In an Aug. 31 research report, Wainwright analyst Joseph Pantginis commented on FDA approval of Novartis AG's (NVS:NYSE) Kymriah (tisagenlecleucel) for pediatric patients with acute lymphoblastic leukemia (ALL) "ahead of the September 29 PDUFA data following the unanimous positive ODAC (Oncologic Drugs Advisory Committee) vote this past July 12. This first approved CAR-T is priced at $475K vs. our projection of $400K."
Oxford BioMedica (OXB:LSE), as the "sole manufacturer for the lentivirus used to create Kymriah," will be a "direct beneficiary" of the approval, Pantginis wrote.
In light of the early approval, H. C. Wainwright reiterated its Buy rating for Oxford BioMedica and increased its price target to £0.21 from £0.18. "The factors impacting our price target change include: 1) increasing our Kymriah projected chance of success from 90% to 100% for ALL, and 75% to 85% for DLBCL (diffuse large B-cell lymphoma); and 2) based on the adjusted cost of therapy, we are increasing our projected peak sales to $600 million from $525 million for ALL, and $3.85B from $3.75B for DLBCL, " Pantginis wrote. Oxford BioMedica currently trades at ~£0.10/share.
Oxford BioMedica's "recent manufacturing agreement with Novartis was extended for an additional three years (we anticipate longer going forward)," Pantginis stated. "While undisclosed, we project that the overall royalty payable to OXB is 3% of Kymriah sales. . .Therefore, we are adjusting our Kymriah based 2022 revenue to OXB projection to $151.1 million from $127.3 million."
The analyst also recognized the "significant surprise" in Novartis' collaboration with "the Centers for Medicare and Medicaid Services (CMS) to bring forward an outcomes-based payment approach. Specifically, this approach would allow for payment 'only when pediatric and young adult ALL patients respond to Kymriah by the end of the first month.'"
"With continuing, almost global, pushback on the increasing costs of oncology drugs, Novartis is truly breaking significant ground, in our belief," Pantginis commented.
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Disclosures from H.C. Wainwright, Oxford BioMedica Plc, Target Price Revision, Aug. 31. 2017
I, Joseph Pantginis, Ph.D. and Pete Stavropoulos, Ph.D. , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of Oxford BioMedica PLC (including, without limitation, any option, right, warrant, future, long or short position).
As of July 31, 2017 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Oxford BioMedica PLC.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Oxford BioMedica PLC for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in Oxford BioMedica PLC as of the date of this research report.