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DB25Mar15
Deutsche Bank Markets Research Rating Company Buy VBL Therapeutics Alert North America Date 25 March 2015 Breaking News United States Health Care Reuters VBLT.OQ Bloomberg VBLT UQ Exchange Ticker NMS VBLT Biotechnology Ph2 interim GBM data looks encouraging to us We do think that these data are encouraging of additive effect when used on top of Avastin Both cohorts were treated with VB-111 until progression and then at progression one cohort (n=22) was treated with Avastin alone and the second cohort (n=24) was treated with VB-111 in combination with Avastin. The median overall survival (OS) of the combo arm was 414 days vs. 235 days (p=.05 on a Wilcoxon test) in Avastin alone. At SNO with only 15 of the 23 combo pts reporting the difference in OS was 504 days in the combo vs. 235 in the Avastin arm (p=.22 in a log rank scale and p=.1 in a Wilcoxon test). A median of 4 doses were given in the combo arm versus a median of 1 dose in the monotherapy Avastin arm. We note that the FDA has guided the company that a survival benefit of 3 months is clinically meaningful and we think this survival benefit in these small cohorts is encouraging. Price at 24 Mar 2015 (USD) Price target 10.00 52-week range 16.44 - 3.22 Alethia Young Mohit Bansal Research Analyst Research Associate (+1) 212 250-5751 (+1) 212 250-3076 [email protected] [email protected] Robyn Karnauskas Research Analyst (+1) 212 250-7591 [email protected] Ellie Merle Research Associate (+1) 212 250-2011 [email protected] Key changes Phase 3 studies in rGBM are risky from our experience but looks like co pursued a tough patient pop in Ph2. We remain at 75% POS. The co thinks patients in Phase 2 were very similar to Phase 3 and that the trial will be powered strongly to detect a change. There will be an interim look after 91 events in 2Q16. Timelines remain on track for the trial to start in mid 16. We note that Avastin has had highly variable survival data in the past because of the severity and heterogeneity in treatment of GBM. Many cancer trials fail in Phase 3 and we caution given the small size of this Phase 2 in a highly variable population. However, we do see these data as encouraging. EPS (USD) The co will show updated curves at ASCO which are important to review as well Management guides that this is a mostly mature curve, but from the call they noted that there will be some things we can learn from the curve at ASCO. For instance, they said the curves separated early which is a promising sign but further information at ASCO will add important color into how early the benefit of VB-111 is seen. Option volume (und. shrs., 1M avg.) Our peak sales are $390M worldwide in 2025. We assume $270M in the US and $120M in the EU. As it pertains to the EU, understanding the Avastin paradigm in an ongoing study is key. If Avastin becomes standard of care in the EU, we think a global trial would work. The co expects that the Avastin study in the EU will be done by year end. Also note that we assign 35% share to second line and 0% to first line so a point of upside would be if share could be taken in front line therapy. 5.54 0.89 to 0.88 ↓ -1.5% Source: Deutsche Bank Stock & option liquidity data Market cap (USD) 110.5 Shares outstanding (m) 19.9 Free float (%) 100 Volume (24 Mar 2015) 74,701 – Source: Deutsche Bank Key data FYE 12/31 1Q EPS 2Q EPS 3Q EPS 4Q EPS FY EPS (USD) P/E (x) 2014A -0.18 -0.19 -0.19 -0.17 -0.74 – 2015E – – – – 0.88 6.3 2016E – – – – 3.49 1.6 Source: Deutsche Bank * Includes the impact of FAS123R requiring the expensing of stock options. ________________________________________________________________________________________________________________ Deutsche Bank Securities Inc. The views expressed above accurately reflect the personal views of the authors about the subject companies and its(their) securities. The authors have not and will not receive any compensation for providing a specific recommendation or view. Deutsche Bank does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. FOR OTHER IMPORTANT DISCLOSURES PLEASE VISIT http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=VBLT.OQ MCI (P) 148/04/2014.
