Two Biotechs Earn Analyst's Top Pick Ranking

In the first quarter of 2018, Echelon selected Theratechnologies Inc. (TH:TSX) as a Top Pick in anticipation of the company's acquisition of FDA approval for ibalizumab (Trogarzo) for treatment of HIV infection. Theratechnologies announced FDA approval on March 6 for "the treatment of human immunodeficiency virus type 1 (HIV-1) infection in heavily treatment-experienced adults with multidrug resistant HIV-1 infection failing their current antiretroviral regimen."

In a March 7 research report addressing the approval, Loe noted that the company's partner, TaiMed Biologics Inc. (4147:TT), had achieved "that seminal regulatory milestone a full month earlier than the previously disclosed PDUFA date in Apr/18." The company's original PDUFA date was in January 2018.

Previously, Echelon commented positively on readouts from clinical trials on ibalizumab, noting the drug "not only performed well on its primary endpoint (reduction in HIV-1 RNA load at seven days) but also as well or better at longer-term 24-week and 48-week time points (the FDA specifically mentions ibalizumab's 24-week data, with 43% of subjects achieving threshold [undetectable] levels of HIV-1 RNA reduction in the process, an extremely rigorous standard that ibalizumab met and which Thera reported back in Feb/17)."

Theratechnologies and TaiMed are prepared to launch the drug in April 2018, according to Loe. "Thera confirmed that partner TaiMed, through its contract manufacturer WuXi Pharma Tech (WX:NYSE), already has commercial batches of active ibalizumab available for launch, and so pending conclusion of initial fill/finish/packaging/labelling activities that can now drive forward, we believe that Thera's timelines to launch are achievable and consistent with our previous expectations," the analyst wrote.

Echelon's revenue projections for Trogarzo are based on medical population forecasts that "there are about 10,200–11,200 patients with multidrug-resistant HIV-1 infection, a market size we derive from published epidemiological data we have reviewed in prior notes."

Concerning Trogarzo's entry into the European market, Loe wrote, "We remain confident that EU regulators will consider existing Phase III ibalizumab data to be sufficient to support filing," and that such a filing will be bolstered by FDA approval in the U.S. In a January 10 research report, Loe expressed his firm's belief that "EMA ibalizumab approval could transpire by mid-F2019 and then [be] launched by Thera in FH219, generating gross ibalizumab sales in that period of $35.0M, increasing to $106.2M in F2020."

Loe also commented on the compound's orphan drug status, noting this "still confers some benefits that remain relevant to our TH investment thesis and ibalizumab's peak revenue potential—these include seven years of US market exclusivity independent of any intellectual property considerations and tax credits ascribed to R&D costs."

In a February 8 research report, Loe outlined the company's financial status following its FQ4/17 reporting. He noted that sales of Egrifta, which addresses "lipodystrophy, a condition that can cause people with HIV to develop visceral adipose tissue (VAT)," achieved a "record level" despite headwinds.

News of the FDA approval prompted Echelon to boost Theratechnologies' price target from $10 per share to $12.50. Shares are currently trading at about $9.81.

The second Top Pick company under Loe's watch is Immunovaccine, which is focused in the field of immuno-oncology. "We see compelling value drivers on the horizon that we believe can sustain Immunovaccine's recent trajectory on value creation," Loe wrote in a January 10 research report.

Front and center in Loe's selection of Immunovaccine Inc. (IMV:TSX; IMMVF:OTCQX) is its "flagship" platform DepoVax, and "a DepoVax formulation of the cancer antigen survivin called DPX-Survivac, from which we have positive immune response/tumor response data from a 40-patient Phase I/II recurrent ovarian cancer trial combining DPX-Survivac with Incyte's (INCY:NASDAQ) Phase III-stage small-molecule checkpoint inhibitor drug epacadostat."

Though the data set was small, Echelon considered a December 2017 readout from the trial "still impressive in our view with 70% clinical benefit rate over a 3–14 month time horizon for patients receiving a lower dose of epacadostat (100 mg BID) and with two of three higher epacadostat (300 mg BID) separately showing evidence of clinical benefit though over a shorter average time course so far (high-dose patients initiated therapy more recently)."

Echelon also noted that Immunovaccine's "expanding oncology clinical pipeline exploits clear mechanistic synergies achievable when combining DPX formulations with checkpoint inhibitor therapies." The company is also in clinical trials through a partnership with Merck & Co. Inc. (MRK:NYSE), targeting ovarian cancer and recurrent diffuse large B-cell lymphoma.

Another candidate, DPX-RSV, factors into Immunovaccine's Echelon Top Pick status, with Loe commenting that the company "has already generated positive and sustainable antigen-specific immune response data from a 40-patient Phase I respiratory syncytial virus (RSV) trial testing SH-protein-based DPX-RSV."

The DepoVax platform is also in play in malaria, and in a November 2017 research report Loe wrote that, in a pipeline update, Immunovaccine had provided "yet another example of how its lipid-based, water-free DepoVax platform can engender antigen-specific B-cell and T-cell immune response, in this case in malaria in partnership with VA-based conglomerate Leidos [LDOS:NYSE]." The interest of Leidos in advancing from preclinical studies into clinical trials represents "a positive endorsement for DepoVax antigen delivery platform, and in a historically challenging infectious disease market."

In addition, "we continue to be impressed with just how widely DepoVax has performed to expectations in multiple medical markets, including animal/veterinary markets with legacy partner Zoetis (ZTS:NYSE)," Loe wrote.

"We do expect partnership activities to accelerate in F2018 as various DPX vaccine formulations, including but not limited to DPX-Survivac, continue to perform as well on disease-specific outcomes as they have in prior data read-outs," Loe stated, adding that "expansion into new indications is a near-term expectation for the firm, and we would encourage the firm to expand its partnership network to more fully explore the breadth of DepoVax's immunological potential."

Echelon has a $3.25 per share price target on Immunovaccine, which is currently trading at about $1.94 per share.

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Disclosures from Echelon Wealth Partners, Theratechnologies Inc., Mar. 7, 2018

Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.

Is Echelon Wealth Partners Inc. a market maker in the issuer’s securities at the date of this report? No

Disclosures from Echelon Wealth Partners, Immunovaccine Inc., Jan. 11, 2018

Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.

Is Echelon Wealth Partners Inc. a market maker in the issuer’s securities at the date of this report? No