The last patient in the phase II study in basal cell carcinoma was dosed in January. 80 patients have now been enrolled. Verrica expects to complete the study and publish topline data in H1 2024, earlier than planned. We are impressed by the speed with which Verrica is conducting this trial. The next milestone from this programme is due upon initiation of phase III, which has not yet been planned. Strong results in the phase II study would be a significant catalyst and significantly change the investment case for Lytix. It would move our base case closer to our bull case, making LTX-315 in basal cell carcinoma (Verrica) the most valuable programme.

A full readout from ATLAS-IT-05 was presented in the webinar on Thursday 29, with 1 partial response, 8 stable disease and 11 progressive disease patients. This corresponds to a disease control rate of 45 percent and an overall response rate of 5%. The key opinion leader, dr Robert Andtbacka, said this was a good result in this challenging patient population that has already received multiple treatments and is essentially end-stage. We also believe this shows LTX-315 in combination with pembrolizumab can have an effect in this patient group, stabilising the disease and contributing to prolonged survival. However, we believe more studies would be needed before a partner might be interested in this particular indication, showing prolonged progression-free survival or overall survival rather than focusing on responses, as in this study. This is likely why Lytix will not add another 20 patients but will focus on ATLAS-IT-06 next, which will begin in H1 2024, recruiting 27 patients with an interim readout in H1 2025.

We have made major changes to our valuation model (discussed below in this update), with larger peak sales for LTX-315 and a longer time to market (we have added three years). The positive and negative changes counteract each other leading to a similar overall valuation as before, but we assume more dilution due to a lower share price. We judge the company will raise around NOK90m by H1 this year. Our base case is NOK13 (NOK14).