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 Note

Empfehlung: BUY

Kursziel: 2.90 Euro

Kursziel auf Sicht von: End FY 2017

Letzte Ratingänderung:

Analyst: Cosmin Filker

Neovacs is a biotechnology company, which specialises in a technology

platform called 'Kinoid' for active immunotherapy in the area of autoimmune

and inflammatory diseases. On the basis of the company's own technology for

the introduction of a polyclonal immune response (protected by six patent

families until at least 2032). Neovacs focuses its development activities

on active immunotherapy with IFN kinoid, which is being developed for the

medical indications SLE (systemic lupus erythematosus) and DM

(dermatomyositis).

In the first half of 2016, the focus was on the further development in

particular of the clinical trial phase IIb (IFN-K-002) for the indication

SLE. This trial is currently being conducted with a total of 178 patients

in 19 countries in Europe, Asia, Latin America and the USA. It is worth

mentioning that in the last reporting period, Neovacs was able to extend

approval of the phase IIb trial to the USA and South Korea. While the USA

has the highest number of SLE cases, SLE may be classified as a rare

illness (orphan disease) in South Korea which should facilitate a much

quicker market approval.

The clinical development of IFN should also be extended in the current

financial year of 2016 to the indication dermatomyositis. In this respect,

the preparatory measures have been taken for the start of a clinical trial

phase IIa in Europe. In this trial, 30 DM patients in France, Italy,

Germany, the UK and Switzerland are to be treated with the Neovacs product.

For our sales forecasts, we have used the marketing schedule and made

estimates concerning the relevant regional case numbers, the potential

Neovacs market share as well as treatment costs. Along the same lines of

the expected progress in clinical approval we do not expect the initial

sales until the 2018 financial year (SLE in South Korea). However,

substantial proceeds are not expected to come until the 2020 financial year

onwards when the marketing of IFN-K is expected to start for the treatment

of DM in Europe, the USA and Asia. Approval for the treatment of SLE should

bring about a substantial increase in sales.

On 12/10/2016, Neovacs S.A. announced it would be collaborating with the

research laboratory for diabetes immunology of the renowned Cochin Hospital

in Paris. Under the management of Dr. Fgnès Lehuen and Professor Christian

Boitard, the proof of concepts is to be produced with the use of IFN-K for

the treatment of type 1 diabetes.

Even though we have not included this new potential trial route in our

forecasts, a positive result of this research collaboration could be an

important milestone for Neovacs S.A. Unlike SLE and DM, type 1 diabetes is

an illness with massive case numbers and therefore immense market

potential. According to estimates by the IDF (International Diabetes

Federation), there are currently around 415 million people suffering from

diabetes, which equates to approximately every 11th adult worldwide. Type 1

diabetes accounts for approximately 10% of all diabetes cases.

We have not initially taken into account the additional potential from

expansion of the indication. At present, only the indications systemic

lupus erythematosus and dermatomyositis therefore serve as the basis for

our valuation model. Our target price calculated within the framework of

the DCF model, taking into account an unchanged marketing probability with

phase II products amounting to 22.8% (source: Journal of Health Economics;

The price of innovation: new estimates of drug development costs), remains

unchanged at EUR2.90 per share. We can therefore confirm our current target

price and continue to issue the BUY rating.

Die vollständige Analyse können Sie hier downloaden:

http://www.more-ir.de/d/14425.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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