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Published to the market and investors on 25^th April 2019 @ 8.01am (BST).

Vicore Pharma Holding AB (VICO-SE): Scleroderma the second indication for VP01 (C21)
Recommendation: OUTPERFORM
Target Price: SEK42.00
Current Price: SEK16.65 (CoB on 24^th April 2019)

KEY TAKEAWAY

Vicore announced that it has selected diffuse systemic sclerosis ("dSSc") as the second rare disease indication for lead asset VP01 (C21), which is already in development for idiopathic pulmonary fibrosis ("IPF"). Phase IIa proof-of-concept trials for both indications are expected to start in H2/2019E, with data possible in mid-2021E. Based on the estimated prevalence and limited therapeutic options, our preliminary analysis suggests that dSSc could represent a sales opportunity for VP01 close to that in IPF, for which we forecast c.$1.5bn in peak sales in 2034E. Our valuation and hence SEK42 / share target price for Vicore only reflect risk-adjusted net present values ("rNPVs") for VP01 in IPF and for VP02 in IPF cough; hence, there is upside to our forecasts for development in additional indications. We reiterate our OUTPERFORM recommendation.

Diffuse systemic sclerosis is a rare disease with high unmet need

Systemic sclerosis ("SSc") - or scleroderma - is a chronic autoimmune disease mediated through fibrotic proliferation of connective tissue. It is characterised by skin thickening, and sometimes spreads to inner organs such heart, lungs and kidneys, as well as the musculoskeletal and digestive systems. It is 3 - 4 times more common in women than men. The prevalence is estimated at 150 - 400 individuals per million. There is no curative treatment and disease management therefore focuses on symptom alleviation using e.g. phototherapy, physiotherapy and glucocorticoids. Vicore intends to target the c.20% of patients presenting with the severe diffuse form and that are often treated with potent immunomodulatory drugs or autologous stem cell transplantation. Their disease can be life-threatening, depending on pulmonary, cardiac and renal involvement.

Rationale for development is upregulation of AT2R, the biological target of VP01

Angiotensin II plays an important role in dSSc and the angiotensin II type 2 receptor ("AT2R") is known to be upregulated in dSSc patients. VP01 is a small molecule agonist of the AT2R that increases signalling through the receptor, thus augmenting its antifibrotic, anti-inflammatory and tissue-protective effects, as demonstrated in many relevant preclinical disease models.

Market opportunity for VP01 in dSSc may be as large as in IPF

While the overall SSc patient population is similar to IPF, Vicore will focus on the approx. 20% of patients with severe diffuse disease. That said, we expect the market environment to be less competitive. There are no approved therapies - in contrast to two in IPF, Ofev (nintedanib) and Esbriet (pirfenidone) plus a few in late-stage clinical development - and to our knowledge only one compound is currently undergoing regulatory review following the submission of nintedanib to the FDA in March 2019 for SSc associated interstitial lung disease. Hence, if successful, VP01 could capture a higher market share in SSc than the 15% we currently assume for IPF, a market that was worth c.$2.2bn in 2018.

New indication represents upside to valuation

Our fair value for Vicore only includes rNPVs for VP01 in IPF (c.70%) and VP02 in IPF cough (c.22%) in addition to net cash at YE2019E. Assuming a similar timeline and comparable R&D costs for VP01 in dSSc as in IPF should lead to a significant increase to our valuation. We intend to update our forecasts in due course.

Kind regards,

Brigitte de Lima | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

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