DNB Markets - Isofol Medical: Waiting for AGENT read-out
Isofol Medical released its Q4 report on 24 February. The report was a non-event, in our view. In Q4, the company announced that it would not reach 300 PFS events (the original trigger for closing the trial) as too many patients had moved on to new treatments without a confirmed event. The company is in discussions with the FDA on what should trigger the breaking of the code in the trial. Overall, the company plans for data read-out in late Q2. Following a change of analyst, we now estimate the fair value for the Isofol Medical share at SEK14–26 (13–23).
Slightly higher operating costs than we expected. The company reported an operating loss of cSEK63m, compared to our forecast loss of cSEK56m. On the other hand, cash flow benefited from positive movements in the net working capital, so the cash position at end-Q4 was cSEK379m, above our forecast of cSEK365m. In Q4, c87% of the operating costs were related to R&D.
FDA discussions this spring likely to be the next key event. In late 2021, the company announced that it would not reach 300 PFS events, which was the agreed trigger for breaking the code on the AGENT trial. Too many patients had progressed to surgery, missed the treatment protocol, or moved on to other treatments without having a PFS event. The company is in discussions with the FDA about what will trigger the breaking of the code on the trial. As PFS was not a primary endpoint, the fact that it will not reach 300 PFS events in a reasonable timeframe should not affect ORR, which is the primary endpoint in the trial. The primary endpoint is to show a ⟩10% point improvement in ORR. With regard to PFS, the FDA has said that a positive trend is sufficient, and that the trend does not have to be statistically significant.
Top-line data in mid-2022 still a possibility. We believe the company may still report top-line data in late Q2, despite the delay in getting to the unblinding of the trial. From the release of the top-line data, it should take 3–4 months to fully analyse the data and subsequently file with the FDA. Hence, we estimate a market launch could take place in late 2023. Furthermore, discussions with potential marketing partners should intensify after the publication of the top-line data, but we do not believe any deals will be struck before the final analysis of the trial is complete.
We have adjusted our fair value to SEK14–26. We do not believe the odds of an approval have deteriorated owing to the discussions on the unblinding of the AGENT trial. Therefore, our main assumptions for the company are unchanged.
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Best regards
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Patrik Ling | DNB Markets | Equity Research | Senior Analyst Healthcare
DNB Bank ASA
Regeringsgatan 59 | Stockholm | Sweden
E-mail: patrik.ling@dnb.se | www.dnb.no
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