More from southern cros equiteis page on PRR.Prima BiomedCOMPANY...

More from southern cros equiteis page on PRR.

Prima Biomed
COMPANY DESCRIPTION
The Sydney-based Prima Biomed (PRR) is an early-stage biotech company. The company was formed in 2001 in order to take part interests in four early stage biomedical projects emanating from Melbourne?s Austin Research Institute48.
Since 2004 PRR has focused primarily on developing a cellular therapy called CVac for the treatment of various cancers but particularly ovarian cancer. CVac
performed well in a Phase IIa clinical trial in this indication. A Phase IIb trial will complete recruitment around June 2011 while a Phase III will commence shortly.
INVESTMENT STRATEGY
We see a payoff to shareholders in PRR arising from commercial sales of CVac
after FDA and EMA approval, expected in 2014 or 2015.
VALUATION
We value PRR on the assumption that it brings the product to market itself. Our 75 cent target price for PRR is at the lowpoint of our base case $0.77 / optimistic
case $1.02 per share probability-weighted DCF valuation range. We assume that PRR can be re-rated by the market as the quality of the science behind CVac and the fact that a pivotal trial is not far away for this product comes to be more appreciated by the market. We think that the current market capitalisation of Dendreon (Nasdaq: DNDN) of US$5.6bn is indicative of the potential of PRR.
Dendreon gained FDA approval for Provenge, a cell therapy similar to CVac, in April 2010.
RISKS
We see the main risk in PRR as being clinical risk ? ie that CVac fails to perform well in its Phase IIb trial. Another major risk is burn rate. As at March 2011 PRR
had around $16.1m cash and burned around $740,000 per month through 2010. It,has raised $59m in equity capital since 2001. The CVAC trial will cost around US$45m, which will have to be financed by new equity.