ExpreS2ion Biotech: New strategy evolving
Dividend payment approaching
Bavarian Nordic presented a deferred consideration to AdaptVac of EUR 10m in last week’s Q3 report. This should make up the final payment to AdaptVac in the ABNCoV2 licensing deal which was entered in 2020 and now has been put on hold.
We speculate that EUR 6m of this payment to be distributed to AdaptVac’s shareholders NextGen Vaccines and ExpreS2ion Biotechnologies either in 2024 or 2025, providing ExpreS2ion operations with SEK 22m in cash. This would correspond to around 40 percent of current market capitalization.
A post-covid strategy taking shape
In a sudden move in August, ExpreS2ion decided to put its proprietary program ES2B-C001 on hold. After revising its development strategy, management now intends to pursue a less costly path for this asset. Substantial investments have already been made in the program, but at the moment it lacks funding for progressing into a clinical trial. With a dividend payment in 2024 we estimate that there is enough headway at for a clinical trial application (CTA).
AdaptVac-holding may become asset
In all the disappointment surrounding ABNCoV2 it should be kept in mind that the primary phase 3 endpoint was reached and that data on immunogenic longevity look promising. This provides validation of both the AdaptVac technology and the EXPRES2 platform, which paves the way for future deals and grants. The AdaptVac pipeline is still in early stages but will have the financial resources to advance.
Four malaria programs with University of Oxford
ExpreS2ion Biotechnologies is involved as protein expression supplier in four different malaria vaccine programs initiated by University of Oxford. This institution is a leading force behind the development of new cures for this devastating disease and was the sponsor behind a recent WHO approved vaccine. The ExpreS2ion programs are progressing and may be part of a second or third wave of malaria vaccines.
Fair value slashed, but trades below cash position
In our revision of the commercial prospects for ExpreS2ion we have excluded the Covid-vaccine and taken a more cautious approach to ES2B-C001. However, market capitalization is trading below the cash position, assuming no value in the protein expression platform or stake in AdaptVac. This looks too pessimistic to us as we arrive at a SOTP of SEK 2,2 (12), including full dilution of the TO9 warrant.