Vascular Biogenics Trial Nears Full Enrollment, Price Could Jump
Sep. 03, 2021 7:21 AM ETVascular Biogenics Ltd. (VBLT)1 Comment
Summary
Vascular Biogenics recently resumed dosing American patients in its OVAL Phase 3 trial.
Trial enrollment should complete in 1H 2022.
If the data is positive, the stock price should jump considerably.
Vascular Biogenics (VBLT), which operates as VBL therapeutics, is a small cap, clinical stage pharmaceutical company based in Israel. It is focused on cancer and inflammation. Its lead candidate is VBL-111 for ovarian cancer. As of the close on September 2, 2021, Vascular Biogenics had a stock price of $2.49, giving it a market capitalization approaching $144 million. The stock price has been volatile, extending from a 52-week low of $1.01 to a 52-week high of $3.17. I believe VB-111 has a solid chance of having a positive trial outcome and then becoming a commercial therapy. The current stock price appears to heavily discount that outcome. Given that enrollment for the VB-111 is approaching completion, I believe now is an opportune time to buy at a low price in hope of a good outcome.
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VB-111 Oval Trial
Recently the VB-111 trial was paused from June 15 until August 30 while the FDA approved batches of the drug produced in a second facility in Modiin, Israel (See VBL Therapeutics Resumes Enrollment). The Oval ovarian cancer trial has currently recruited about 80% of its 400 patient target. VB-111, or ofranergene obadenovec, is a gene therapy delivered by adenovirus. It targets both tumor blood vessels and generates an anti-tumor immune response. It demonstrated proof-of-concept and survival benefit in its Phase 2 trial. A DSMC (Data and Safety Monitoring Committee) review of data is expected in the current quarter.
The endpoints of the Phase 3 Oval trial are PFS (progression free survival) and OS (overall survival). If enrollment proceeds as planned PFS could read out in the second half of 2022. While that might seem like a long wait for some investors, it is not far off for pharmaceutical development, and the stock price could rise in anticipation of the data and, before that, at completion of enrollment. If VB-111 is approved by the FDA and other regulatory agencies, it will be tested for other cancers. It has already demonstrated benefit in a Phase 2 radioiodine-refractory thyroid cancer trial. On the downside, it missed its endpoint in its Phase 3 glioblastoma trial, a notoriously difficult target cancer.
Q2 2021 Results and Cash Runway
Q2 2021 results for Vascular Biogenics were reported on August 16, 2021. Since Vascular has no commercial products, revenue was negligible. Expense for R&D and administration brought the net loss to $8.0 million, compared to a loss of $6.3 million in Q2 2021. That resulted in an EPS loss of $0.12. Cash and equivalents ended at $57 million. Taking $8 million per quarter as a cash burn rate, one year and three quarters remain. That would get the company through the Oval trial PFS data read out and is in line with guidance that cash should last until year-end 2023. If the PFS data is good, Vascular should be able to raise cash to complete the FDA process and take the therapy to market. If the PFS data fails to reach the statistical goal, the company would have to raise money to continue developing its earlier-stage assets, which would mean very substantial dilution to current stock holders.
Rest of Pipeline
While the main value at present is in the VBL-111 ovarian cancer indication, Vascular has a more extensive pipeline. The most important therapies target MOSPD2 for inflammation or cancers. The MOSPD2 inflammation program candidate, VB-601, has plans for Phase 1 trial initiation before the end of 2021. Preclinical data was presented an MOSPD2 antibody for multiple sclerosis at a science meeting in September 2020. The cancer version of MOSPD2 antibodies will be the bispecific VB-602. Preclinical data was presented at AACR in 2020.
Vascular also has an inflammatory disease program based on lecinoxoids. It includes VB-201 and VB-703. The work has mainly been preclinical, though VB-201 demonstrated reduction in atherosclerosis inflammation in an exploratory Phase 2 trial. Currently development of this program appears to be on the backburner.
Given the preclinical status of these programs, I do not expect them to have a significant impact on Vascular's value in the near future. Strong Phase 1 data with an MOSPD2 molecule, would modify that.
Conclusion
Vascular Biogenics has a low market capitalization for a company that might have an effective ovarian cancer therapy. I believe that is because it is relatively unknown, but what is known about it is the therapy failed for glioblastoma. Completion of enrollment in the Phase 3 VBL-111 trial would likely raise the company profile and stock price. Data to date is good, though that is no guarantee. While we will not know the outcome until the second half of 2022 or perhaps early 2023, the price is very attractive now. That is presuming you understand the risk and can withstand the impact if trial results are negative. Waiting for trial results is much safer, but if the results are positive, the price paid for the stock will be much higher.
Disclosure: I/we have a beneficial long position in the shares of VBLT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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