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Analysis: "Broadening the portfolio"

Detta är en betald analys på uppdrag av ExpreS2ion Biotech Holding utförd av Analysguiden

Deal with Adaptvac reduces portfolio risk

ExpreS2ion is broadening its portfolio by exercising an option from its partner Adaptvac to take control of full rights to the preclinical project AV001, a therapeutic breast cancer vaccine. The large exposure in the valuation that the company previously had to Adaptvac's corona vaccine decreases and AV001 becomes an almost equally important part of our Sum-of-The-Parts–valuation. The listed entity ExpreS2ion Biotech Holding AB holds 100 percent of ExpreS2ion Biotechnologies ApS, the operative entity based in Horsholm, Denmark.

To enable this reallocation of the company, the Board proposes a new share issue of SEK 131 million with preference for shareholders to be subscribed for during October at SEK 12. The offer includes two warrants for free, TO4 and TO5, which during the next year can bring in an additional SEK 22-80 million depending on the share price development.

Reduced ownership in Adaptvac

In order to exercise its option, ExpreS2ion pays a fee of SEK 3.5 million. The bulk payment is made by the transfer of 16 percentage points of its ownership in Adaptvac to the other shareholders of Adaptvac. We interpret this transaction as being done without any cash consideration to ExpreS2ion. Following the transaction, ExpreS2ion will own 34 percent of the shares in Adaptvac compared to the previous 50 percent.

After the July agreement between Adaptvac and Bavarian Nordic, the responsibility for further development of the PREVENT-nCoV corona vaccine will be transferred to Bavarian Nordic, an integrated vaccines company with majority of its commercial operations in US. A Phase 1/2a study is expected to begin already in the fourth quarter of this year. As early as the first quarter of 2021, Bavarian expect to advance the project to large Phase 3 studies. This ultra-rapid drug development has been made possible by the governmental vaccine demand against the corona virus, which keep the world economy in a choke hold. Decisive in the short term will be how Bavarian Nordic solves the financing of the large phase 3 study, which we estimate can cost up to USD 400 million. An application for support from CEPI, Coalition for Epidemic Preparedness Innovations, has been submitted, but other avenues for soft financing are also open.

Minor increase in Sum of the parts

We are raising our sales assumptions and the likelihood of approval (LOA) of the PREVENT-nCoV project. We see the AV001 advancing towards clinical trials and becoming an important value driver in the long term. These adjustments compensate by a small margin the close to doubling in number of shares following the proposed new share issue. Our summation of the various project values in the company amounts to SEK 24 in a ‘base case’, SEK 1 higher than our previous Sum-of-The-Parts.

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