Pixium Vision — Capital increase strengthens funding runway

Pixium Vision (PAR: PIX)

Last close As at 28/03/2024

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Research: Healthcare

Pixium Vision — Capital increase strengthens funding runway

On 13 July Pixium announced a €8m capital increase, which addresses a nearer-term funding need and should enable the company to focus on continuing the ongoing PRIMAvera pivotal study. Net proceeds are expected to provide Pixium with sufficient additional funding to complete all the required implantations and follow-up visits as part of the PRIMAvera study to generate the necessary data required for a CE marking application in Europe. Pixium expects to be sufficiently funded through the end of 2022, which we believe removes a near-term funding gap overhang and may result in market participants placing greater attention on the Prima commercial opportunity and PRIMAvera data inflection point, rather than funding needs.

Written by

Pooya Hemami

Analyst - Healthcare

Healthcare

Pixium Vision

Capital increase strengthens funding runway

Capital increase

Healthcare equipment & services

16 July 2021

Price

€0.76

Market cap

€43m

$1.18/€

Net cash (€m) at 31 December 2020 (excluding lease liabilities)

3.3

Shares in issue (as of 15 July)

57.2m

Free float

64%

Code

ALPIX

Primary exchange

Euronext Growth Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(23.2)

(42.9)

43.7

Rel (local)

(21.4)

(44.8)

13.7

52-week high/low

€2.09

€0.50

Business description

Pixium Vision develops bionic vision systems for patients with severe vision loss. Its lead product, Prima, is a wireless sub-retinal implant system designed for dry-AMD. The company recently started a European pivotal study.

Next events

36-month data from European feasibility study

Q421/Q122

Analysts

Pooya Hemami, CFA

+1 646 653 7026

Maxim Jacobs, CFA

+1 646 653 7027

Pixium Vision is a research client of Edison Investment Research Limited

On 13 July Pixium announced a €8m capital increase, which addresses a nearer-term funding need and should enable the company to focus on continuing the ongoing PRIMAvera pivotal study. Net proceeds are expected to provide Pixium with sufficient additional funding to complete all the required implantations and follow-up visits as part of the PRIMAvera study to generate the necessary data required for a CE marking application in Europe. Pixium expects to be sufficiently funded through the end of 2022, which we believe removes a near-term funding gap overhang and may result in market participants placing greater attention on the Prima commercial opportunity and PRIMAvera data inflection point, rather than funding needs.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

1.8

(9.8)

(0.44)

0.0

N/A

N/A

12/20

2.1

(8.7)

(0.26)

0.0

N/A

N/A

12/21e

2.4

(10.7)

(0.22)

0.0

N/A

N/A

12/22e

1.6

(13.9)

(0.24)

0.0

N/A

N/A

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

New healthcare investors joining Pixium

Pixium announced a €8m (gross) capital increase (€7.376m net) whereby several new healthcare-focused institutional investors agreed to subscribe to 8.097m shares and 4.0486m warrants (each warrant provides the right to purchase one share at €1.24 per share for up to five years) at an effective price of €0.988 for each share plus 0.50 of a share-purchase warrant. Excluding the warrants, shares outstanding will increase by 16.5% (and 24.7% if all warrants are exercised).

Financing boosts US investor base

Most investors in this latest capital increase were US based and healthcare focused, which we believe bodes well for Pixium’s longer-term fundraising needs. We expect Pixium will need to raise further capital to commercialise Prima in Europe and to fund a US pivotal study. Having a strengthened US investor base should increase US investor visibility and could facilitate future funding needs. We believe the company is still interested in obtaining a US listing, although with this latest capital increase, the company has strengthened its working capital and may now have greater flexibility with respect to timing for a potential US listing.

Valuation: Mild dilution in equity valuation per share

After adding €8.3m pro forma H121e net cash and rolling forward our estimates, we obtain an equity valuation of €138.0m, or €2.41 per basic share (vs €2.55 previously). The per-share valuation is affected by increased shares outstanding after the capital increase. Assuming full exercise of the July 2021 warrants, our fully diluted equity valuation would be €2.33 per share.

Funding secured until late 2022

Pixium has announced a €8m (gross) capital increase (€7.376m net of offering costs) by way of a private placement whereby several new healthcare-focused institutional investors agreed to subscribe to 8.097m shares and 4.0486m warrants (each warrant provides the right to purchase one share at €1.24 per share) at an effective price of €0.988 for each share plus 0.50 of a share purchase warrant. Each BSA (warrant) is immediately exercisable on issuance for up to five years. Excluding the warrants, the total number of shares outstanding will increase by 16.5% (and by 24.7% if all warrants are exercised), or to c 57.23m shares outstanding. The new shares are expected to trade from 15 July.

Net proceeds are intended to provide the company with sufficient additional funding to complete all the required implantations and follow-up visits as part of the PRIMAvera European pivotal study to generate the necessary efficacy and safety data required for a CE marking application for the Prima Bionic Vision System in Europe. It has previously guided that top-line PRIMAvera data would be released in early 2023, with the CE mark filing application expected shortly thereafter. Pixium reported H121 gross cash of €10.13m and indicated that with the net proceeds from this capital increase, it expects to be able to finance its operations until year-end 2022.

Overall, we view this announcement as a positive for Pixium as it removes a near-term funding gap overhang given that before the capital increase, the market recognised that Pixium would be in need of additional funds within about six months. With the company now funded through the expected completion of primary data accumulation for the PRIMAvera trial (12 months of data post-implantation) and potentially to the Q123 expected release of primary efficacy data, we believe the company is a better position to focus its efforts on completing this programme and potential investors may now pay greater attention to the Prima commercial opportunity and PRIMAvera data inflection point rather than funding needs.

Most investors in this latest capital increase were US based and healthcare focused, which we believe bodes well for the company’s longer-term fundraising needs. We expect Pixium will need to raise further capital to commercialise Prima in Europe and to fund a US pivotal study, and having a strengthened US investor base should increase US investor visibility, which could facilitate future funding needs. We believe the company is still interested in obtaining a US listing for Pixium, although with this latest capital increase, the company may now have greater flexibility in this regard (it can now wait for a potentially higher market valuation to opportunistically pursue a future raise or US listing).

Prima on track for potential European launch before YE23

Pixium began the PRIMAvera trial for Prima in late 2020 and it announced the first successful implantation in April 2021. The open-label, baseline-controlled, prospective, single-arm confirmatory trial is designed to enrol 38 patients. The primary efficacy endpoint is the proportion of subjects with an improvement of visual acuity of logMAR 0.2 or more from baseline to 12 months and the primary safety endpoint is the number and severity of device and procedure-related serious adverse events at 12 months follow-up. The company expects to release top-line data in early 2023, aiming for a CE mark submission in Europe in H123, leading to a potential European approval and launch in late 2023. For the US market, our baseline estimate continues to assume a potential US launch of H225, but there is a possibility this could be brought forward if the FDA agrees to an approach that would allow the PRIMAvera trial to serve as a registration-enabling study in this market. Nonetheless, we continue to model that a separate US pivotal study will start implantations in H122, and that a US PMA and launch will occur in H225.

Financials

Pixium had a Q420 net cash position of €3.3m (€10.6m in gross cash and €7.2m gross debt), excluding €1.3m in lease liabilities. Since YE20, in addition to this €8m (gross) capital raise, the company raised another €1.25m tranche from its European Select Growth Opportunities Fund (ESGO) financing facility, followed by two €1m tranches (announced in April), and converted about €1.28m of its outstanding ESGO debt into equity. On 8 April, Pixium also received a $1m payment from Second Sight.

We estimate H121 pro forma net cash of c €8.3m (€17.5m gross cash following the capital increase offset by €9.2m estimated current gross debt). We believe Pixium’s funds on hand should last through the end of Q422. Our model assumes Pixium will need to raise €24.4m (from €31.8m, previously) in additional funds before year-end 2023, modelled as illustrative long-term debt, to complete the PRIMAvera pivotal study, all EU-related regulatory and preparatory commercial activities and bring Prima to commercial launch. We expect part of this requirement will be fulfilled using the remaining (or unused) €3.0m in tranches from the ESGO funding facility. All in, we model a €12.5m raise in 2022 and €11.9m in 2023.

Valuation

Our local-currency revenue assumptions are unchanged. We have increased our 2021e net loss estimate by €0.6m to account for the capital raise’s financing costs but have left our operating expense forecasts for 2022 and future years unchanged. We have adjusted our forex assumptions to $1.18/€ (from $1.22/€ previously) and after rolling forward our estimates, we now obtain an rNPV of €129.1m (from €122.5m, previously). After adding €8.3m pro forma H121e net cash, we obtain an equity valuation of €138.0m, or €2.41 per basic share (vs €2.55 previously). The per-share valuation is affected by increased shares outstanding following the capital increase. Assuming full exercise of the July 2021 warrants, our fully diluted equity valuation would be €2.33 per share.

Exhibit 1: Pixium Vision rNPV assumptions

Product contribution

Indication

Status

NPV (€m)

Prob. of success

rNPV (€m)

rNPV/share (€)

Launch year

Peak sales (€m) in 2029

Prima (net of R&D and SG&A costs) in EU Market

Age-related macular degeneration with geographic atrophy

Pivotal study

614.2

25.00%

146.7

2.56

Q423

438

Prima (net of R&D and SG&A costs) in US Market

Age-related macular degeneration with geographic atrophy

Human feasibility trials

361.9

20.00%

72.1

1.26

H225

380

Net capex, NWC & taxes (Global)

(364.0)

(89.1)

(1.56)

Total

612.2

129.7

2.27

Net cash (H121e) pro forma including July 2021 capital increase

8.3

8.3

0.15

Total equity value

620.5

138.0

2.41

Basic shares outstanding (000) (post-July 2021 capital increase)

57,228

Source: Edison Investment Research

Exhibit 2: Financial summary

€000s

2017

2018

2019

2020

2021e

2022e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

2,535

1,598

1,782

2,092

2,440

1,600

Cost of Sales

(1,124)

(41)

0

0

0

0

General & Administrative

(5,324)

(2,019)

(3,572)

(4,017)

(3,800)

(3,545)

Research & Development

(7,817)

(5,297)

(6,563)

(5,711)

(8,400)

(10,400)

EBITDA

 

 

(11,731)

(5,758)

(8,352)

(7,636)

(9,760)

(12,345)

Depreciation

(936)

(677)

(448)

(366)

(409)

(497)

Amortization

0

0

0

0

0

0

Operating Profit (before exceptionals)

 

(12,666)

(6,435)

(8,801)

(8,003)

(10,169)

(12,842)

Exceptionals

0

(5,859)

(69)

(448)

(624)

0

Other

0

0

0

0

0

0

Operating Profit

(12,666)

(12,294)

(8,870)

(8,450)

(10,793)

(12,842)

Net Interest

(876)

(1,277)

(1,006)

(700)

(543)

(1,090)

Profit Before Tax (norm)

 

 

(13,542)

(7,712)

(9,806)

(8,703)

(10,712)

(13,933)

Profit Before Tax (FRS 3)

 

 

(13,542)

(13,571)

(9,876)

(9,150)

(11,336)

(13,933)

Tax

0

0

0

0

0

0

Profit After Tax and minority interests (norm)

(13,542)

(7,712)

(9,806)

(8,703)

(10,712)

(13,933)

Profit After Tax and minority interests (FRS 3)

(13,542)

(13,571)

(9,876)

(9,150)

(11,336)

(13,933)

Average Number of Shares Outstanding (m)

13.3

18.5

22.3

34.0

49.8

57.8

EPS - normalised (€)

 

 

(1.02)

(0.42)

(0.44)

(0.26)

(0.22)

(0.24)

EPS - normalised and fully diluted (€)

 

(1.02)

(0.42)

(0.44)

(0.26)

(0.22)

(0.24)

EPS - (IFRS) (€)

 

 

(1.02)

(0.73)

(0.44)

(0.27)

(0.23)

(0.24)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

9,649

3,666

4,507

3,411

3,226

2,772

Intangible Assets

7,680

2,623

2,361

1,727

1,727

1,727

Tangible Assets

1,970

1,042

2,145

1,684

1,499

1,046

Current Assets

 

 

14,241

17,756

9,107

12,721

12,904

14,677

Short-term investments

0

0

0

0

0

0

Cash

10,532

15,629

6,792

10,566

10,664

12,438

Other

3,710

2,126

2,316

2,155

2,240

2,240

Current Liabilities

 

 

(2,752)

(2,044)

(2,880)

(3,795)

(4,059)

(6,359)

Creditors

(2,752)

(2,044)

(2,880)

(3,260)

(3,524)

(5,824)

Short term borrowings

0

0

0

(536)

(536)

(536)

Long Term Liabilities

 

 

(9,302)

(8,023)

(7,033)

(7,851)

(9,821)

(22,321)

Long term borrowings

(9,130)

(7,870)

(5,787)

(6,695)

(8,665)

(21,165)

Other long term liabilities

(172)

(153)

(1,246)

(1,157)

(1,157)

(1,157)

Net Assets

 

 

11,836

11,355

3,700

4,485

2,249

(11,231)

CASH FLOW

Operating Cash Flow

 

 

(10,605)

(6,174)

(7,282)

(6,206)

(9,761)

(9,592)

Net Interest

(876)

(1,277)

(1,006)

(700)

(543)

(1,090)

Tax

0

0

0

0

0

0

Net Operating Cash Flow

(11,481)

(7,450)

(8,288)

(6,906)

(10,304)

(10,682)

Capex

(191)

(31)

(34)

(82)

(224)

(44)

Acquisitions/disposals

0

0

0

0

0

0

Financing

519

14,068

2,034

9,055

8,656

0

Net Cash Flow

(11,153)

6,587

(6,288)

2,068

(1,872)

(10,726)

Opening net debt/(cash)

 

 

(12,911)

(1,401)

(7,760)

(1,004)

(3,336)

(1,464)

HP finance leases initiated

0

0

0

0

0

0

Other

(357)

(228)

(468)

264

0

0

Closing net debt/(cash)

 

 

(1,401)

(7,760)

(1,004)

(3,336)

(1,464)

9,263

Lease debt

na

na

1,346

1,258

1,258

1,258

Closing net debt/(cash) inclusive of IFRS16 lease debt

(1,401)

(7,760)

342

(2,078)

(206)

10,520

Source: Edison Investment Research, Pixium Vision


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This report has been commissioned by Pixiium Vision and prepared and issued by Edison, in consideration of a fee payable by Pixiium Vision. 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.

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This report has been commissioned by Pixiium Vision and prepared and issued by Edison, in consideration of a fee payable by Pixiium Vision. 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.

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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.

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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.

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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.

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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

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Media and Games Invest — Acquisition of Smaato and updated guidance

Following the KingsIsle transaction in January 2021, Media and Games Invest (MGI) has announced a second transformational deal – the cash acquisition of Smaato (a mobile-first adtech platform) for €140m, 10.7x FY21e EBITDA. The transaction adds scale to MGI’s existing adtech platform, Verve, and brings new capabilities, particularly in mobile web and web programmatic advertising. Smaato’s adj. EBITDA margin (FY20: 25%) will significantly strengthen Verve’s margins (FY20: 9%). Management has raised the group’s FY21 revenue guidance to €234–254m and adj. EBITDA guidance to €65–70m. At the midpoint, the implied valuation of 16.1x EV/FY21 adj. EBITDA remains in line with peers, despite superior growth. The transaction is to be funded from existing cash resources and expected to complete in Q321, with €12.7m held over and payable in March 2022. Leverage remains within management’s target range of 2–3x adj. EBITDA.

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