DNB Markets - Isofol Medical: Shifting focus from clinical to commercial development
Isofol Medical reported a Q2 operating loss of cSEK45m, slightly better than our expected loss of cSEK51m. The financial risk has decreased following a successful capital raise, and the end-Q2 cash position was cSEK531m. With all parts of the phase III study fully completed and a comfortable financial position, the company can now shift its focus from clinical to commercial development and we expect a ramp-up in costs as pre-commercial activity intensifies. We reiterate our fair value of SEK13–23.
Q2 review. The operating loss of cSEK45m was better than our expected loss of cSEK51m. The deviation was explained by lower than expected R&D costs. Following a successful rights issue and exercise of an over-allotment option, the end-Q2 cash position was cSEK531m.
Shifting focus from clinical to commercial development. With the recruitment of Japanese patients completed in Q2, all parts of the phase III study are fully recruited. Together with the capital raise, this should allow the company to shift its focus from clinical to commercial development. We expect a ramp-up in costs as Isofol Medical intensifies its pre-commercial activities to ensure a swift launch on potential approval.
Timeline reiterated. Management expects top-line data in H1 2022, with a subsequent FDA filing in H2 the same year and a possible launch in 2023.
Abstract on gene expression presented at ASCO. As we highlighted before, Isofol Medical has previously presented data that showed that TYMS gene expression (TYMS encodes TS, which is an enzyme that 5-FU inhibits) can be predictive of response to treatment with 5-FU+arfolitixorin. The results presented at ASCO point to a link between TYMS and MYC (family of oncogenes that is a potential target for anti-cancer drugs), where the latter regulates TYMS expression, potentially impacting the effect of 5-FU+ folate-based therapy. While there are no approved MYC-inhibitors at present, from Isofol Medical’s perspective this is positive, as a link between the two genes could pave the way for a potential combination of an MYC-inhibitor and 5-FU+arfolitixorin in the future.
We reiterate our fair value of SEK13–23. We have updated the share count and included the income from the over-allotment option in our estimates.
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David Martinsson | Markets | Equity Research | Healthcare
Patrik Ling | DNB Markets | Equity Research | Senior Analyst Healthcare
DNB Bank ASA, Filial Sverige
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