quite an in-depth analysis on Prima which provides a sound...

quite an in-depth analysis on Prima which
provides a sound overview on current status.

"Prima BioMed: Catalysts On The Way
Aug 1 2013, 05:56 | 3 commentsby: Tech Guru | about: PBMD (Prima Biomed Ltd.) Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Prima BioMed (PBMD) is an Australian-listed Biotech company which is cross-listed on the NASDAQ with an ADR. Given its international listing, its market cap ($125m), and, its liquidity (22k shares average, or $70k notional traded daily), it has received little exposure despite a compelling technology platform, solid cash position, and upcoming data catalysts. As management has gotten on the road and started to tell the story, the stock has responded somewhat (from $2.50 in mid-July to $3.20 at 7/30 close), but given the low volumes and overall outlook, I believe there is still room left to run…with some caveats that I will discuss later.

Background

First, some brief background. Prima styles itself as a leader in developing personalized immunocellular therapeutics for cancer. Its lead product, the CVac vaccine, is an autologous dendritic cell-based product, targeted at mucin-1 overexpressing cancer cells, and is indicated for the treatment of epithelial ovarian cancer in remission, after 1st or 2nd line treatment. The company has a strong IP position and is protected from bio-similar competition, and intends to seek Orphan designation for enhanced exclusivity in the US and EU.

Addressable Market Opportunity

For the lead indication, the addressable market can be 'cut' as follows: Ovarian Cancer has an overall incidence of 150,000 per year, with the targeted indication incidence at 35,000 per year between the US and EU7, with approximately 20k in the US alone. Current standard of care is debulking/platinum/Taxane/chemo, which has not changed significantly in 20 years. As such, there is a compelling need for an effective therapy that can be well tolerated and avoid the well known side effects of those agents. Given current biologic pricing of $75k-$100k a year, and an open addressable market in the US of 20k patients, the overall market potential for an agent in this class is $1.5b+ in sales per year.

Beyond ovarian cancer, the approximate incidence (in the United States and the European Union 7) for triple-negative breast cancer is approximately 100,000 per year; for metastatic colorectal cancer it is approximately 180,000 per year; for resectable pancreatic cancer it is approximately 18,000 per year. These represent upside opportunities as the data is less proven, in my opinion.

Catalyst Pathway

Upcoming Data: Two upcoming data readouts are expected on the CVAC vaccine: first, data from its 63 patient phase II trial for CAN-003 (for ovarian cancer) are expected in 3Q/13, which will showcase its immune monitoring capabilities. Second, and more significantly, PBMD will present top line results from the CAN-003 trial (n=63 for CVac or the maintenance treatment of epithelial ovarian cancer patients in remission) on 10/1 at the European Cancer Conference. Interim data from the CAN-003 trial, presented in October and November 2012, demonstrated positive trends in progression free survival and immune responses.

Phase II Trials: Following the '03 results, PBMD intends to initiate several ph-II trials focusing on triple negative breast cancer, resectable pancreatic cancer, and metastatic colorectal cancer which initiate in 4Q/13. The new trials will be co-funded by Prima and the Sächsische Aufbaubank (Saxony Development Bank) in Germany ("SAB"). The SAB will provide for approximately 50% of the total program costs in a non-dilutive grant. The total costs for these trials are estimated at $15mm. Each trial will be a randomized study of CVac as adjuvant therapy in combination with standard of care versus standard of care alone. Prior to study treatment, patients will have undergone standard first line treatment for their cancer type, which is a combination of surgical resection and chemotherapy (and possibly radiation).

CANVAS Trials: Concomitantly, PBMD is enrolling for its 'CANVAS' (Cancer Vaccine Study) trial, which has enrolled 46 patients as of June 30th, and will be a multi-center, randomized, and placebo-controlled study of CVac in mucin 1 positive, epithelial ovarian cancer patients who have undergone optimal surgery and achieve complete remission after first-line chemotherapy. The study objectives are to ascertain if CVac, as compared to a placebo, is able to improve the time patients remain in remission (progression-free survival) and extend overall survival of patients. Safety parameters, quality of life impact, manufacturing quality, and additional laboratory assessments will also be investigated.

Prior Data- Interim CAN-003: In the interim CAN-003 study: There were seven serious adverse events (AE) recorded, with all but one considered to be unrelated to treatment. Median progression free survival (PFS) time of 421 days for the first group of CVac patients, 365 days for the randomised CVac group and 321 days for standard of care= a 2-3 month advantage for CVac users relative to standard of care. PFS results appear slightly superior to other therapeutic vaccines which were ultimately approved.

Solid Cash Position: $30m in cash remaining after FQ4/13, with a current cash burn rate of $5m. Given the support from the German grant to defray trial costs and prudent cash management, the company should have at least 2 years runway (which removes financing overhang). In addition, due to its Australian domicile and tax structure, PBMD can also capture R&D tax credits which return cash to companies who do not earn a profit (as opposed to just generating NOLs in the US), which, in the pre-profit era, will also preserve cash position.

Caveats/Risks: PBMD is a small, illiquid, Australian based company, with a significant retail following (>13,000 shareholders) in Australia, largely due to the stature of the company's non-executive Chairman, Lucy Turnbull, who is quite well known (alongside her husband) by many Australian citizens. Given that the ADR is tied to the Australian liquidity, and the Australian share price is 0.09/share (trades 3mm a day or $270k a day), it still likely remains too small/illiquid for many funds, at this point. Further, shares are likely to remain volatile due to the lack of volume.

Summary/Thesis: Despite its small market cap and illiquidity, PBMD has an interesting technology platform, with good interim data and efficacy, addressing a 'wide open' market in ovarian cancer, and supported by a solid cash position. I believe upcoming catalysts in 2H/13 will drive stock price appreciation into and behind the results, and that the market opportunity is significant enough to warrant a closer look at the company
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