Vicore Pharma Holding AB (VICO-SE): Key activities on track at Q1/2019 update

goetzpartners securities Limited 
Vicore Pharma Holding AB (VICO-SE): Key activities on track at Q1/2019 update 
 
17-May-2019 / 07:23 GMT/BST 
 
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*Published to the market and investors on 17th May 2019 @ 7.02am (BST). * 
 
*Vicore Pharma Holding AB (VICO-SE): Key activities on track at Q1/2019 
update* 
*Recommendation: OUTPERFORM* 
*Target Price: SEK42.00 * 
*Current Price: SEK 16.25 (CoB on 16th May 2019) * 
 
*KEY TAKEAWAY* 
 
At its Q1/2019 update, Vicore confirmed that all pipeline projects are on 
track. VP01 is expected to enter Phase IIa trials in idiopathic pulmonary 
fibrosis ("IPF") and diffuse systemic sclerosis ("dSSc") in H2/2019E, while 
VP02 is undergoing formulation work and should start a first-in-human trial in 
2020E. From a financial point of view, Vicore reported an operating loss of 
SEK16m, more than double the SEK7.2m incurred in the prior year, primarily 
reflecting the higher cost base of the enlarged organisation following the 
acquisition of INIM in July 2018, but also a marked uptick in R&D expenses 
associated with the two lead programmes. The cash balance stood at SEK216m, 
allowing the company to fund operations into 2021E and as such beyond key data 
points. We maintain our OUTPERFORM recommendation and SEK42 target price 
("TP"), which is based on a sum-of-the-parts ("SoTP") valuation that includes 
VP01, VP02 and net cash at YE2019E. 
 
*VP01 on track to enter two Phase IIa studies in H2/2019E* 
 
Vicore's lead drug, an angiotensin II type 2 receptor ("AT2R") agonist, is 
currently undergoing a dose-scaling Phase I study to identify the highest safe 
dose to be used in two upcoming Phase IIa studies: (1) a proof-of-concept 
trial in IPF to assess safety and lung function, and (2) a mechanistic study 
in dSSc. The next step would be a pivotal Phase IIb / III trial in IPF. We 
currently forecast launch in 2026E and peak sales of >$1.5bn in the US and 
Europe, based on VP01's differentiated profile compared to marketed IPF drugs 
and those in late-stage clinical development, and assume that Vicore markets 
the drug on its own. Despite their limited efficacy and poor safety profiles, 
the two marketed IPF drugs, Esbriet (pirfenidone) and Ofev (nintedanib) posted 
combined sales of c.$2.2bn in 2018, underscoring the high unmet need in this 
indication. We do not yet include sales in dSSc in our forecasts. 
 
*VP02 undergoing formulation work prior to toxicology study, then Phase I in 
2020E* 
 
VP02 is a reformulated version of an existing immunomodulatory ("IMiD") drug 
that has shown promising efficacy in IPF cough, the most debilitating symptom 
associated with IPF. Vicore is currently developing formulations in 
collaboration with Nanologica for targeted dosing to the lung through 
inhalation. Once these activities have been completed, the compound will 
undergo toxicological tests prior to entering a Phase I trial in 2020E. 
Despite being at an earlier stage than VP01, its shorter development timelines 
mean that VP02 could reach the market earlier than VP01. We therefore forecast 
launch in 2025E and peak sales in IPF cough of >$700m. Vicore is also 
considering developing VP02 for IPF and potentially pulmonary sarcoidosis. We 
await further clarity prior to adding sales and associated R&D expenses for 
either indication into our forecasts. 
 
*TP of SEK42 per share suggests ample upside* 
 
Our SoTP valuation for Vicore of SEK42 per share consists of risk-adjusted net 
present values ("rNPVs") for VP01 in IPF, which accounts for c.70% of our fair 
value, and VP02 in IPF cough (c.22%), plus net cash at YE2019E. With the 
shares trading at SEK16 per share, we see ample room for upside from current 
levels as VP01 progresses into Phase IIa clinical studies and VP02 enters 
Phase I. We also expect the pending up-listing to the Nasdaq Stockholm to aid 
share price appreciation towards fair value due to the increased visibility 
among the investor community. 
 
Kind regards, 
 
Brigitte de Lima, PhD, CFA | Research Analyst 
 
goetzpartners Healthcare Research Team | Research Team 
 
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May 17, 2019 02:23 ET (06:23 GMT)