Neovacs Update: Changing Lupus Landscape

Roche’s recent decision to advance rontalizumab, their anti-interferon-alpha (IFNα) antibody, into Phase III trials for lupus suggests that clinical proof-of-concept has been achieved in Phase II trials. This lends validation to Neovacs’s (OLW.F) IFNα-Kinoid, which has completed a Phase I/II trial for lupus with encouraging efficacy data. Neovacs is currently planning a Phase IIb trial in lupus. Separately, it is planning a Phase IIb for the TNFα-Kinoid in rheumatoid arthritis (RA) and is expecting final results of a Phase IIa study in Crohn’s Disease (CD). Additional positive Phase II trial data could attract a licensing partner.


IFNα-Kinoid is competitive in a changing landscape
Roche recently announced that rontalizumab, their humanised monoclonal antibody (mAb) that targets interferon-alpha (IFNα), would be progressing into Phase III trials. This is the first anti-IFNα mAb to reach the Phase III trials stage, which helps to validate the IFNα targeting approach for lupus, including Neovacs’s IFNα-Kinoid.

A Phase I/II trial for lupus has completed
In November 2011, a Phase I/II randomised, double-blind, placebo-controlled trial of IFNα-Kinoid administered in 28 mild-to-moderate lupus patients demonstrated that all the treated patients produced anti-IFNα antibodies and the higher doses had a statistically significant impact on the interferon and lupus signatures. IFNα-Kinoid was also well tolerated and had a good safety profile. A Phase IIb trial is currently being planned.

Financials: Funded to H113
Neovacs ended H112 with cash of €6.6m, which should provide a sufficient runway to complete the CD Phase IIa trial. Neovacs received an OSEO-Anvar grant of €99k for the IFNα-Kinoid in H112. Our financial model suggests that Neovacs will need to raise capital in Q113.

Valuation: Risk-adjusted NPV of €101m
Neovacs has a current market cap of €28m and cash of €6.6m, resulting in an EV of €21m. By comparison, we calculate a risk-adjusted NPV of €101m based on prudent assumptions of the two products’ probability of success in each indication, launch date, pricing and market penetration.

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