BerGenBio continues to report promising data from the Phase II study in non-small cell lung cancer (NSCLC) with bemcentinib in combination with pembrolizumab, on this occasion progression free survival (PFS) data at SITC 2018. The final data from the current trials are due over the next six months. But, the results to date are sufficiently compelling that the company has already started to prepare a randomised Phase II trial programme with bemcentinib to begin in H219. No details of the Phase II studies have been disclosed; but we expect the company to run a series of trials in various NSCLC settings (including with pembrolizumab) and in AML. We have raised our valuation of BerGenBio from NOK52.65 to NOK54.21 per share.
| Year-end: December 31 | 2016 | 2017 | 2018E | 2019E |
| Sales (NOKm) | 0.0 | 0.0 | 0.0 | 0.0 |
| Adj. PBT (NOKm) | (129.8) | (182.2) | (197.5) | (240.2) |
| Net Income (NOKm) | (129.8) | (182.2) | (197.5) | (240.2) |
| Adj. EPS (NOK) | (419.7) | (4.0) | (3.8) | (4.4) |
| Cash (NOKm) | 161.8 | 370.4 | 345.1 | 109.5 |
| EBITDA (NOKm) | (131.4) | (183.5) | (200.0) | (239.2) |
Update
26 November 2018
| Price | NOK26.90 |
| Market Cap | NOK1,472m |
| Enterprise Value | NOK1,074m |
| Shares in issue | 54.7m |
| 12-month range | NOK18.60-54.80 |
| Free float | 57% |
| Primary exchange | Oslo |
| Other exchanges | N/A |
| Sector | Healthcare |
| Company Code | BGBIO |
| Corporate client | Yes |
Company description
BerGenBio is a clinical-stage, biopharmaceutical company based in Bergen, Norway and Oxford, UK. It is developing innovative therapies for aggressive cancers by way of inhibiting the Axl signalling pathway. The lead oncology compound, bemcentinib, is in multiple Phase II trials.
Analysts
Mick Cooper PhD
mcooper@trinitydelta.org
+44 (0) 20 3637 5042
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
We have revised our valuation to take into account the company’s progress in clinical trials. We have increased our valuation of BerGenBio by NOK1.56 to NOK54.21/share, as detailed in Exhibit 1. The main changes to our model are the removal of TNBC, and increases in the probability of success from 20% to 30% for both NSCLC with pembrolizumab and with docetaxel, due to the promising data that has been presented since the ASCO meeting in June 2018.
We still consider it reasonable to include bemcentinib’s broader potential as an immuno-oncology therapy, given the promising data to data in NSCLC. However, we note that BerGenBio’s shares are currently trading at a discount of 29.3% to our core valuation, which also places no value on the antibody BGB149.
Additional data from the current clinical trials will be presented over the next six months at various conferences, which will probably include ASH on 1 to 4 December, AACR on 29 March to 3 April, and ASCO on 31 May to 4 June. The new data could act as share price catalysts. The most eagerly awaited results will be the overall survival data from the first stage of the Phase II study in NSCLC with pembrolizumab and the results from the trial’s second stage, which will hopefully confirm the findings from the first stage. These data should be reported in Q219.
We have also amended our estimates as summarised in Exhibit 2. The changes reflect the company’s tight cost control and the lower R&D spending due to the termination of the TNBC study in the short-term. We then anticipate that R&D investment will increase significantly from H219 as BerGenBio rolls out its randomised Phase II programme. We will refine our estimates for FY19 and beyond, once BerGenBio has announced the development programme for the randomised Phase II studies.
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