Joining the US CAR club
Celyad SA (BRU:CYAD) (formerly Cardio3) has completed a US IPO and EU placing to raise $100.1m gross. This will fund an aggressive and ambitious clinical trial programme to develop novel Natural Killer CAR cancer therapy (NKG2D). Celyad aims to start one solid tumour trial per quarter once a Phase I initial AML/MM efficacy signal is detected. This potentially moves NKG2D therapy into large, valuable indications. The core value remains based on C-Cure cardiac cell therapy. Adding CAR AML and MM therapies takes the indicative value to €966m. Solid tumour indications may add €519m, €53/$60 share, but are not currently included as they are still preclinical.
NKG2D CAR potentially targets multiple cancers
The current dose-finding Phase I safety study is in acute myeloid leukaemia (AML) and multiple myeloma (MM). Results will be announced as each three-patient cohort completes dosing; the first patient has been safely treated. If an efficacy signal is seen, Cardio3 will both expand the study in AML and MM and start a series of solid cancer Phase II studies, aiming to start one new indication per quarter. This could open solid tumour CAR therapy, a new market opportunity.
Cardiac: C-Cure cells and surgical devices
The core of Cardio3’s value remains the C-Cure autologous cell treatment for cardiac regeneration. CHART-1 will deliver data by mid-2016; the probability is set at 45%. CHART-2, a part-US Phase III study, is planned to start in H215; Cardio3 has applied to the FDA to use its Cathez catheter delivery system. Cathez and CorQuest are the basis for a high-value cardiac surgery device business.
Valuation: Cash after the IPO
The US IPO of 1.168m ADRs at $68.56 per ADR plus a private EU placing of 0.292m shares at €60.25 raised $100.1m gross; possibly over $90m net. There is a further overallotment period of 15% of the offering for 30 days from 18 June that could raise $15m. Based on a potential 9.53m shares in issue after overallotment, our indicative value has adjusted to €966m, €98/$112 share (formerly €121share) at the IPO $/€ rate of 1.138. The core value remains C-Cure with initial estimates for CAR in AML and MM at 15% probability added. Adding in up to six solid tumours may generate a further €519/$586m of additional value. The placing changes the year-end 2015 cash forecast to €115m.
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