DNB Markets – Isofol Medical: Approaching AGENT read-out

In our view, the Q1 report was a non-event, with the results broadly in line with our estimates. The company continued its dialogue with the FDA and has started analysis of the pivotal AGENT study; it reiterated that top-line data is set to be presented within 2–3 months. Overall, the company looks to have been on track in the quarter. We largely maintain our forecasts and assumptions as well as our fair value of SEK14–26.

In line with expectations. The Q1 operating loss of cSEK50m was in line with our expectation, while total expenses were cSEK54m, compared to our forecast of cSEK53m. As in previous quarters, R&D accounted for around 88% of total costs. Net sales were cSEK4m, compared to our estimate of cSEK4.7m; the deviation related to slightly higher sales from Isofol Medical's partnership with Solasia in Asia. Following minor changes in net working capital, cash flow was cSEK-49m, resulting in a net cash position of cSEK333m at end-Q1. In general, we expect steadily increasing staff- and sales-related expenses over the coming years, correlating with pre-commercial activities after top-line data has been presented.

Continued dialogue with FDA. During the quarter, Isofol Medical was in continued discussions with the FDA to begin analysing the AGENT study data; this will be based on the previously published censorship rules required by the FDA as well as some updated guidelines. The company reiterated that it expects top-line data to be presented within 2–3 months, which indicates late June–August. The primary endpoint is to show a ⟩10%-point improvement in ORR. As regards PFS, the FDA has said that a positive trend would be sufficient and that the trend does not have to be statistically significant. However, we believe the PFS data will be important for the commercial position towards payers in later stages. A pre-NDA meeting is scheduled for H2.

Pre-commercial activities. The company indicated a good pace in its pre-commercial activities regarding different outcomes of the crucial AGENT study. On the conference call, the CEO pointed to significant interest in arfolitixorin, which should intensify after full read-out of the study in H2. In our view, the company's preparations for different outcomes of the study strengthen our view that the outcome will not necessarily be binary.

Fair value of SEK14–26 reiterated. In summary, the company looks to have been on track in the quarter. Our 2022 forecasts are largely unchanged, while we have increased the cost base for 2023–2024e.

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