck, lung, pancreatic and TNBC, making it attractive as a vaccine target.
Modi-1 employs three citrullinated peptides, two derived from vimentin and one from α-enolase, with the combination selected specifically to minimise the possibility of tumour escape. These are conjugated to a synthetic toll-like receptor (TLR) 1/2 agonist (AMPLIVANT, owned by ISA Pharmaceuticals), which acts as a potent adjuvant and materially enhances activity (10-100 fold) through better dendritic cell antigen processing and presentation plus enhanced T cell priming.
Producing commercial quantities of these three conjugates posed a number of technical challenges, but these have been overcome. The data package, including toxicology, to support first-in-human trials was successfully completed and the Phase I/II clinical study format to explore safety, immunological activity, and preliminary efficacy agreed. The study started with the two citrullinated vimentin peptides (Vim28 and Vim415) and, as there were no local or systemic toxicities or side-effects, the citrullinated enolase peptide (Eno241) was added.
The Phase I/II study (ModiFY) is two stage: an initial dose escalation and safety phase followed by a number of specific cohorts that explore for initial signs of efficacy in TNBC, ovarian cancer, head & neck cancer, and renal cancer (Exhibit 9). These will allow Modi-1 to be employed as both monotherapy and in combination with a CPI, as well as in the neoadjuvant setting. The patients will likely have failed their first line of therapy. This is, in our view, an important point as prior chemotherapy could stress normal cells and so, in theory, potentially impact Modi-1’s selectivity for tumour cells (resulting in on-target off-tumour effects).
The trial has been designed to provide insightful data in a variety of clinical settings. Up to 138 patients in up to 20 sites across the UK will be examined. Nine sites are actively recruiting with another three expected to initiate screening during 2023. To date, 21 patients have been dosed successfully and a further 16 recruited. Cohort 1 confirmed the safety profile of a low dose of the two vimentin peptides. Cohort 2 used these peptides plus an enolase peptide at a higher dose. All patients showed the injections are well tolerated with no safety concerns. One patient with head & neck cancer has shown a confirmed partial tumour response with further tumour regression at week 16. Two further patients have shown stable disease. To date, 13 ovarian, 2 breast and 3 head and neck patients have been dosed. Cohort 3 is currently underway and involves combination with a CPI. Further safety and immunological data are expected to be available through H123, with first signs of efficacy data likely later in 2023.
The Modi-2 vaccine is based on the same principles but employs tumour-associated peptide epitopes in which lysine residues are converted to homocitrulline. Extensive preclinical work has identified homocitrullinated epitopes derived from several proteins that generate potent T cell responses. These proteins include vimentin, aldolase, cytokeratin 8, immunoglobulin binding protein (BiP), nucleophosmin (NPM), α-enolase, β-catenin (Wnt pathways), and heat shock protein (HSP-60). These epitopes are formed through carbamylation pathways in an analogous manner to PAD for citrullination, with MPO (myeloid peroxidase) converting lysine residues to homocitrulline.
These proteins have proven links to many solid tumours and encouraging and prolonged efficacy has been seen in the relevant preclinical cancer models and in tumour-expression studies or similar, notably breast, colorectal, non-small cell lung, and prostate cancer. Efforts are now directed towards characterising and picking appropriate epitopes (provisionally aldolase A, cytokeratin 8, immunoglobulin binding protein, and vimentin) for selected tumours, targeting those with a particularly immune-suppressive TME.
Modi-2 is planned to employ four homocitrullinated peptides that are conjugated to adjuvant and presented as micellar nanoparticles using the novel SNAPvax technology that was licensed in November 2022 from Vaccitech. SNAPvax enables peptides to self-assemble with TLR-7/8a, a powerful and proven adjuvant, to promote strong T cell responses and overcome the formulation issues that are often associated with immunogenic peptide antigens. The plan is to complete the non-clinical characterisation work, including manufacture, so that Phase I trials can start during H124.
The ImmunoBody platform creates DNA vaccines that encode a human antibody framework, but the parts of the antibody that would normally bind to the target protein, the complementarity determining regions (CDRs), are replaced with carefully selected cytotoxic T lymphocyte (CTL) and helper T cell epitopes from a cancer antigen (Exhibit 10). Each vaccine can be engineered with several selected cancer associated T cell epitopes to create a genetic antigen/antibody complex. The direct and cross presentation of antigens generates high avidity T cells with a broad and potent anti-tumour effect.
Therapeutic vaccines require targeting and activation of dendritic cells (DCs) to stimulate both CD4 and CD8 T cell responses. DCs are considered the most efficient APC (antigen presenting cells) being able to initiate, coordinate, and regulate adaptive immune responses. ImmunoBody constructs are flexible, but with core features that include:
ImmunoBody vaccines activate DCs through two distinctly different and complementary mechanisms that maximise T cell activation and avidity: direct- and indirect/cross-presentation. There are various pathways by which DCs can process antigens, and the highest avidity T cell responses are generated if more than one pathway is used to present the same epitope.
Primarily, the DNA element is taken up directly by the DCs, via transfection, and the resulting protein is processed in the APC. This direct presentation produces the appropriate immune response but generates only moderate T cell avidity and the anti-tumour response is too weak in the typical immunosuppressed TME. However, an identical protein component is secreted by muscle cells (which is produced at the site of the injection from the DNA) that binds to the Fc receptors on DCs leading to the cross presentation of epitopes (Exhibit 11). This dual approach generates both a cytotoxic CD8 cell response and a Th CD4 response that, importantly, is up to 100 times greater than either presentation alone with potent high avidity T cells generated. This amplified immune response is now sufficient to generate the required broad anti-tumour response in the TME.
The ImmunoBody vaccines have been designed so that epitopes for both MHC I and MHC II complexes are produced once they have been broken down by the proteasome. Epitopes for MHC I are normally 8-11 amino acids in length and generate a CD8 response, and epitopes for MHC II are usually 13-17 amino acids long and result in a CD4 response. The generation of both a Th and Tc cell response is important, as the Tc cells only become activated and able to destroy the tumour cells once Th cells recognise the appropriate epitope and secrete cytokines and chemokines to activate and recruit T cells.
The lead ImmunoBody programme, SCIB1, is being developed for the treatment of metastatic melanoma. SCIB1 incorporates specific epitopes from the proteins gp100 and TRP-2, which were identified from the cloning of T cells from patients who achieved spontaneous recovery from melanoma skin cancers. Both proteins play key roles in the production of melanin in the skin.
The original dose-escalation Phase I/II monotherapy study (SCIB1-001) in 35 patients with metastatic melanoma (Stage III and IV) showed a potent dose dependent T cell response in 88% of patients with no serious adverse events or dose limiting toxicities. Fifteen patients with tumours received SCIB1 doses of 0.4mg to 8.0mg, whilst 20 fully resected patients received doses of 2mg to 8mg. At the data cut-off point for the study, all 20 fully resected patients were alive, with a median observation time of 37 months from study entry. In the 16 patients with fully resected disease who received 2-4 mg doses of SCIB1, an impressive 14 were still alive five years after the study had started. Melanoma recurrence rates in resected SCIB1-treated patients were also lower than in historical controls.
The second, and more recent, open label Phase II study (SCOPE) examines SCIB1 in combination with the CPI pembrolizumab (Merck’s Keytruda) or the doublet therapy consisting of ipilimumab (Yervoy) plus nivolumab (Opdivo). The addition of the doublet cohort reflects changes in treatment regimens for metastatic melanoma. The study rationale is that the ImmunoBody vaccine primes an immune response against the tumour whilst the CPI reduces the immune-suppressant effect seen in the TME. Preclinical studies show a strong synergistic effect when SCIB1 is combined with a relevant CPI (c 85% response rates in animal models). The primary objectives are tumour response rate, progression-free survival and overall survival.
The study was delayed by several factors, including COVID-19 related issues with clinical trial formats (affecting patient recruitment) and changes in standard of care for metastatic melanoma as mentioned. Under the updated protocol some 87 patients are expected to be treated up to 10 times for 85 weeks using the PharmaJet Stratis needle-free injection device system in the upper arm or upper leg. Eight trial sites are currently recruiting with a further six in the set-up stage. During 2023 the SCOPE study is expected to transition to dosing with iSCIB1+, a modified version of SCIB1.
The AvidiMab platform is being employed to increase effectiveness, and extend the patent life, of the ImmunoBody programmes. The initial work has been on modifying SCIB1 with additional epitopes also added. The effectively new programme is named iSCIB1+ and broadens utility to patients beyond those indicated with SCIB1. In addition to material improvements in potency, this allows it to be used to treat all patients rather than being limited to the 40% of patients who have the appropriate human leukocyte antigen (HLA) type. Preclinical work suggests that clinical benefits (in terms of performance, efficacy, and ease of administration) of iSCIB1+ are a significant advance over SCIB1.
A similar reworking of SCIB2, where the published preclinical data showed promising results, has developed into a new programme known as iSCIB2. Again, the preclinical data suggest the AvidiMab modifications have resulted in excellent anti-tumour activity. Although we view these developments as new programmes, the existing experience (notably with manufacturing of clinical supplies and toxicology) with SCIB1 and SCIB2 means the iSCIB equivalents should progress more rapidly to the key clinical stages.
The COVIDITY programme, consisting of COVID-19 vaccine candidates SCOV1 and SCOV2, completed dosing in the South African studies and reported safety and immunogenicity data in February 2023. As previously communicated by management, this programme will not be taken forward in-house due to the competitive landscape but may be partnered. We had not viewed COVIDITY as a major element in Scancell’s investment case, although it does provide useful evidence of AvidiMab’s utility and proof of Scancell’s vaccine creating skills.
Scancell operates at the cutting edge of immuno-oncology and the risks inherent in such research are higher than the industry average. The appeal of harnessing the body’s immune system to treat tumours has attracted industry-wide attention, with multiple well-funded players operating in a crowded and competitive space. While Scancell’s therapeutic platform technologies have demonstrable and attractive qualities, an unexpected breakthrough in an unrelated scientific area may side-line one or more of its approaches.
On the competitive front, both Moditope and ImmunoBody would be complementary to many methods under investigation to enhance the activity of the immune system, with combination therapies increasingly accepted as standard of care for many solid tumours. However, Scancell is also competing directly against other therapeutic vaccine companies, including collaborator BioNTech, and various companies developing oncolytic viruses. This is currently an area of particular interest to big pharma companies.
The antibody platforms are at earlier development stages and, understandably, are riskier and more uncertain. GlyMab has generated genuinely exciting preclinical data, which has attracted a licensing deal from Genmab, but the potential value of the platform will only be realistically demonstrated in appropriate clinical trials. AvidiMab has broad applicability in enhancing antibody potency, however as yet there has been no third-party validation of its perceived worth.
More generally, and in common with most innovative healthcare companies, the three main sensitivities relate to the clinical and regulatory aspects, the execution of the commercialisation plans (primarily partnership agreements), and the financial resources required to accomplish these:
Scancell can be viewed as a classic discovery play and so we employ a sum-of-the-parts model, where the risk-adjusted NPV of each platform is estimated (adjusted for the likely success probabilities), summed, and netted against operational costs. Success probabilities are based on standard industry criteria for the respective stage of the clinical development process but are flexed to reflect the inherent risks of the individual programmes, the technology risk, the indication targeted, and, where relevant, the trial design. As always, we use conservative assumptions regarding market sizes and growth rates, net pricing, adoption curves, and peak market penetration. The clinical programmes (including those ready to enter the clinic) carry the greatest weight, whilst preclinical programmes are discounted more aggressively to reflect the lower success probabilities. As is usual, our valuation has been updated to reflect financial results, FX, and has been rolled forwards in time. The key underlying assumptions for each platform are largely unchanged, unless described below, and are outlined in Exhibit 12.
The above table shows the various elements that make up our valuation. The vaccine platforms have greater visibility, and this determines their respective values. For the product-based elements, we use a blended royalty rate of 17.5% to reflect the typical upfronts and progress milestones that could form part of any future partnering deals. For AvidiMab we use a more modest 8% blended rate, which reflects the lower relative value-add, but offset to a degree by a broader applicability. Peak sales are estimated on the likely products and indications that each platform can generate. The current limited visibility means we have adopted conservative assumptions, arguably overly so, leaving the potential for future upside if progress materialises as management expects.
The Moditope platform has a value of £122.0m, equivalent to 14.9p per share (12.4p fully diluted). The platform’s next value inflection point should be from additional safety, immunogenicity and particularly efficacy data from the ongoing ModiFY Phase I/II study of Modi-1, which are expected during 2023. Modi-2 is expected to enter human trials in H124.
The GlyMab antibody portfolio consists of five preclinical programmes that could be employed in multiple differentiated product forms. The first partnering deal for one of these programmes was executed in October 2022 with Genmab. Scancell received an upfront payment of $6m and is entitled to future potential development, regulatory and commercial milestones of up to $624m for development across all modalities, with $208m for each product, plus single digit royalties on net sales. We have incorporated these deal terms within the GlyMab platform valuation. The Genmab deal provides external validation for the platform, and gives increased confidence in the platform’s potential, in our view, hence we have increased the success probability to 3.5% for the yet to be partnered programmes (whilst maintaining other underlying assumptions on launch and peak sales) and apply a slightly higher 5% success probability to the Genmab partnered programme given the deal is now in place, which reduces execution risk. We value the portfolio of GlyMab antibodies, including the Genmab partnered programme, at £50.3m, equivalent to 6.1p per share (5.1p fully diluted).
ImmunoBody now contributes £42.2m (from £53.6m), equivalent to 5.2p per share (4.3p fully diluted), as we have removed any contribution for COVIDITY in our peak sales. We continue to view the iSCIB programmes (SCIB programmes enhanced with AvidiMab) as relatively early stage despite a degree of validation provided by SCIB1’s Phase I trial (first combination efficacy data is expected in 2023). Importantly, we view the true value inflection point as being when a suitable partner(s) takes iSCIB into the wider, and more expensive, clinical trials.
AvidiMab could be used to enhance the avidity and potency of virtually any antibody-based product. It would also extend the patent life of commercially established programmes. Hence its appeal could be significant. However, it has only been applied to Scancell programmes and until it has been licensed externally it is difficult to model with any degree of confidence. Consequently, we maintain a cautious approach, assuming the antibodies using AvidiMab technology have collective peak sales of £8.5bn. With this clear caveat, we value it at £29.0m, equivalent to 3.5p per share (2.9p fully diluted).
Summing the values of these platforms (with each incorporating associated costs) and adding our estimate for current cash resources (based on reported end-October 2022 cash of £24.0m less estimated cash burn, plus the Genmab upfront milestone receipt of £5.3m) we arrive at a valuation for Scancell of £269.6m, equivalent to 32.9p a share (27.4p fully diluted). There are a number of likely catalysts expected over the next 18 months, with successful outcomes expected to lead to upward revisions to our valuation.
Scancell’s balance sheet was transformed in 2020, with the £30m Redmile investment boosting cash resources and enabling the three promising therapeutic platforms to progress effectively unhindered by funding concerns. End-October 2022 cash of £24.0m (April 2022: £28.7m), together with the $6m/£5.3m upfront payment from partner Genmab, underpins management’s near-term plans to advance its leading programmes through the early clinical phases, and to develop the next wave of follow-on assets.
Interim H123 financial results to end-October 2022, posted recently, were largely as expected. The non-recurring Genmab upfront payment of $6m/£5.3m was recognised in full in revenues (with cash received post period end). R&D spend increased to £4.9m (H122: £4.0m) with increased headcount and higher costs relating to development work on the Modi-1 clinical trial, and on the GlyMab and AvidiMab platforms. G&A expenses also rose, to £2.4m (H122: £1.9m), due to the higher stock option (non-cash) charge. Together, these led to an operating loss of £2.0m (H122: £5.4m loss).
Interest payable was £1.3m (H122: £1.7m), which relates to the Convertible Loan Notes (CLNs) and is lower owing to the extension of the CLN maturity date to 2025. The finance expense of £0.9m (H122: credit £2.4m) is a fair value adjustment of the derivative liability and not a cash item. This meant the reported loss before taxation was £4.1m (H122: profit £2.5m). R&D tax credits increased to £0.9m (H122: £0.7m) reflecting the higher level of development spend claimable in the period. Reported net loss was £3.2m (H122: profit £3.2m).
Looking ahead, for FY23e we expect R&D spend to increase to £14.5m (FY22: £9.5m), as clinical trials progress and investment continues in the main technology platforms. We forecast G&A expenses to rise slightly to £5.3m (FY22: £4.8m). For FY24e we expect R&D to remain broadly stable at £15.1m, and G&A to continue to expand to £5.8m. We forecast a FY23e operating loss of £14.5m, and a wider loss of £20.9m in FY24e, with this owing to the non-recurring license income of £5.3m in FY23; conservatively, our financial forecasts do not include any future uncertain/unknown milestones from Genmab. Similarly, we forecast a FY23e net loss of £15.7m, and a wider loss of £21.9m in FY24e. We expect the FY23e cash position to be £17.8m at end-October 2023. We include an illustrative financing of £20m (as short-term debt) in FY24e, for end-October 2024 cash of £20.2m.
The next 12 months will be pivotal for Scancell. Progress of the novel and differentiated Moditope and ImmunoBody technology platforms, either into or through clinical development, or, in the case of the anti-glycan antibodies and AvidiMab platforms to convert into meaningful collaborations, should be key to unlocking shareholder value, as seen with the Genmab deal. Clinical disappointments, trial slippage, or a delay in executing attractive partnering deals will likely knock investor sentiment.
Scancell,
Unit 202 Bellhouse Building,
Sanders Road,
Oxford Science Park,
Oxford, OX4 4GD
United Kingdom
Tel: +44 (0) 1865 582 066
Person | Position | Biography |
Dr Jean-Michel Cosséry | Non-Executive Chair | Joined as Chair in February 2023. 25+ years of pharma and biotech experience, including commercial opertions, capital raising, IPOs, business development and M&A. Previously, VP North America Oncology at Eli Lilly, Chair of the Eli Lilly UK Board, and Chief Marketing Officer at GE Healthcare. Current NED at Malin Plc, Exact Therapeutics, Eracal Therapeutics, and Sophia Genetics; prior NED at Kymab, Immunocore. |
Professor Lindy Durrant | CEO | Founded Scancell in January 1996 as a spin-out from her work at the University of Nottingham (which she joined in December 1983). Initially Co-CEO then CSO before becoming CEO in July 2021. Also Professor of Cancer Immunology at the Department of Clinical Oncology. Over 200 publications in peer-reviewed journals and over 143 patents filed. Holds BSc (Hons) Biochemistry and a PhD from Manchester University. |
Dr Sally Adams | CDO | Joined Scancell in May 2014 as Development Director. Wide ranging experience, with nearly 30 years experience in drug development including 11 years as Director of Immunotherapeutics at British Biotech. Holds a MA Genetics from the University of Cambridge and a PhD in Microbiology from Imperial College London. |
% holding | |
Redmile Group | 29.37 |
Vulpes Life Science Fund | 14.39 |
Calculus Capital | 4.58 |
Scancell directors and related holdings | 1.24 |
Top institutional investors | 47.58 |
Other shareholders | 52.42 |
Total shareholders | 100.00 |
Disclaimer
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
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In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.
Trinity Delta view: We view the ROCK programmes, RXC007 and RXC008, as particularly promising in the treatment of a variety of fibrosis conditions. In previous notes we described how RXC007’s profile has the potential to become a major element in a broad range of fibrosis indications, including IPF and ILDs, and how it is increasingly seen as a key component of Redx Pharma’s investment case. We believe Sanofi’s Rezurock effectively de-risks the ROCK pathway and Pliant Therapeutics’ share price attests to investor interest in fibrosis indications. Whilst we acknowledge this study is still only a Phase IIa trial, the data should provide invaluable insights into RXC007’s clinical and commercial positioning. Our valuation remains £461m (or $553m), equivalent to 138p per share.
Lighthouse
9 February 2023
Price | 49.0p |
Market Cap | £164.1m |
Primary exchange | AIM London |
Sector | Healthcare |
Company Code | REDX |
Corporate client | Yes |
Company description
Redx Pharma specialises in the discovery and development of small molecule therapeutics, with an emphasis on oncology and fibrotic diseases. It aims to initially progress them through proof-of-concept studies, before evaluating options for further development and value creation.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Disclaimer
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.
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Redx Pharma’s two lead assets are in Phase II trials and key data for both are expected during H223. These are RXC004, a porcupine inhibitor for Wnt-ligand dependent solid tumours, and RXC007, a ROCK2 inhibitor in IPF (idiopathic pulmonary fibrosis). Efficacy insights from both datasets should provide valuable information on the commercial potential of each candidate and visibility on next steps. Redx Pharma has discovered and developed five molecules which are currently in clinical trials, and the discovery engine and differentiated medicinal chemistry expertise continue to bear fruit, with a growing earlier stage preclinical pipeline. This includes RXC008, a GI targeted ROCK inhibitor, which is progressing towards IND/CTA submission by end-2023 for fibrostenotic Crohn’s disease. Cash resources should be sufficient through key H223 value inflection points. Our rNPV-based valuation is £461m (from £458m), or 138p/share.
Year-end: September 30 | 2021 | 2022 | 2023E | 2024E |
Revenues (£m) | 10.0 | 18.7 | 3.9 | 1.0 |
Adj. PBT (£m) | (18.8) | (17.3) | (44.1) | (49.7) |
Net Income (£m) | (21.6) | (18.0) | (47.2) | (52.9) |
Adj. EPS (p) | (7.4) | (5.9) | (12.9) | (11.2) |
Cash (£m) | 29.6 | 53.9 | 13.6 | 1.5* |
EBITDA (£m) | (19.1) | (15.4) | (44.8) | (50.2) |
Update
30 January 2023
Price | 51.0p |
Market Cap | £175.8m |
Enterprise Value | £121.9m |
Shares in issue | 334.9m |
12 month range | 50.2-85.9p |
Free float | 13.1% |
Primary exchange | AIM London |
Other exchanges | N/A |
Sector | Healthcare |
Company codes | REDX |
Corporate client | Yes |
Company description
Redx Pharma specialises in the discovery and early clinical development of small molecule therapeutics, with an emphasis on oncology and fibrotic disease. It aims to initially progress these through to proof-of-concept studies, before evaluating options for further development and value creation.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Redx Pharma’s differentiated medicinal chemistry expertise has been proven by its consistent track record, having discovered and developed five molecules which are now in the clinic, including two wholly-owned assets in Phase II trials. The strategy is to partner certain assets, sometimes as early as preclinical, and deals are already in place with AstraZeneca and Jazz Pharmaceuticals; meanwhile, selected in-house programmes are being developed to key value-inflection points. This has led to a well-balanced and diverse pipeline. The proprietary lead assets focus on selected oncology indications, with RXC004 in development in solid tumours, and broader fibrosis diseases, and with RXC007 being examined in lung fibrosis (IPF) and with potential to be expanded to the broader immune mediated interstitial lung diseases (ILDs). These lead compounds are progressing through Phase II clinical trials, with data due to be released throughout the coming 12-24 months and key insights expected during H223. Our Redx Pharma rNPV based valuation is £461m ($553m) equivalent to 138p per share.
Redx Pharma has two wholly-owned assets in Phase II trials: RXC004 in Wnt-dependent solid tumours, and RXC007 in IPF, a fibrotic lung disorder. Key data for both are expected during 2023, notably during H223, with details outlined below. In addition, gastro-intestinal pan-ROCK inhibitor RXC008, potentially for fibrostenotic Crohn’s disease, is expected to be submitted for IND/CTA clearance for progression into the clinic by end-2023, with patient enrolment starting in 2024. Redx Pharma is aiming to generate three INDs, including RXC008, by the end of 2025. A summary of Redx Pharma’s pipeline is shown in Exhibit 1.
RXC004 is an innovative porcupine inhibitor for Wnt-ligand dependent cancers. Two Phase II trials are ongoing (Exhibit 2): PORCUPINE in genetically selected microsatellite stable metastatic colorectal cancer (MSS mCRC) and PORCUPINE2 in genetically selected pancreatic and unselected biliary cancer. For a detailed overview of RXC004, including the role of Wnt signalling and prior Phase I data, please refer to our February 2022 Outlook.
The first data expected during 2023 from the Phase II RXC004 programme are top-line results from the monotherapy biliary cancer arm of PORCUPINE2, which are anticipated during H123. Other RXC004 monotherapy data include from the genetically selected pancreatic cancer arm of PORCUPINE2 and from PORCUPINE, both of which are expected during H223.
Key data from the monotherapy arms of the Phase II programme will be toxicity and tolerance, rather than efficacy, in our view. This is owing to patients having advanced, hard-to-treat disease, in addition to RXC004’s mechanism which, on its own, is cytostatic (slows cell growth) rather than cytotoxic (kills tumours). Hence, at best we expect to see evidence of disease stabilisation rather than improving outcomes (as measured by responses). A similar outcome was observed in the Phase I study of Novartis’ Wnt inhibitor WNT974, where 16% of patients had stable disease but there were no responses. Therefore, we only expect responses in the monotherapy arms (partial or complete) if there is some residual synergistic effect from prior treatment regimens, notably checkpoint inhibitors (CPIs).
The true indication of RXC004’s potential efficacy, and likely the biggest commercial opportunity, will therefore arise from combination studies with CPIs, with data expected H223 from both PORCUPINE2 in biliary cancer (+ Keytruda, Merck) and PORCUPINE (+ Opdivo, Bristol Myers Squibb). The combination with CPIs is important as RXC004 also has an immune-enhancing effect which turns non-responsive “cold” tumours to “hot”, and hence could act synergistically with PD-1/PD-L1 inhibitors, such as Keytruda and Opdivo, which are generally ineffective in “cold” tumours. We note that Keytruda is on-track to deliver >$20bn in global sales in 2022, even though only around 15-20% of patients achieve durable responses with immunotherapy. Thus, there could be significant commercial potential for any agent(s) that can improve immunotherapy outcomes.
RXC007 is a novel and highly specific small molecule that targets the ROCK2 (Rho Associated Coiled-Coil Containing Protein Kinase 2) receptor. A Phase IIa trial (Exhibit 3) in idiopathic pulmonary fibrosis (IPF) started in October 2022. For more details on RXC007, its mechanism, previous preclinical data which suggest the potential to be disease modifying, and prior Phase I results, please see our October 2022 Update.
The ongoing Phase IIa trial will investigate escalating doses of RXC007, both with and without standard of care (SoC) in IPF (nintedanib or pirfenidone) over 12 weeks, and will assess early efficacy signals, safety, and tolerability. Initial top-line data are expected during H223. If positive, these data will inform dosing and the design of a larger 12-month Phase IIb trial, which will likely explore RXC007 plus SoC over 12 months in IPF with lung function (FVC) as a primary endpoint.
Pending initial Phase IIa data, the future Phase IIb trial could also expand development to include interstitial lung diseases (ILD). This is a much broader indication, with IPF representing only around 20-50% of ILDs. This is supported by preclinical data in models of GVHD (Graft vs Host disease) which suggest RXC007 could have an impact on immune-mediated fibrotic diseases such as ILD, in addition to systemic sclerosis.
We value Redx Pharma as a classic drug discovery and development play, with our sum of the parts rNPV-based model generating a valuation of £461m ($553m), equivalent to 138p per share. Exhibit 4 summarises the outputs and underlying assumptions of our valuation model. Our February 2022 Outlook provides a detailed overview of our valuation methodology.
Our Redx valuation comprises a sum of the parts that includes a pipeline rNPV and a discovery platform valuation, with the latter based on Redx’s output/track record and benchmarked against similarly successful discovery peers. As always, we employ conservative assumptions throughout our modelling, particularly regarding market sizes and growth rates, net pricing, adoption curves, and peak market penetration.
The clinical progress of the various pipeline assets should unlock upside, as further data would prompt us to adjust the respective success probabilities that reflect the inherent clinical, commercial, and execution risks that each programme carries. Additionally, as these programmes progress, there should be more insight into the specific oncology or fibrosis patient populations that will be addressed, and this in turn would mean that peak sales (pricing, penetration) and timeline assumptions could be revisited.
End-September 2022 cash was £53.9m (31 March 2022: £31.6m; 30 September 2021: £29.6m), which includes proceeds from the June 2022 £34.3m (gross) equity placement and a total of $24m (£18.1m) in milestones received during the fiscal period to end-September 2022, including a $5m milestone from partner Jazz Pharmaceuticals in June 2022. Management has outlined that these funds, plus modest risk-adjusted milestones, should be sufficient to fund planned operations through key data points across the clinical pipeline into 2024, which includes the focus data readouts for RXC004 and RXC007 during H223.
FY22 revenues increased to £18.7m (FY21: £10.0m) owing to both higher milestone related revenue of £10.7m (FY21: £5.0m) and research collaboration income of £6.9m (FY21: £2.8m). During FY22 Redx Pharma received $24m (£18.1m) of cash as milestones, including: (1) $10m (£7.4m) from Jazz Pharmaceuticals in December 2021 for progress in the MAPK collaboration; (2) $9m (£6.7m) from AstraZeneca in December 2021 on Phase I initiation for RXC006 (AZD5055); and (3) $5m (£4m) from Jazz Pharmaceuticals in June 2022 for IND clearance for JPZ815, with a Phase I trial subsequently initiated in November 2022. AstraZeneca milestones (eg the $9m in December 2021) are recognised on receipt as they relate to contingent consideration on the license previously granted, whereas payments from the Jazz collaborations (predominantly related to the underlying development services) have a deferred recognition element and are recognised as each stage is completed. Future milestone receipts are not expected to be as frequent as partnered candidates advance to later, and therefore longer, studies.
R&D costs remained tightly controlled at £28.6m (FY21: £24.4m) despite continued pipeline progress and advancement. We anticipate a material increase in R&D spend given Phase II programmes are now ongoing for two candidates and forecast £40.0m in FY23e and £42m in FY24e. G&A also increased to £10.2m (FY21: £6.5m). This led to a FY22 operating loss of £16.3m (FY21: loss of £19.7m) and a net loss of £18.0m (FY21: loss of £21.6m).
Our future revenue forecasts do not include any unknown and/or uncertain milestones, hence we only include remaining deferred revenue recognition of previously received milestones of £3.9m in FY23e and £973k in FY24e, which relate to the Jazz Pharmaceuticals collaboration. While future potential milestone receipts are significant (c $800m in aggregate) there is limited visibility on timings as they are linked to the clinical development progress of AZD5055 and JZP815 which are under the control of their respective licensors.
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Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
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Trinity Delta view: The global (ex-China) licensing deal with Takeda for fruquintinib development and commercial rights is significant on several fronts. It is the first major partnership agreement under the new strategy, providing external validation for fruquintinib, a substantial near-term opportunity ex-China. With a potential FDA approval decision in H124, fruquintinib remains on track to become the first HUTCHMED asset to be approved ex-China, thus executing a near-term deal was also key to ensure commercial success and the timing should provide partner Takeda with ample time for commercial preparations. The deal could also facilitate and potentially accelerate a broader development and commercial opportunity for fruquintinib, with HUTCHMED sharing the downstream economics, while also freeing up internal bandwidth. This, coupled with that $400m upfront payment boosting end-June 2022 cash and equivalents of >$800m, will enable more internal resources to be directed towards advancing other late-stage assets. We currently value HUTCHMED at $5.51bn ($31.89 per ADS), £4.6bn and HK$43.1bn (531p or HK$49.83 per share); we intend to revisit our forecasts once the Takeda deal closes following antitrust review and FY22 results report, likely in early-March.
Lighthouse
24 January 2023
Price (US ADS) (UK share) (SEHK share) | US$18.35 297.5p HK$27.60 |
Market Cap   | US$3.17bn £2.57bn HK$23.86bn |
Exchanges | NASDAQ AIM London SEHK |
Sector | Healthcare |
Company Codes | HCM HCM.L 0013.HK |
Corporate client | Yes |
Company description
HUTCHMED is a Hong Kong headquartered biopharma focused on discovering, developing and commercializing innovative targeted therapeutics and immunotherapies to treat cancer and autoimmune diseases. It has a diverse pipeline of first-in-class/best-in-class selective oral TKIs in development for the China and global markets.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Disclaimer
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2023 Trinity Delta Research Limited. All rights reserved.