DNB tar ned kursmålet til 31. (35)
Quarterly reports from early-stage biotech companies tend to be non-events, and Targovax’s Q2 was no exception, in our view. The company improved its cash position with a NOK206m private placement, which we believe will be sufficient to take clinical trials through to 2019. We reiterate our BUY recommendation but have trimmed our target price to NOK31 (NOK35) due to the depreciation of the USD/NOK spot exchange rate.
Q2 loss in line with expectations. The company reported an operating loss of
cNOK34m, in line with our estimate. External R&D expenses were slightly higher than
we had forecast, while ‘other operating expenses’ were slightly lower.
Financial position strengthened with a cNOK206m capital raise. As we expected
after the Q1 report, Targovax raised an additional cNOK200m of financing (in a private placement of 10m shares at NOK20/share) in Q2 to refinance its clinical trials. The company also executed a repair issue after the private placement, raising cNOK6m. Targovax received proceeds totalling NOK206m (before costs and fees) after Q2 (thus not included in the Q2 cash flow). It is seeking additional financing to take TG01 to phase IIb or III for the pancreatic cancer indication. The share listing moved from Oslo Axess to the main list (OSE) in Q2. Minor changes in the value infliction point timeline. In its Q2 presentation, the
company gave an updated timeline of its near-term value inflection points. The
ONCOS-102 phase I trials for Ovarian/colorectal cancer as well as prostate cancer, previously intended to start in H1, were postponed to H2. During Q2, the first patient was recruited for the ONCOS-102 phase I study in combination with Keytruda for advanced melanoma; we find this study interesting from a short-term perspective as Targovax could potentially have interim data in late H2 in our view.
BUY recommendation reiterated but target price trimmed to NOK31. Targovax is
an early-stage biotech company with two platform technologies for cancer vaccines
(one peptide-based platform (TG01) and one oncolytic virus platform (ONCOS102)).
The products are still at early stages of development, so this is a high-risk investment,in our view. Nevertheless, we see potential for the products.