Prima BioMed Ltd Overview Recommendation: Long Term Speculative Buy Investment: Prima Biomed Ltd ASX Code: PRR Current Price: 13.5 cents Market Cap: $87.52m 12 Month Low: 0.5 cents 12 Month High: 28 cents 12 Month Performance: +2600% Headlines ? Prima has now commenced its Phase IIb Clinical Trial for CVac? in the United States under the guidance of the US Food and Drug Administration (FDA). ? Prima will commence the recruiting of patients for the Phase IIb Trial within 1 ? 2 months. These tests will be conducted on a 60 patient population across multiple centers in the USA and Australia. ? Plans to deliver results from a larger total patient population over a shorter timeframe by conducting concurrent trials in Europe through the European Medicines Agency (EMEA). Company update On Friday Prima BioMed Ltd (ASX: PRR), a company we brought to our clients attention with a buy recommendation at 6.9 cents back in May 2009, released a letter to all shareholders informing them of recent updates and most importantly progress with its crucial Phase IIb Clinical Trial. Although more of an update than an anticipated news announcement, we feel it is worth providing our insights on this and our current stance with PRR. Prima has had a stellar last 12 months and has time and time again achieved strategic objectives that are crucial to this drug reaching commercialisation. We feel that this letter provides comfort for those investors that have ridden the PRR wave, that this company is well on its way to providing a commercially available therapy for ovarian cancer patients in the not so distant future. With the share price stabilizing at 14c, we see this as a good entry point for those clients that exited Prima in the high 20?s and are looking for a possible entry again. For those that didn?t get in on the last run up, here is the opportunity. For those clients that have been watching the Dendreon story, you would be aware that DNDN has its most important date yet set for the 1st May. This is the date that DNDN will be advised by the FDA as to whether they can commercialise their drug or not. Kinetic sees this as a huge buy catalyst for PRR. One only has to look back in time at what happened to Prima?s share price when Dendreon announced their Phase 3 trials back in April 2009. There is no mistaking it; PRR is a huge proxy for DNDN. Australian analysts are rating this stock a buy with a price target between 60 cents to $1.14 over the next 12 months. Don?t miss the next run! ?Kinetic Securities 9/02/2010 3 of 6 About Prima BioMed Prima BioMed is an ASX listed Australian health care company. The Company is focused on technologies in the fields of cancer immunotherapy and immunology. Prima?s lead product is the CVac? ovarian cancer therapy treatment. It has completed two successful clinical trials and is in the final stages of US FDA approval and eventual commercialisation. The Company?s broader, long term goal is to develop commercial cancer treatment technologies and programs for global markets. About CVac? Ovarian Cancer Treatment CVac? is Prima BioMed?s lead product. It is of key importance as there is a large un-met medical need for new treatments for ovarian cancer which has a very high morbidity rate. CVac? is a maintenance therapy administered post-surgery and post-chemotherapy to delay relapse and control metastases. There are currently no products available as maintenance based therapies for ovarian cancer and the global market for ovarian cancer therapeutics was valued at US$2.1b in 2007 and is expected to total US$3.6b by 2010. Regulatory approval and commercialisation of CVac? is the core focus for Prima. Why DNDN is a good comparable for PRR Dendreon is obviously further down the road to commercialisation than PRR, as indicated by its >US$3bn market capitalisation, however we feel that the comparison is a valid one and also an indicator of a potential future market capitalisation for PRR much greater than the current one. We say this for three reasons: 1) The treatment approach is similar. Provenge (DNDN?s drug) is, like CVac?, an ex vivo dendritic cell therapy, the difference being CVac uses mannan/MUC-1 as the stimulating agent whereas Provenge is prostatic acid phosphatise conjugated to GMCSF17. 2) The survival data seems achievable. In the Phase III data released in April 2009 Provenge extended survival in patients in the last stages of the disease by a median of 4.1 months. Given what we know about CVac? this kind of survival data seems achievable in ovarian cancer. 3) CVac? can be administered subcutaneously, whereas Provenge is an intravenous treatment. This gives CVac? a net advantage in terms of ease of administration and, importantly, a theoretical efficacy advantage, since subcutaneous administration would like speed delivery of dendritic cells to the lymph nodes. ?Kinetic Securities 9/02/2010 4 of 6 What the CVac?s? Phase IIa data told us In CVac?s? Phase IIa trial, 21 late-stage ovarian cancer patients were studied for the duration of response and the period in which they were disease-free, based on measurement of CA125, a biochemical marker that oncologists traditionally use in following the progression of ovarian cancer. Of the 21 patients four registered a positive clinical response or stabilisation of disease, for a 19% response rate. This may not seem like much, but was actually quite an achievement because: 1) The patients were late stage - having failed other therapies, their CA125 levels were rising rapidly by the time they enrolled, which meant that any response rate above 10% was considered remarkable; 2) The response, when it happened, was long-lasting, ranging from 27 weeks to 44 weeks, which was significant given the low life expectancy of the patients enrolled. We understand the average progression free interval was 127 days; 3) Around half of the patients notionally gained some benefit. The 19% response rate was for those patients where CA125 went down or only rose slowly. Another 5 patients registered some response to the vaccine for shorter periods, suggesting that around half of all patients gained some benefit from the vaccine; 4) There were no safety issues as measured by ?serious adverse events?. This suggests CVac? can deliver on being a gentler form of cancer therapy than chemo or radiotherapy; 5) Other cancer products have had lower response rates. Provenge?s Phase II response rate, as measured by a reduction in biomarker levels, was 16%6. This subsequently translated into strong Phase II data on progression free intervals and overall survival. It?s also worthwhile considering the example of Tarceva, a Roche/Genentech drug for the treatment of non-small-cell lung cancer. That product?s worldwide annual rate of sales is currently running at in excess of US$1.2bn7. A typical response rate for Tarceva as a lung cancer monotherapy is in the order of 10-20%. The path to 60 cents per share We see a number of catalysts emerging to drive PRR?s stock price towards analyst?s price targets over the next 12 months: 1) Recognition of the near-term nature of the story. With PRR entering Phase IIb and Phase III trials in the near future we believe sentiment on the stock will improve as investors realise that part of the earlier-stage risk has been taken out. 2) Commencement of the Phase IIb trial. We expect that PRR will dose the first patient in the Phase IIb trial before 2009 is out. We see the publicity this trial is likely to garner as attracting new investor interest in the stock. ?Kinetic Securities 9/02/2010 5 of 6 3) Progress on recruitment to the trial. As new patients are recruited into the IIb trial as well as the European Phase III trial we expect that confidence will build regarding PRR meeting its timelines for completion. 4) Public awareness of ovarian cancer. As a disease specific to women with a relatively low five-year survival rate, ovarian cancer and prospective treatments for it attracts media attention from time to time. This may help focus public attention on the prospects for CVac?s clinical success. 5) Patent grants and Orphan Drug Designation. Not all of PRR?s intellectual property is covered by granted patents in Europe and the US. We see future patent grants as increasing the comfort level on the validity of PRR?s technology. Orphan Drug Designation will also provide 7 year exclusivity in US and 10 years in Australia, New Zealand, Japan and Europe.
PRR Price at posting:
12.3¢ Sentiment: Buy Disclosure: Held