800-742-7730     This email address is being protected from spambots. You need JavaScript enabled to view it.     Offices     News     Family of Companies

NHLD logo
NAM Logo
NationalInsurance Logo
vfin logo
GC logo

VTL Vital Therapies, Inc. - Initiation Note

Vital Therapies, Inc.

BUY (VTL, $4.05)

Phase 3 VTL-308 Trial Appears Well-Suited To Show A Benefit From ELAD; Financing Overhang Removed: Initiating BUY/$12 TP

March 30, 2017

Jonathan Aschoff, Ph.D.


This email address is being protected from spambots. You need JavaScript enabled to view it.

We are initiating coverage of Vital Therapies, Inc. with a Buy rating and a 12-month target price of $12. Vital’s lead product candidate, an extracorporeal liver assist device (ELAD), is an external human cell-based liver support system designed to allow a patient’s diseased liver to potentially regenerate to a healthy state. Our valuation is based entirely upon projected future ELAD sales in the US and EU, with product launches projected in 2H19 and 2H20, respectively, provided that ELAD succeeds in Phase 3. Vital would realistically be able to cover the roughly 200 key treatment centers by itself, and our financial model and valuation reflect that path.

The most important investment catalyst for Vital is the mid-2018 release of Phase 3 ELAD results in severe acute alcoholic hepatitis (AAH), a fatal condition caused by a patient’s relatively recent binge drinking. Clinical success in this subset of AAH would allow Vital to target 20,000 US and 30,000 EU patients that have a high likelihood of near-term death. ELAD would have no competition other than standard of care, which is background therapy in the Phase 3 VTL-308 trial, and thus would be expected to be given along with ELAD.

To be fair, ELAD has had a checkered clinical past, but the population targeted by VTL-308 is highly likely to respond to ELAD therapy. VTL-308 entry criteria are based upon the 60 of 203 patients from the last Phase 3 trial (VTL-208) that had liver dysfunction above a certain threshold, but kidney dysfunction, clotting dysfunction and age below certain thresholds, thereby allowing for a truly sick population that most importantly has a substantial amount of liver dysfunction relative to other dysfunctions. This subgroup from VTL-208 yielded impressive and statistically significant overall survival results, and the robust enrollment into VTL-308 (53 of 150) thus far speaks to the useful size of the market opportunity despite the restrictive enrollment criteria.

ELAD addresses a large and completely unmet market opportunity. For ELAD therapy, we believe that Vital should be able to charge at least $150,000 in the US and over $100,000 in the EU, representing a combined peak market opportunity of $6 billion. We note that Vital's current market value is equal to only 5% of the US opportunity and thus view the company to be substantially undervalued.

Current cash should last into mid-2018. Vital had about $60 million in cash as of YE16 and in 1Q17 raised an additional $32.5 million, which should be sufficient to support its activities into mid-2018, by our projections.


Request Document

Important Disclosures

This publication does not constitute and should not be construed as an offer or the solicitation of any transaction to buy or sell any securities or any instruments or any derivatives of the securities mentioned herein, or to participate in any particular trading strategies. Although the information contained herein has been obtained from recognized services, and sources believed to be reliable, its accuracy or completeness cannot be guaranteed. Opinions, estimates or projections expressed in this report may make assumptions regarding economic, industry, company and political considerations, and constitute current opinions, at the time of issuance, which are subject to change without notice.

This report is being furnished for informational purposes only, and on the condition that it will not form a primary basis for any investment decision. Any recommendation(s) contained in this report is/are not intended to be, nor should it / they construed or inferred to be, investment advice, as such investments may not be suitable for all investors. When preparing this report, no consideration to one’s investment objectives, risk tolerance and other individual factors was given; as such, as with all investments, purchase or sale of any securities mentioned herein may not be suitable for all investors. By virtue of this publication, neither the Firm nor any of its employees shall be responsible for any investment decisions. Before committing funds to ANY investment, an investor should seek professional advice. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice, or to be used by anyone to provide tax advice. Investors are urged to consult an independent tax professional for advice concerning their particular circumstances. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, either expressed or implied, is made regarding future performance.

National Securities Corporation (NSC) and its affiliated companies, shareholders, officers, directors and / or employees (including persons involved with the preparation or issuance of this report) may, from time to time, have long or short positions in, and buy or sell the securities or derivatives (including options) thereof, of the companies mentioned herein. One or more directors, officers, and / or employees of NSC and its affiliated companies, or independent contractors affiliated with NSC may be a director of the issuer of the securities mentioned herein. NSC and / or its affiliated companies may have managed or co-managed a public offering of, or acted as initial purchaser or placement agent for a private placement of any of the securities of any issuer mentioned in this report within the last three (3) years, or may, from time to time, perform investment banking or other services for, or solicit investment banking business from any company mentioned in this report.

This research may be distributed by affiliated entities of National Securities Corporation (NSC). Affiliated entities of NSC may include, but are not limited to, vFinance Investments, Inc., National Asset Management and other subsidiaries of our parent company, National Holdings Corporation.

The securities mentioned in this document may not be eligible for sale in some states or countries, nor be suitable for all types of investors; their value and the income they produce if any, may fluctuate and/or be adversely affected by exchange rates, interest rates or other factors. Furthermore, NSC may follow emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. This report does not take into account the particular investment objectives, financial situation or needs of individual investors. Before acting on any advice or recommendation in this material, the investor should exercise independent judgment as to whether it is suitable in light of his/her particular circumstances and, if necessary, seek professional advice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.

Additional information relative to securities, other financial products, or issuers discussed in this report is available upon request. Neither this entire report, nor any part thereof, may be reproduced, copied or duplicated in any form or by any means without the prior written consent of National Securities Corporation. All rights reserved. NSC is a member of both the Financial Industry Regulatory Authority (FINRA) and the Securities Investors Protection Corporation (SIPC).

For disclosures inquiries, please call us at 1-800-417-8000 and ask for your NSC representative, or write us at National Securities Corporation, Attn. Supervision Department, 410 Park Avenue, 14th Floor, New York, NY 10022, or visit our website at www.nationalsecurities.com

NHLD logo
NAM Logo
NationalInsurance Logo
vfin logo
GC logo

Newsletter Sign Up

News letter