Blasts get blasted but dose needs definition

Celyad 7 December 2018 Update
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Celyad

Blasts get blasted but dose needs definition

ASH update

Pharma & biotech

7 December 2018

Price

€18.66

Market cap

€223m

$1.18/€

Cash (€m) at 30 September 2018

55.9

Shares in issue

11.94m

Free float (Edison estimate)

67%

Code

CYAD

Primary exchange

Euronext Brussels

Secondary exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

(23.5)

(24.3)

(41.2)

Rel (local)

(19.5)

(16.8)

(29.6)

52-week high/low

€38.7

€18.7

Business description

Celyad is developing an innovative natural killer receptor (NKR) CAR T-cell immune-oncology platform. Celyad has a leading position in CAR for AML and solid tumours and is exploring the use of NKR CAR with chemotherapy. It holds a key granted patent in allogeneic CAR technology.

Next events

Further data

H1 (mid) 2019

FY18 results

Q119

Analysts

Dr John Savin MBA

+44 (0)20 3077 5735

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Celyad is a research client of Edison Investment Research Limited

Data at ASH on 3 December confirmed that CYAD-01 T-cells can destroy acute myeloid leukaemia (AML) blast (cancer) cells. In eight reported AML patients, there was a 62% (5/8) response rate across three dose levels. As preconditioning was not used, this rate is impressive. Safety was excellent with only one dose-limiting toxicity event at a high dose. The good safety profile should now enable faster progress to determine the optimal dose schedule. Further data are promised in H119, probably mid-year. A study combining CYAD-01 with preconditioning is underway and may be crucial. The indicative value is still €1,090m (€89 per share) pending further data.

Year
end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/16

8.52

(20.00)

(2.09)

0.0

N/A

N/A

12/17

3.54

(26.80)

(2.79)

0.0

N/A

N/A

12/18e

0.00

(27.25)

(2.43)

0.0

N/A

N/A

12/19e

0.00

(28.50)

(2.38)

0.0

N/A

N/A

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

Lots of detail but no clear dose response in AML

In the reported open-label THINK study to date, 14 patients were dosed of whom eight were relapsed or refractory (r/r) cases, so small numbers to date. AML is a very aggressive and mutationally varied cancer affecting individuals usually from their late 60s. Three r/r AML patients showed complete remission (38%), but due to prior chemotherapies, none had a full haematological recovery. One, treated at the low dose (3x108) in November 2017, proceeded to a stem cell transplant; the best outcome to date. Long-term persistence of CYAD-01 cells is needed for disease control, but one course (three infusions) at a low dose is insufficient to control blasts for more than a few months at best. Multiple CYAD-01 courses are needed. Crucially, the NKG2D receptor used in CYAD-01 is not immunogenic so CYAD-01 can be repeatedly dosed. All patients showed high levels of the NKG2D ligands targeted by CYAD-01, especially the heterogeneous MICA and MICB ligands.

Next AML data by mid-2019

The THINK study will recruit a further cohort to test multiple dosing: six injections over two months; data are promised in H119 (probably mid-year). A further 21-patient study now running is DEPLETHINK; initial data due in H119. This uses preconditioning (Cy-Flu lymphodepletion) to drive in vivo CYAD-01 expansion. Early solid cancer data from SITC (Nov 2018) indicates CYAD-01 can expand further after preconditioning. In our view, CYAD-01 still needs higher, consistent CR rates and survival data to progress into further pivotal studies. This probably just needs more patients to be studied at high doses. CYAD-01 safety now seems established.

Valuation: Unchanged at €1,090m pending more data

The overall indicative value remains €1,090m, €89 per share based on a 25% probability of success in AML. The timing, design and costs of pivotal studies are still not determined, and this will affect future value estimates. A multiple dose therapy will be expensive and will need reliable outcomes for strong sales.

Exhibit 1: Financial summary

€000s

2016

2017

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

8,523

3,540

0

0

Cost of Sales

(53)

(515)

(500)

(500)

Gross Profit

8,470

3,025

(500)

(500)

EBITDA

 

 

(21,246)

(22,317)

(26,500)

(27,750)

Operating Profit (before amort. and except).

 

 

(22,006)

(23,283)

(27,500)

(28,750)

Intangible Amortisation

(756)

(748)

(750)

(750)

Other income and charges

0

(26,273)

0

0

Share-based payments

(2,847)

(2,569)

(2,600)

(2,600)

Operating Profit

(25,609)

(52,873)

(30,850)

(32,100)

Net Interest

1,997

(3,521)

250

250

Profit Before Tax (norm)

 

 

(20,009)

(26,804)

(27,250)

(28,500)

Profit Before Tax (FRS 3)

 

 

(23,612)

(56,394)

(30,600)

(31,850)

Tax

6

1

0

0

Profit After Tax (norm)

(20,003)

(26,803)

(27,250)

(28,500)

Profit After Tax (FRS 3)

(23,606)

(56,393)

(30,600)

(31,850)

Average Number of Shares Outstanding (m)

9.3

9.6

11.2

12.0

EPS - normalised (c)

 

 

(209)

(279)

(243)

(238)

EPS - (IFRS) (c)

 

 

(253)

(586)

(273)

(267)

Dividend per share (c)

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

N/A

N/A

N/A

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

53,440

41,232

40,492

39,752

Intangible Assets

49,566

36,508

35,768

35,028

Tangible Assets

3,563

3,290

3,290

3,290

Investments

311

1,434

1,434

1,434

Current Assets

 

 

85,366

36,393

50,659

22,149

Stocks

0

0

0

0

Debtors

1,359

233

233

233

Cash (cash plus deposits)

82,587

33,905

48,171

19,661

Other

1,420

2,255

2,255

2,255

Current Liabilities

 

 

(11,275)

(7,944)

(7,944)

(7,944)

Creditors

(9,960)

(7,509)

(7,509)

(7,509)

Deferred revenue

0

0

0

0

Walloon loans and bank loan

(1,315)

(435)

(435)

(435)

Long Term Liabilities

 

 

(36,646)

(22,146)

(22,146)

(22,146)

Loans (non-current) Bank and Walloon

(7,866)

(1,870)

(1,870)

(1,870)

Other long term liabilities

(28,780)

(20,276)

(20,276)

(20,276)

Net Assets

 

 

90,885

47,535

61,061

31,811

CASH FLOW

Operating Cash Flow

 

 

(26,695)

(46,027)

(26,514)

(27,471)

Net Interest

1,997

(3,521)

264

(29)

Tax

0

0

0

0

Capex

(1,782)

(858)

(1,010)

(1,010)

Acquisitions/disposals

(1,561)

0

0

0

Financing

0

625

46,140

0

Dividends

0

0

0

0

Other

3,109

1,099

(4,614)

0

Net Cash Flow

(24,932)

(48,682)

14,266

(28,510)

Opening net debt/(cash)

 

 

(96,131)

(73,406)

(31,600)

(45,866)

HP finance leases initiated

0

0

0

0

Loan and finance movements

2,207

6,876

(0)

0

Closing net debt/(cash)

 

 

(73,406)

(31,600)

(45,866)

(17,356)

Source: Edison Investment Research estimates, Celyad reports and announcements

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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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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