DJ Vicore Pharma Holding AB (VICO-SE): Funded through 2021E beyond key inflection points
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goetzpartners securities Limited
Vicore Pharma Holding AB (VICO-SE): Funded through 2021E beyond key inflection
points
13-Dec-2018 / 10:38 GMT/BST
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*Published to the market and investors on 13th December 2018 @ 9.59am (GMT).*
*Vicore Pharma Holding AB (VICO-SE): Funded through 2021E beyond key
inflection points*
*Recommendation: OUTPERFORM*
*Target Price: SEK42.00*
*Current Price: SEK17.65 (CoB on 12th December 2018) *
*KEY TAKEAWAY*
Vicore has had a busy few months during which it acquired INIM Pharma and
raised SEK242m (c.EUR23m) through a rights issue (SEK82.4m) and a directed
share issue (SEK160m), which extended the company's cash runway to YE2021E. By
this time Vicore should have reached key inflection points for its two lead
assets: Phase IIa proof-of-concept for VP01 (C21) in idiopathic pulmonary
fibrosis ("IPF") and Phase I for reformulated immunomodulatory imide drug
("IMiD") VP02 in IPF cough. We expect VP02 to be launched in 2025E, up to one
year earlier than VP01, due to its shorter development programme (fewer,
smaller and shorter trials). We have updated our models and valuation to
include both fundraises, VP02 sales, a delay to the expected launch of VP01,
and Vicore's revised strategy to commercialise both assets on its own. Our
valuation remains broadly unchanged at SEK42 per share (>130% upside). We
maintain our OUTPERFORM recommendation.
Reformulated IMiD (VP02) for local lung delivery adds SEK9 / share to
valuation
VP02 is a novel formulation of one of the four marketed IMiDs. It is being
developed for IPF cough, the most debilitating symptom associated with the
disease affecting c.80% of patients and for which there is currently no
approved treatment. The rationale is that first-generation IMiD thalidomide
demonstrated a significant, clinically relevant effect on alleviating IPF
cough in a 24-patient trial. Vicore plans to conduct an abbreviated
development programme. A short Phase I trial due to start in Q1/2020E is
expected to be followed by a Phase II trial in Q4/2020E, after which VP02 may
enter a registrational Phase II/III trial in H2/2022E. We model approval in
the US and Europe in 2025E and peak sales of >$720m by 2038E.
VP01 launch delayed to 2026E due to Phase I extension
New CEO Carl-Johan Dalsgaard conducted a strategic review that resulted in two
key changes to the VP01 programme: (1) Extension of Phase I to identify the
maximum tolerated dose ("MTD"), and (2) a longer and larger Phase IIa PoC
trial to achieve a meaningful functional readout. This has led us to push back
the expected launch to 2026E. We also now model that Vicore commercialises
VP01 on its own (vs. a licensing deal previously) as this is management's
preferred approach. We continue to believe that the molecule's profile should
allow it to capture at least 15% of the market and generate peak sales of
c.$1.5bn.
SoTP valuation broadly unchanged at SEK42 per share
Based on our estimates, VP01 remains Vicore's most valuable asset, accounting
for nearly 70% of our valuation. VP02 accounts for approx. 20% despite the
faster path to market and lower development costs, due to lower peak sales
expectations compared to VP01 ($732m vs. c.$1.5bn) and a higher risk
adjustment (90% vs. 85%).
Kind regards,
Brigitte de Lima | 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 | brigitte.delima@goetzpartners.com /
healthcareresearch@goetzpartners.com
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