Southern Cross Equities just issued a 28 page research note on...

Southern Cross Equities just issued a 28 page research note on PRR. Below is the synopsis.


Prima Biomed (PRR)
A powerful Australian cell therapy

PRR is developing CVac, a cellular therapy which is being taken into a Phase IIb clinical trial in ovarian cancer and which is similar to Dendreons recently FDA approved Provenge cancer vaccine. We expect a favourable result for the CVac trial in 2012, which could lead to licensing. PRR has commercially-oriented management. Speculative Buy recommendation and 60 cent target price maintained.
Ovarian cancer is a significant opportunity. Prima Biomed (PRR) is an early stage company developing CVac, a cellular therapy or cancer vaccine for the treatment of various cancers, beginning with ovarian cancer. CVac performed well in this indication in a Phase IIa clinical trial. In the US$2-3bn market for ovarian cancer, existing treatments have a small level of efficacy. This is the main opportunity for CVac. However we also see the potential for the therapy to be applied to other cancers such as breast, kidney and pancreatic.
CVac has performed well in the clinic. CVac performed well in Phase IIa in terms of disease-free survival as well as reduction in cellular markers of the disease. We see the upcoming Phase IIb and Phase III trials as potentially providing the catalyst to unlock commercial revenues to PRR through licensing deals that would yield upfront and milestone payments as well as royalties.
PRR is a well-managed company. We have a high regard for PRRs management led by CEO Martin Rogers. We like the commercial approach that the company has taken towards realising value from the quality science behind CVac.
Target price 60 cents per share. We value PRR on the basis of a successful Phase IIb trial for CVac leading to a licensing deal for the product. Our 60 cent target price for PRR is at the lowpoint of our base case $0.63 / optimistic case $1.12 per share probability-weighted DCF valuation range. We think that the current market capitalisation of Dendreon (Nasdaq: DNDN) of US$5.9bn is indicative of the potential of PRR. Dendreons Provenge cellular therapy, which is similar to PRRs, gained FDA approval in late April 2010.