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goetzpartners securities Limited
4SC AG (VSC-DE): Rising from the East
09-Apr-2018 / 15:47 GMT/BST
Free to access research and investor meetings in a post-MiFID2 world
4SC AG (VSC-DE): Rising from the East
Recommendation: OUTPERFORM
Target Price: EUR10.00 (from EUR7.50)
Current Price: EUR6.80 (cob on 4th April 2018)
KEY TAKEAWAY
4SC's Japanese partner Yakult Honsha's (Yakult) decision to join the RESMAIN
study looks a significant endorsement of the resminostat programme. While CTCL
(Cutaneous T-Cell Lymphoma) is probably not itself a substantial opportunity
in Japan, with Yakult's prime focus on the more Asian-prevalent biliary
cancer, it clearly demonstrates commitment from a partner that already knows
the product well. Outside Japan, prospects for 4SC also look bright. Its
clinical programmes appear to be progressing well. Strong news flow, including
the first read out from its proof-of-concept phase II for 4SC-202 in H2/2018E,
should maintain momentum for the stock over the next 6 months and beyond.
Adding in the potential upside from Yakult in Japan and the expected news
flow, we reiterate our OUTPERFORM recommendation and increase our target price
to EUR10 (from EUR7.50).
Sound endorsement of Resminostat - While CTCL is a significantly smaller
opportunity in Japan than in Europe or particularly the US (less than 25% the
prevalence), Yakult's decision to join the trial is a significant endorsement
of the safety and efficacy of resminostat from a partner that has been on
board since 2011.
Large Asian opportunity in biliary cancer - Yakult recently announced that
they are going to initiate a phase II proof-of-concept trial with resminostat
in the treatment of biliary tact cancer ("BTC"). More uncommon that in the
West, BTC affects around 5400 in Japan and is even more common in parts of SE
Asia and China.
News flow from pipeline - 4SC's clinical pipeline appears to be moving
forwards well. First interim read out from the 4SC-202 phase II in melanoma in
combination with the check point inhibitor expected in H2/2018E with the
RESMAIN CTCL trial due to report in 2019E.
Prospects for partnering - 4SC has indicated that it anticipates entering
combination trials with partners in H2/2018E. Positive interim data in
melanoma would certainly boost the probability of licensing for development in
potential blockbuster indications.
Remains undervalued - Although the stock has performed well, given the recent
endorsement from a major partner and the prospect of strong news flow, we are
optimistic for more to come. Our current DCF analysis suggest a fair value of
EUR8.7 rising to EUR14.6 with news flow. We reiterate our OUTPERFORM
recommendation and increase our target price to EUR10 (from EUR7.50).
Kind regards,
Dr. Chris Redhead | Analyst
goetzpartners Healthcare Research Team | Research Team
goetzpartners securities Limited
The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.
T +44 (0) 203 859 7725 | healthcareresearch@goetzpartners.com /
chris.redhead@goetzpartners.com
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(END) Dow Jones Newswires
April 09, 2018 10:48 ET (14:48 GMT)
