DNB Markets - Isofol Medical: Q1 in line, as company readies for pre-commercial activity ramp-up
The Q1 report in itself was a non-event, and the cSEK45m operating loss broadly in line with our forecast. Management expects pre-commercial activities to ramp up to ensure a swift launch on a potential approval of arfolitixorin, and top-line data in H1 2022. An abstract on the company’s gene expression analysis is due to be presented at ASCO. After updating our model for the new share count and factoring in the expected ramp-up of pre-commercial activities, we have lowered our fair value to SEK13–23 (21–37).
Q1 review. The cSEK45m operating loss was slightly smaller than our cSEK-51m, and the end-Q1 cash position was cSEK78m. We expect costs to increase as the company intensifies its pre-commercialisation activities ahead of the expected FDA filing.
Intends to raise at least cSEK400m in rights issue. On 14 May, an EGM mandated the company to raise cSEK400m, with a potential cSEK100m over-allotment option. A majority of net proceeds have been earmarked to bring arfolitixorin beyond the top-line results to filing, as well as for pre-commercial activities and the exploration of further indications. We estimate a financial runway until H2 2022 (without the over-allotment option).
Preparations intensify ahead of expected filing. Visibility on timelines has improved following the DSMB’s recommendation to procced with the 440 patients, and the company is now accelerating its pre-commercial activities to ensure a swift launch on a potential approval. It expects top-line data in H1 2022, with a sub-event filing in H2 the same year. Management expects arfolitixorin to be in the market in 2023.
Abstract on gene expression due to be presented at ASCO. Isofol Medical has previously presented data that showed that TYMS gene expression (TYMS encodes TS, which is an enzyme that 5-FU inhibits) can be predictive of response to treatment with 5-FU+arfolitixorin. The new results seem to indicate there is a link between TYMS and MYC (family of oncogenes that is a potential target for anti-cancer drugs), where the latter regulates TYMS expression. While there are no approved MYC-inhibitors currently, from Isofol Medical’s perspective, this is positive, as a link between the two genes would open up for a potential combination of an MYC-inhibitor and 5-FU+arfolitixorin in the future.
We have lowered our fair value to SEK13–23 after updating the share count and raising our cost estimates to reflect the intensified pre-commercialisation activities.
David Martinsson | Markets | Equity Research | Healthcare
DNB Bank ASA, Filial Sverige
Visiting address: Regeringsgatan 59 | Stockholm | Sweden
Patrik Ling | DNB Markets | Equity Research | Senior Analyst Healthcare
DNB Bank ASA
Regeringsgatan 59 | Stockholm | Sweden
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