Original-Research: Neovacs S.A. (von GBC AG): BUY

Original-Research: Neovacs S.A. - von GBC AG

Einstufung von GBC AG zu Neovacs S.A.

Unternehmen: Neovacs S.A.

ISIN: FR0004032746

Anlass der Studie: Research Report (Initial Coverage)

Empfehlung: BUY

seit: 21.06.2016

Kursziel: EUR 2.90

Letzte Ratingänderung: -

Analyst: Cosmin Filker

* Neovacs S.A., a biotechnology company based in France, focuses on the

develop-ment of what are known as kinoids, which are used for the treatment

of autoimmune and inflammatory diseases. Within the Kinoid platform, which

was developed within the company, interferon alpha kinoid (IFN kinoid) has

progressed the furthest towards clinical approval for the two indications

SLE (systemic lupus erythematosus) and DM (dermatomyositis). Further

products based on Kinoid technology which could address autoimmune diseases

are currently in preclinical development and represent possible upside

potential.

* It is assumed that both autoimmune diseases DM and SLE are caused by the

dysregulation of the cytokine IFN. Neovacs' technology addresses IFN with

the aim of neutralising the overproduction of IFN, thereby bringing the

immune system back into balance. The Neovacs kinoid can be used to trigger

a highly targeted immune response without the addition of foreign

antibodies. High effectiveness and the absence of rejection reactions (with

no loss of efficacy) have both been observed in previous studies. With

regard to Belimumab (trade name Benlysta(R)), which is currently the only

approved drug for the treatment of SLE, doubts have been cast about the

additional benefit of this comparatively expensive active substance.

Life-threatening side effects have also been observed.

* The Neovacs drug is currently being researched in a clinical study IIb

(SLE) in 19 countries (Europe, Asia, Latin America and the USA) with 178

patents. We expect the first results to be available in the summer of 2017.

In parallel, a licensing agree-ment has also been concluded with Chong Kun

Dang (CKD) Pharmaceutical Corp. for the South Korean market. There is a

high chance that SLE will be categorised as a rare disease (orphan disease)

in South Korea, which would enable faster marketing approval and omit the

lengthy periods of time and high costs associated with trial phase III. The

indication DM may achieve global orphan disease status, which is

characterised by a significantly lower prevalence, although we expect

faster global marketing authorisation here. A clinical phase I/IIa trial is

expected to start here in 2016.

* We expect marketing revenues to be generated for the first time in 2018

(SLE - South Korea). While we anticipate that the marketing approval for

the indication DM will be granted in 2020, global marketing for the

indication SLE is likely to start in the 2022 financial year. Initially, we

have conservatively assumed a small market share. Fundamentally, the IFN

kinoid should generate a lot of attention and, therefore, high potential

demand, particularly considering the lack of medication available for the

incurable diseases SLE and DM.

* Within the scope of the DCF valuation model, we calculated a fair value

of EUR2.90 per share and, on the basis of the current price level of EUR0.86,

have issued a BUY rating. We have taken the existing marketing risk of

phase II products into account with a valuation allowance of 77.2%. During

a meta-analysis, it was noted that 77.2% of drugs in phase II studies do

not achieve market approval. Once clinical progress is recorded, we will

reduce the risk discount corre-spondingly.

Die vollständige Analyse können Sie hier downloaden:

http://www.more-ir.de/d/14059.pdf

Kontakt für Rückfragen

Jörg Grunwald

Vorstand

GBC AG

Halderstraße 27

86150 Augsburg

0821 / 241133 0

research@gbc-ag.de

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http://www.gbc-ag.de/de/Offenlegung.htm

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