Viralytics will present its first meaningful clinical update since June 2017 when it features 2 poster and a podium presentation at this week’s Society for Immunotherapy of Cancer (SITC) conference in Washington.
The first of the posters will feature an update of the CAPRA study (combination of Cavatak with Keytruda) in late stage melanoma. The second is a preclinical study featuring a three way combination of Cavatak with an anti-PD1 blockade and an IDO inhibitor in melanoma.
The CAPRA study last reported a disease control rate of 87% in its first 15 patients, following which the company extended the patient numbers on the trial from 30 to 50. The majority of newer patients are expected to come from the patient population whose disease has progressed following treatment with a checkpoint inhibitor (the so called checkpoint refractory population). This latter patient cohort will have significantly more advanced disease and are considered harder to treat. VLA will almost certainly stratify the results between the two patient cohorts. Subject to efficacy data, we continue to believe the company will pursue a first approval for Cavatak in the checkpoint refractory population where there are no competing therapies.
The preclinical study is expected to show strong efficacy data in the three way combination. The most advanced IDO inhibitor in the clinic today is Incyte’s drug Epacadostat. Epacadostat is being studied in a series of late stage clinical trials for treatment naïve melanoma patients. We expect the preclinical data will enhance the data package available to a potential bidder for the company or collaboration partner.
The podium presentation is an overview of oncolytic viruses in combination therapies.
Maintain Buy (Speculative) Rating
We maintain our Buy (Speculative) rating. Valuation is amended to $2.31 (from $2.32). Earnings changes in FY18 and FY19 relate to the update of expected clinical trial expenses based on the recent cash burn rate.
Disclosure: Bell Potter Securities acted as lead manager of the companies 2015 placement and 2016 SPP and received fees for that service.
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Recommendation:
Buy (Spec)
Previous Close:
$0.74
Price Target:
$2.31
John Hester Analyst - Healthcare Direct 02 8224 2871
Mobile 0413874622
Fax 02 9255 7482 [email protected]Bell Potter Securities Ltd
Level 38, Aurora Place,
88 Phillip Street,
Sydney NSW 2000www.bellpotter.com.au
VLA Price at posting:
84.0¢ Sentiment: Buy Disclosure: Held
