Significant Progress Made in NanoAbs Program
On May 12, 2022, BiondVax BVXV announced that Dr. Tamar Ben-Yedidia, the company's Chief Scientific Officer, presented important updates on the NanoAbs program at the Biomed Conference in Tel Aviv, Israel. The company has made a number of recent advancements, including:
• The successful technology transfer from Max Planck to BiondVax's manufacturing facility, which was verified through the successful manufacture of a NanoAb for the treatment of COVID-19 that showed strong in vitro neutralization capability at levels similar to those seen with NanoAbs produced at Max Planck.
• The NanoAbs produced at BiondVax's facility showed strong COVID-19 neutralization capability after being sprayed through a medical device inhaler, thus supporting the use of inhaled NanoAbs for the first-in-human trial scheduled for 2023.
• Max Planck recently generated a new NanoAb targeting the Omicron variant of COVID-19 that successfully neutralized that variant in an in vitro assay. That NanoAb will be produced at BiondVax's manufacturing facility and used in the first-in-human clinical trials.
These are important milestones for the company and it is encouraging to see that the NanoAb program is proceeding along at a good pace. To prepare for first-in-human trials in 2023, the company next has plans to perform large-scale in-house manufacturing of the NanoAbs in Pichia pastoris, a type of yeast with a number of favorable characteristics that make it suitable for manufacturing recombinant proteins. Following NanoAb production, we anticipate testing of the product in a therapeutic hamster model along with GLP toxicology testing in rats. BiondVax recently received supportive Scientific Advice from the Paul Ehrlich Institute (PEI) that included support for conducting a combined Phase 1/2a first-in-human clinical trial that would include patients with confirmed COVID-19 infection. PEI Scientific Advice is typically viewed as a key first step toward approval for a first-in-human clinical trial, and BiondVax will be aligning their development plans with the PEI's advice. In addition, performing a combined P1/2a trial will allow BiondVax to assess safety and efficacy in one trial as opposed to two and could potentially accelerate development timelines. We look forward to additional updates from the company as it continues work toward getting an anti-SARS-CoV-2 NanoAb into clinical trials in 2023.
Anti-SARS-CoV-2 NanoAb Protects Hamsters Following Inhaled Administration
BiondVax recently conducted a webinar with Professor Dr. Matthias Dobbelstein, a Fellow at MPG and Professor at UMG, who provided an overview of NanoAbs, including data for a SARS-CoV-2 NanoAb. During his presentation, Professor Dobbelstein showed data from a small pilot study in which hamsters were protected from COVID-19 by SARS-CoV-2-specific NanoAbs. The following figure shows that hamsters treated with either injected or nasal NanoAbs were protected from infection with SARS-CoV-2 (as judged by the change in body weight on Day 6 post challenge). These are very encouraging results and if replicated in a larger study could also serve as proof-of-concept for inhaled delivery of NanoAbs, which would be an additional advantage over monoclonal antibody treatments for pulmonary conditions such as asthma.
While the pandemic phase of COVID-19 appears to be on the decline, almost all experts agree that SARS-CoV-2 is not ever going to be eradicated and there will likely be seasonal increases in COVID cases similar to what is seen with influenza and other respiratory viruses. Thus, the world is going to continue to need effective COVID treatments. While monoclonal antibody treatments were effective against earlier strains of SARS-CoV-2, with the emergence of the Omicron variant and its subvariants all of the previously approved monoclonal antibody therapies have had their emergency use authorizations rescinded. This presents an opportunity for superior second generation COVID treatments to enter the market, which is expected to total approximately $2.2 billion in 2026 (EvaluatePharma).
On June 1, 2022, BiondVax announced financial results for the first quarter of 2022. The company reports its financials in New Israel Shekels (NIS), which were translated to $US for that quarter using the exchange rate of 3.176 (NIS/$US), the rate as of March 31, 2022. As expected, the company did not report any revenues for the first quarter of 2022. R&D expenses for the first quarter of 2022 were NIS 3.65 million (approximately $1.1 million) compared to NIS 2.8 million for the first quarter of 2021. The increase was primarily due to the new NanoAb program. G&A expenses for the first quarter of 2022 were NIS 4.6 million (approximately $1.5 million) compared to NIS 4.0 million for the first quarter of 2021.
As of March 31, 2022, BiondVax had approximately NIS 48.9 million (approximately $15.4 million) in cash and cash equivalents, which was partly due to an underwritten public offering in December 2021 that resulted in gross proceeds of approximately $9.0 million. With a current burn rate of approximately $1 million per month, we estimate the company has sufficient capital to fund operations for the next 15 months. As of March 31, 2022, BiondVax had approximately 18.6 million ADS outstanding (of which approximately 21% is owned by a single long-term shareholder) and, when factoring in options and restricted stock units, a fully diluted ADS count of approximately 20.2 million.
Valuation and Conclusion
We value BiondVax based on the potential for the company's SARS-CoV-2 NanoAb candidate as well as the NanoAb pipeline that the company will be developing now that the final agreements with the MPG and UMG are signed. Investors should be aware that a valuation assigned to a therapeutic for a pandemic virus is fraught with uncertainty and will likely need to be adjusted many times both as the therapeutic is developed and the trajectory of the pandemic unfolds. Thus, what we present below is how we view the current situation and as events change our analysis is likely to change along with them.
At this juncture, we see the most likely outcome for an effective SARS-CoV-2 treatment being a U.S. government procurement contract such that the therapy can be administered in a judicious and fair manner. We anticipate BiondVax obtaining proof-of-concept data for the SARS-CoV-2 NanoAb in 2022 and obtaining initial clinical trial results in 2023. Our estimate for approval is currently 2025, at which time we model for a $350 million contract. We assign a 4x multiple, a 15% probability of approval, and a 20% discount rate, which leads to a net present value for the SARS-CoV-2 NanoAb of $122 million.
For the NanoAb pipeline, we assign a valuation of $150 million. This is derived from estimating peak sales ten years from now for the candidates in psoriasis, psoriatic arthritis, asthma, and macular degeneration of $1.5 billion, $750 million, $1.5 billion, and $1 billion, respectively, applying a 4x multiple to peak sales, a 5% probability of approval, and a 20% discount rate. These values are going to change as the NanoAb pipeline matures, but we believe this is a fair valuation estimate as of today.
Combining the net present value for the SARS-CoV-2 NanoAb candidate, the NanoAb pipeline, and the company's current cash position leads to a valuation of approximately $288 million. BiondVax currently has a fully diluted share count of approximately 20 million ADSs and we add 4 million ADSs for future dilution as the company will need to raise additional funds to acquire clinical proof-of-concept data for the SARS-CoV-2 asset. This leads to a current valuation of $12 per ADS and we note that there is still room for upside to that valuation as the NanoAb pipeline develops.
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