Edison Investment Research Limited: Edison issues initiation on RhoVac (RHOVAC)

London, UK, 28 May 2019

Edison issues initiation on RhoVac (RHOVAC)

RhoVac is developing RV001, a cancer immunotherapy designed to prevent or limit metastasis by activating T-cells against cells with metastatic potential. The therapy contains fragments of the protein RhoC, which is overexpressed in cells with metastatic potential across a range of cancers. The recently announced rights issue (SEK154.2m net) is fully committed to by a group of investors, funds from which will be used for a Phase IIb study in prostate cancer (results in H221) and a potential Phase II combination study with a checkpoint inhibitor in a different solid tumour indication. RhoVac will require a partner following positive Phase IIb results. We value RhoVac at SEK708m or SEK37.2/share.

We value RhoVac at SEK708m or SEK37.2/share including estimated net cash of SEK170.3m (net cash from end-2018 + net proceeds from planned rights issue, to which we assign 100% probability since it is fully committed to by a group of investors). We currently only value RV001 in prostate cancer, with peak sales of $888m (SEK8.6bn). Near-term catalysts for the share price will be the initiation of the Phase IIb study and of the second potential Phase II combination study. According to our model, a successful Phase IIb outcome would result in an increase in RhoVac's rNPV to SEK2.0bn or SEK107.1/sh (see Valuation section).

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