Company profile - Brighter Actiste feature image - 16092019 - JPG

Approvals in the UAE and Saudi Arabia

Brighter 24 November 2020 Update
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Brighter

Approvals in the UAE and Saudi Arabia

Financial update

Pharma & biotech

24 November 2020

Price

SEK3.39

Market cap

SEK737m

US$0.11/SEK

Net debt (SEKm) at 30 September 2020

1.8

Shares in issue

217.3m

Free float

99.5%

Code

BRIG

Primary exchange

Nasdaq First North

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

25.6

5.8

(35.2)

Rel (local)

20.3

(3.1)

(44.2)

52-week high/low

SEK6.21

SEK2.26

Business description

Brighter is a Swedish healthtech company addressing common welfare challenges of modern society through a group of innovation companies. Its lead solution, Actiste, currently being commercialised, is aimed at helping people with diabetes adhere to care guidelines and achieve treatment goals by simplifying the everyday treatment and introducing a new layer of data-driven support.

Next events

Actiste commercial launch

2020/2021

Analysts

Maxim Jacobs

+1 646 653 7027

Nathaniel Calloway

+1 646 653 7036

Brighter is a research client of Edison Investment Research Limited

Brighter recently announced that both the United Arab Emirates (UAE) Ministry of Health and Prevention (MOHAP) and the Saudi Food and Drug Authority (SFDA) have provided market approvals for the Actiste device. While all necessary regulatory approvals have been obtained in the UAE, commercialisation in Saudi Arabia will require additional regulatory approvals, such as for consumables, but those are expected to be granted in the coming months. Additional registration efforts are also underway in Malaysia, Singapore, Thailand and Indonesia and are about to start in Kuwait, Oman and Bahrain.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/18

1.1

(48.8)

(0.74)

0.0

N/A

N/A

12/19

3.3

(88.7)

(1.06)

0.0

N/A

N/A

12/20e

12.3

(166.5)

(0.82)

0.0

N/A

N/A

12/21e

93.0

(101.5)

(0.46)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

UAE and Saudi market approvals

Brighter announced approval in the UAE and Saudi Arabia for the Actiste device. While additional regulatory approvals are necessary in Saudi Arabia, those are expected in the coming months. The company expects to use a mix of business-to-consumer (B2C), business-to-business (B2B) and business-to-government (B2G) channels to commercialise Actiste.

High diabetes prevalence in GCC area

Brighter is focusing initially on the Gulf Cooperation Council (GCC) region as this area has an especially high level of unmet need in diabetes. Prevalence ranges from 10.1% to 16.3% of the populations on an age-adjusted basis. In total, 1.2 million adults in the UAE and another 4.3 million in Saudi Arabia are estimated to have the disease.

Progress at Camanio

Camanio, Brighter’s subsidiary that specialises in digital solutions and services for home care, announced that it was included in a nationwide framework agreement in Sweden regarding stationary and mobile care alarms. The agreement is valid for four years and Camanio is one of just five companies included. Additionally, the company announced that sales of the BikeAround jDome and digital therapy animals to municipalities and communities totalled SEK1m on 3 November alone.

Valuation: SEK1,225m or SEK5.64 per basic share

We have lowered our valuation to SEK1,225m or SEK5.64 per share, from SEK1,252m or SEK5.76 per share, mainly due to lower net cash though this was partially offset by rolling forward our NPVs. Brighter had SEK14.4m in gross cash (SEK1.8m net debt) at the end of Q320. We project it will need to raise an additional SEK60m over the rest of the year (previously SEK110m) and SEK175m in 2021. We lowered the financing needs for the rest of the year in part due to lower operating expenses than we expected.

A step forward in the GCC

Brighter announced in November that both the UAE MOHAP and the SFDA have provided market approval for the Actiste device. While all necessary regulatory approvals have been obtained in the UAE, commercialisation in Saudi Arabia will requires additional approvals, such as consumables as well as use of the cellular network for transmission from the Saudi telecoms authority. These additional approvals are expected to be granted in the coming months. The company expects to use a mix of B2C, B2B and B2G channels to commercialise Actiste. According to the International Diabetes Federation, the UAE has 1.2 million diabetics and Saudi Arabia has 4.3 million diabetic adults between the ages of 20 and 79 (see Exhibit 1).

Exhibit 1: Adults aged 20–79 with diabetes in 2019 in target markets

Country

Age-adjusted prevalence
(%)

Prevalence of diabetes in adults aged 20–79 (‘000s)

GCC

UAE

16.3

1,223.4

Saudi Arabia

15.8

4,275.2

Kuwait

12.2

681.1

Oman

10.1

291.8

Qatar

15.6

347.0

Bahrain

15.6

202.7

South-East Asia

Indonesia

6.3

10,681.4

Thailand

7.0

4,284.9

Singapore

5.5

640.4

Malaysia

16.7

3,652.6

Europe

Sweden

4.8

521.2

Source: IDF Diabetes Atlas, Ninth Edition

Additional registration efforts are also under way in Malaysia, Singapore, Thailand and Indonesia, and about to start in Kuwait, Oman and Bahrain. Also, as of May the service is commercially available in Sweden and the company is harvesting user insights that will help it improve the experience over time.

Camanio subsidiary progressing

Camanio, Brighter’s subsidiary that specialises in digital solutions and services for home care, announced that it was included in a nationwide framework agreement with the Swedish Association of Local Authorities and Regions (SALAR) regarding stationary and mobile care alarms. The agreement is valid for four years and Camanio is one of just five companies included. A similar framework agreement from October 2016 to December 2019 resulted in SEK194m in sales for the participating companies over the same period.

Additionally, the company announced that Camanio sales of the BikeAround jDome and digital therapy animals to municipalities and communities totalled SEK1m on 3 November alone (though we believe the sales were likely timed to coincide and that the daily run rate will not be that high over the quarter). Demand for these products and services have increased due to the COVID-19 pandemic.

Valuation

We have lowered our valuation to SEK1,225m or SEK5.64 per share, from SEK1,252m or SEK5.76 per share, mainly due to lower net cash though this was partially offset by rolling forward our NPVs.

Exhibit 2: Brighter valuation table

Programme

Market

Probability of success

Launch year

Upper tier launch pricing
($ per month)

Lower tier launch pricing
($ per month)

Peak revenue ($m)

Valuation (SEKm)

Actiste

Nordic region

30%

2020

131.3

71.6

5.5

26.3

Gulf Cooperation Council countries

30%

2020

112.5

61.4

45.7

178.3

South East Asia

30%

2020

93.8

51.1

54.7

261.7

EU

25%

2021

133.9

73.0

243.1

680.0

US

20%

2021

143.1

78.0

193.1

487.8

Unallocated costs

(407.7)

Total

1,226.4

Net cash (debt) (at 30 September 2020) (SEKm)

(1.8)

Total firm value (SEKm)

1,225

Total shares (m)

217.3

Value per basic share (SEK)

5.64

Source: Edison Investment Research

Financials

The company reported sales of SEK2.5m in Q320, up from SEK2.1m in Q220, with the vast majority of sales coming from the Camanio segment. The companywide Q320 operating loss was SEK41.0m for the quarter, compared to a loss of SEK12.6m in Q319, as operating expenses increased in part due to the acquisitions of Pink Nectarine Health and Camanio in late 2019/early 2020. However, this loss is down from the SEK46.4m loss seen in Q220 as external costs were reduced. Following these results, we have lowered our 2020 revenue estimates from SEK15.8m to SEK12,3m, but have kept our 2021 sales estimates the same. We have also decreased our operating expense estimate by approximately SEK15m for both years due to a lower expense run rate versus our prior expectations.

The company had SEK14.4m in gross cash on hand at the end of Q320. In September, prior to the end of the quarter, Brighter had raised SEK21.7m through a warrant exercise and an additional SEK21.0m through a directed share issue. At the end of the quarter, the company reported SEK7.0m in short-term debt and SEK9.2m in long-term debt; after considering gross cash, we calculate SEK1.8m net debt. We project Brighter will need to raise an additional SEK60m by the end of this year (versus our previous estimate of SEK110m,) and SEK175m in 2021. We lowered the financing needs for the rest of the year in part due to lower operating expenses than we expected. The company management has stated that there is an equity-based financing contract in place for funding routine operations for at least the next 12 months.

Exhibit 3: Financial summary

SEK'000s

2018

2019

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,052

3,284

12,312

93,039

Cost of Sales

0

(1,246)

(4,432)

(18,608)

Gross Profit

1,052

2,039

7,879

74,431

General and Administrative Expenses

(13,014)

(23,418)

(71,439)

(72,153)

Other Operating Expenses

(32,201)

(52,365)

(72,157)

(72,879)

EBITDA

 

 

(44,163)

(73,744)

(135,716)

(70,600)

Operating Profit (before amort. and except.)

 

 

(44,326)

(78,857)

(163,866)

(98,750)

Intangible Amortisation

0

0

0

0

Other

0

0

0

0

Exceptionals

0

0

0

0

Operating Profit

(44,326)

(78,857)

(163,866)

(98,750)

Net Interest

(4,476)

(9,875)

(2,584)

(2,739)

Other

(4,278)

(953)

0

0

Profit Before Tax (norm)

 

 

(48,802)

(88,732)

(166,450)

(101,490)

Profit Before Tax (FRS 3)

 

 

(53,080)

(89,685)

(166,450)

(101,490)

Tax

0

0

0

0

Deferred tax

(0)

(0)

(0)

(0)

Profit After Tax (norm)

(48,802)

(88,732)

(166,450)

(101,490)

Profit After Tax (FRS 3)

(53,080)

(89,685)

(166,450)

(101,490)

Average Number of Shares Outstanding (m)

71.7

84.7

203.3

219.5

EPS - normalised (ore)

 

 

(74.00)

(105.85)

(81.86)

(46.24)

EPS - FRS 3 (SEK)

 

 

(0.74)

(1.06)

(0.82)

(0.46)

Dividend per share (ore)

0.00

0.00

0.00

0.00

BALANCE SHEET

Fixed Assets

 

 

112,430

186,740

271,289

331,973

Intangible Assets

102,930

158,677

222,556

282,869

Tangible Assets

8,537

16,470

37,115

37,486

Other

964

11,593

11,618

11,618

Current Assets

 

 

58,186

68,925

132,385

149,408

Stocks

7,070

6,831

19,065

19,065

Debtors

40,358

44,396

80,780

80,780

Cash

9,031

9,340

19,475

36,498

Other

1,727

8,358

13,065

13,065

Current Liabilities

 

 

(63,698)

(46,308)

(38,886)

(54,352)

Creditors

(11,805)

(35,666)

(31,930)

(47,396)

Short term borrowings

(51,893)

(10,642)

(6,956)

(6,956)

Long Term Liabilities

 

 

0

(1,581)

(69,266)

(244,272)

Long term borrowings

0

(1,390)

(69,203)

(244,203)

Other long term liabilities

0

(191)

(63)

(69)

Net Assets

 

 

106,918

207,776

295,522

182,757

CASH FLOW

Operating Cash Flow

 

 

(68,249)

(93,902)

(176,113)

(86,017)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(29,986)

(40,125)

(71,512)

(71,960)

Acquisitions/disposals

0

0

0

0

Financing

34,655

150,532

244,053

0

Conversion of convertible debt instruments

43,065

0

0

0

Dividends

0

(494)

0

0

Other

(14,406)

(18,685)

(35,965)

0

Net Cash Flow

(34,921)

(2,673)

(39,536)

(157,977)

Opening net debt/(cash)

 

 

(1,580)

42,862

2,692

56,684

HP finance leases initiated

0

0

0

0

Exchange rate movements

0

0

0

0

Other

(9,521)

42844

(14,456)

0

Closing net debt/(cash)

 

 

42,862

2,692

56,684

214,661

Source: Edison Investment Research, company accounts


General disclaimer and copyright

This report has been commissioned by Brighter and prepared and issued by Edison, in consideration of a fee payable by Brighter. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Brighter and prepared and issued by Edison, in consideration of a fee payable by Brighter. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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