A GREAT read, and a 14p recommendation:-
It is a One stop lentiviral shopping places OXB in gene therapy
leadership role. We are initiating coverage of Oxford BioMedica with
a Buy rating and £0.14 price target. Through its LentiVector platform,
the company has been able to generate multiple product candidates
(internally and for partners) using lentiviral gene delivery using either
in vivo or ex vivo techniques. Additionally, the platform has led to
a bioprocessing business model with current partnerships in hand
(led by Novartis) with more anticipated in the future. In 2016, the
company completed a major manufacturing expansion establishing a
firm readiness for imminent and future needs.
CTL019 in the leading role right now. OXB is responsible for the
generation of the lentiviral vector expressing the chimeric antigen
receptor (CAR) for Novartis' CTL019 CAR-T asset and we project a 3%
royalty to OXB. As described below, we believe that CTL019 is on the
brink of approval and Novartis indicated on June 16 (JULIET conference
call) that availability of vector does not play any role as a bottleneck for
CTL019 manufacturing. We believe OXB's role in CTL019's anticipated
success is not currently reflected in the shares since most of the focus
is on Novartis.
Visibility to increase rapidly for shares; facilities are prepped and
ready for action. From a visibility standpoint for OXB shares, we
project two important upcoming catalysts for the shares: 1) July 12
FDA Advisory Committee for CTL019 (we project positive vote); and
2) September 29 PDUFA date for CTL019. Overall, we project FDA
approval for CTL019, which should be the first CAR-T approved in the
U.S., and have the added benefit of OXB locking in a revenue stream
to the company. In 2022, we project $127.3 million in revenue to OXB
from sales of CTL019.
Multiple assets with important proof-of-concept ready for right
partners. As part of the company's manufacturing expansion and
overall readiness for the anticipated CTL019 launch, the company
made difficult, yet correct financial decisions, in our belief. In order to
effectively manage cash burn, it paused the development of several of
its internal pipeline candidates in order to focus on its manufacturing
partners. Most of these assets already have clinical proof-of-concept
in hand, which we believe positions them well for potential spin-out
or outlicensing. As an example, OXB-101 (formerly ProSavin) was in
development for Parkinson's. A single injection into the brain showed
significant impact on motor responses at six and 12 months as well as
showing evidence of transgene expression of at least four years of follow
up. A next generation vector with 5-10x more potency is in development
and Phase 2 ready.
Valuation and risks to price target achievement. Our £0.14 price
target is based on our clinical net present value (NPV) model,
which derives value primarily (85%) from Novartis' CTL019 (lentiviral
production and royalty). This model allows us to flex multiple
assumptions affecting a drug's potential commercial profile. Factors
which could impede reaching our price target include failed or
inconclusive clinical trials or inability of the company to secure adequate
funding to progress its drugs through the development pathway.
