Edison Issues Initiation on TxCell

May 31, 2016, 05:55 ET from Edison Investment Research

LONDON, May 31, 2016 /PRNewswire/ --

TxCell offers a rare investment opportunity in the regulatory T-cell (Treg) area with major potential in inflammatory and autoimmune disorders. TxCell is restarting the Ovasave Phase IIb study in refractory Crohn's disease; data is due by early 2018. A flexible CAR Treg platform is being actively developed with a leading academic partner to address possible markets like lupus nephritis and perhaps multiple sclerosis. The indicative value is €7.08/share before further funding of an expected €27m over 2016-17. By 2018 a scenario value, given good Phase IIb Ovasave data and partnering plus CAR progression, could be over €300m.

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The valuation of TxCell depends on Ovasave as the sole clinical-stage project. The overall probability is set at 28%, which is a combination of 33% clinical and 85% manufacturing probabilities. A core assumption is that a partner to fund Phase III is found in 2018 in a €175m deal plus 16.5% royalties. A niche orphan product for uveitis (eye inflammation) is in preclinical with a 7.5% probability but with direct sales potential. The CAR Treg platform could become the main value driver due to its versatility and deal potential and is assigned a nominal value of €20m; lupus nephritis in the initial, research-stage indication. This gives a prefunding value of €7.08/share with funding of €27m (net of current cash) until late 2017 needed. If CAR progresses and Ovasave enters Phase III with a partner in a deal worth at least €175m in 2018, the indicative market value could rise to over €300m.

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SOURCE Edison Investment Research