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2021-09-24

Immunovia AB: Vator Securities: Unleashing a paradigm shift in early detection of pancreatic cancer

Advancing into commercial phase, Immunovia has achieved a strong launch of its first product IMMray PanCan-d which was shortly followed by backing of the largest US patient organization Pancreatic Cancer Action Network (PanCAN) and the US National Pancreas Foundation (NPF). Such support provides real-world commercial third-party validation and should reinforce the capital market's confidence in the test's performance and clinical utility offer.

As anticipated, and addressed in our latest update (https://vatorsecurities.se/analysis/commissioned-research-immunovia-ab-2/), there is price elasticity supporting a pricing of USD 995 per test - up from previous company target of USD 600 and in line with conducted pricing analyses and health-economic evaluations. An industry standard discount of up to 30% is expected in the initial stages, decreasing in conjunction with gradual reimbursement unlocking. Broader national health insurance coverage (Medicare) and commercial coverage among 30-50% of US commercial payors is targeted in selected states by end 2022 for familial/hereditary risk group.

Surveillance of familial/hereditary risk patients is currently limited to the population with hereditary background from two or more first-degree relatives, about 350.000 patients in the US (an increase from previous estimate of ~100.000 patients). This translates into an initial addressable market of approx. USD 700m/year given two tests per patient and year in accordance with surveillance guidelines. However, it is likely that the entrance of a simple blood test, such as IMMray PanCan-d, motivates expanding surveillance to include individuals with hereditary predisposition from at least one first-degree relative, still at significant risk of developing disease. This would increase the annual patient population under surveillance in the US to 1.5m, a market expansion of 4x and significant upside to the initial opportunity targeted.

Immunovia is launching and have investigator-driven trials ongoing for the symptomatic and NOD groups. Evidence on clinical utility from these combined with data from ongoing prospective trials will be essential as basis to drive commercial impact. As the commercial roadmap is not as straightforward as for surveillance of the familial/hereditary risk group, it is likely that gradual reimbursement unlocking will start from 2023 onwards - when more substantial evidence on utility should have been gathered. We assume that detailed commercial roll-out and reimbursement plans for these subgroups are being developed precisely as the plan for the familial/hereditary group. We particularly look forward to understanding how the prevalence in the NOD group will be enriched from 0.85% to 2-3% in order for surveillance to qualify for payor coverage. There are established methods available, and we believe that the investigator-driven studies will evaluate these further.

It is worthwhile to yet again emphasize that the opportunities in NOD and symptomatic risk groups have been entirely excluded in the pricing of the share, trading below the value of the initial opportunity in the familial/hereditary risk group. We see significant short-term upside to today's pricing of the company as sales reporting approaches. We maintain the Outperform rating and raise the target price to SEK 320 per share (SEK 300), corresponding to an equity value of SEK 7.2bn non-diluted, derived from a DCF valuation of the opportunity in pancreatic cancer. The value increase is motivated by overall commercial de-risking combined with value expansion achieved through launch, albeit delayed, higher pricing and larger initial US patient population than previously estimated. Surveillance expansion of the familial/hereditary risk group and pipeline program provide further upside potential.

Read more and download the report: Unleashing a paradigm shift in early detection of pancreatic cancer (http://vatorsecurities.se/wp-content/uploads/2021/09/Immunovia-Unleashing-a-paradigm-shift-in-early-detection-of-pancreatic-cancer.pdf)

Marketing material commissioned by Immunovia AB

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