Small Caps | Nov 10 2011
– Prima Biomed developing C-Vac ovarian cancer vaccine
– Nomura initiates coverage with a Buy rating
By Chris Shaw
Prima Biomed ((PRR)) is developing a recurrence vaccine for ovarian cancer called C-Vac, which is an immunotherapeutic vaccine. Immunotherapy is a technology that uses the body's own processes to destroy cancer cells, the advantage being less side effects compared to external chemotherapeutic agents.
The process sees the patients own dendritic immune cells sensitised against components of the patient's ovarian cancer. These sensitised cells then attach to cancel cells and transport them to the immune system where the cancer cells are destroyed.
Nomura has initiated coverage on Prima Biomed with a Buy rating, attracted to both the technology being developed and the potential for the share price to benefit as clinical data from the company is released to the market.
At present, Prima Biomed is preparing for a Phase III clinical trial, which is due to commence in the current quarter. Final data from the trial is expected in 2014, though data from a Phase IIb clinical trial should be released in the final quarter of next year and so provide some interim news flow.
Potential partnering opportunities are the likely source of positive news for Prima Biomed between now and the release of Phase III trial data.
According to Nomura, the potential market size of Prima Biomed's C-Vac treatment is around US$2 billion annually. Assuming the treatment can be used on 25% of those females with a recurrence of epithelial ovarian cancer, the potential market is around US$500 million per year.
The five-year relative survival rate for Australian women with ovarian cancer has increased to 40% in 2000-2006 from 33% in 1982-1987. But as Nomura notes, 90% of sub-optimally debulked patients and 70% of optimally debulked patients relapse in the 18-24 months following primary treatment. Nomura expects Prima Biomed will, at least initially, aim for regulatory approval as a treatment for recurrent cancer.
Such patients are traditionally re-treated with platinum-based chemotherapy, often in combination with other agents. One problem is cumulative toxicity from primary therapy can preclude re-treatment with the likes of paclitaxel and carboplatin. This suggests a clear market for Prima Biomed if the company's trials show its technology delivers positive results.
In previous Phase I clinical tests C-Vac has been shown to be safe, while Nomura notes 19% of patients responded to the treatment in Phase IIa tests conducted in Australia. Given the results were not statistically significant, the upcoming Phase III trial will be the key to assessing the effectiveness of Prima Biomed's technology more thoroughly.
Revenues could come before the Phase III trials are completed, as Nomura notes the Dubai Healthcare City (DHCC) has granted approval for marketing and distribution of C-Vac in the DHCC. If Prima Biomed can finalise an Australian manufacturing licence and a test run to show logistical chain of custody from Dubai to Australia and back, first sales of C-Vac could come before the end of this year.
Early revenues are unlikely to be enough to allow Prima Biomed to avoid going back to the market to raise additional funds. Nomura suggests a further capital raising will be needed to allow Phase III clinical trials to continue, as the cost of such a trial can be as much as US$60,000 per patient and the trial is planned to involve 800 women.
Factoring in a capital raising and the expected time-line for the Phase III trial and bringing C-Vac to market, Nomura has set a valuation based price target for Prima Biomed of $0.31. This implies significant upside of better than 60% relative to the current share price.
There is little with which to compare the estimates of Nomura, as a market capitalisation for Prima Biomed of around US$225 million means the stock receives little coverage. None of the eight brokers in the FNArena database provide research on the company.
Shares in Prima Biomed today are unchanged as at 12.00pm with a last sale price of $0.175. This compares to a trading range over the past year of $0.10 to $0.42.
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