CAR reaches the highest dose

Celyad 1 June 2016 Update

Celyad

CAR reaches the highest dose

Clinical progress and FY15

Pharma & biotech

1 June 2016

Price

€48.7

Market cap*

€453/$507m

*€/$1.12

Cash (€m) at 31 December 2015

108

Shares in issue

9.31m

Free float

54.7%

Code

CYAD

Primary exchange

Euronext Brussels

ADR exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

20.1

29.9

(27.7)

Rel (local)

16.5

24.6

(23.7)

52-week high/low

€66.6

€29.5

Business description

Celyad is developing C-Cure, an autologous Phase III stem-cell therapy for chronic ischaemic heart disease with Phase II data due in June. An innovative cell cancer CAR T-cell NKR-T immuno-oncology programme is in Phase I. Celyad listed an ADR on NASDAQ in 2015.

Next events

NKR-2 ASCO safety

3-7 June

CHART-1 data

Late June

NKR-2 Phase I data

Late June

Analysts

Dr John Savin MBA

+44 (0)20 3077 5735

Celyad is a research client of Edison Investment Research Limited

Celyad can now move to the highest planned dose of 3x107 cells in the important NKR-2 Phase II CAR trial. If the next 30m cell dose is also safe (and the MTD) it will lead to two separate six patient open label studies in Acute Myeloid Leukaemia and Multiple Myeloma. Further data is possible in late June. Efficacy indications in either of these could enable a series of solid tumour exploratory studies. The advantage of the NKR-T immuno-oncology approach is that it is easily transferred to multiple cancer types. FY15 accounts were as expected with year-end cash of €108m.

Year end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/14

0.15

(18.46)

(2.73)

0.0

N/A

N/A

12/15

0.00

(28.35)

(3.26)

0.0

N/A

N/A

12/16e

0.00

(32.54)

(3.50)

0.0

N/A

N/A

12/17e

0.00

(37.74)

(4.06)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items and share-based payments. EPS altered by the share increase from 7.8m to 9.3m in 2015.

CAR progress: high dose cohort can start

Celyad’s emphasis is now on the NKR-T CAR platform with its broad potential in multiple cancer types. The US NKR-2 immuno-oncology Phase I has completed the third dose level and with no safety issues can move to the 30m dose level. It is not certain if this will be the maximum tolerated dose (MTD) expected to be used in later solid tumour studies. Once an MTD is found, the trial will move into an expansion phase where six acute myeloid leukaemia (AML) and six multiple myeloma (MM) patients are recruited in total. Management expects further data by late June. Solid tumour indication studies are being planned at the highest dose level. An allogeneic technology is in preclinical development.

Pivotal cardiac data due in late June

The Phase III C-Cure CHART-1 cardiac regeneration result is expected at the end of June. The primary endpoint is a composite (Bartunek et al, 2015). The CHART-1 outcome will be fascinating and success would trigger the start of the part-US 240 patient Phase III CHART-2. Celyad aims to do a partnering deal, possibly to be signed in 2017. The will enable resources to be focussed onto NKR-T development.

Valuation: Unchanged at €846m/$947m

The core value remains C-Cure at 45% probability of success for CHART-1, and 40% for CHART-2. The probability for CAR in AML and MM remains at 17.5%, but could rise once the last safety hurdle is cleared. The indicative valuation assumes that C-Cure is partnered after Phase III in Europe with some upfront fees; C-Cure was always assumed to be partnered for US marketing. The value estimate remains at €846m/$947m (€88/$98 per share). The FY15 financial results were as expected with cash of €108m. We have updated our 2016 forecast based on the 2015 results. The 2017 forecast (Exhibit 1) does not assume any C-Cure royalties or deals and is preliminary pending the CHART-1 outcome.

Exhibit 1: Financial summary

€000s

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

146

3

0

0

Cost of Sales

(115)

(1)

0

0

Gross Profit

31

2

0

0

EBITDA

(18,247)

(28,639)

(32,769)

(37,718)

Operating Profit (before amort and except)

(18,440)

(28,912)

(33,042)

(37,991)

Intangible Amortisation

(677)

(760)

(760)

(760)

Other income and charges

3,778

0

0

0

Share-based payments

(1,098)

(795)

(795)

(795)

Operating Profit

(16,437)

(30,467)

(34,597)

(39,546)

Net Interest

(16)

558

500

250

Profit Before Tax (norm)

(18,456)

(28,354)

(32,542)

(37,741)

Profit Before Tax (FRS 3)

(16,453)

(29,909)

(34,097)

(39,296)

Tax

0

0

0

0

Profit After Tax (norm)

(18,456)

(28,354)

(32,542)

(37,741)

Profit After Tax (FRS 3)

(16,453)

(29,909)

(34,097)

(39,296)

Average Number of Shares Outstanding (m)

6.8

8.7

9.3

9.3

EPS - normalised (c)

(273.41)

(326.28)

(349.65)

(405.50)

EPS - (IFRS) (€)

(2.44)

(3.44)

(3.66)

(4.22)

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

11,041

50,105

49,222

48,339

Intangible Assets

10,266

48,789

48,029

47,269

Tangible Assets

598

1,136

1,013

890

Investments

177

180

180

180

Current Assets

30,265

109,420

71,482

32,240

Stocks

0

0

0

544

Debtors

830

549

549

0

Cash

27,633

107,513

69,679

30,442

Other

1,802

1,358

1,254

1,254

Current Liabilities

(6,053)

(11,490)

(11,592)

(11,550)

Creditors

(5,276)

(10,592)

(10,592)

(10,592)

Deferred revenue

0

0

0

0

Walloon loans for cash payment

(777)

(898)

(1,000)

(958)

Long Term Liabilities

(11,239)

(36,561)

(30,357)

(30,357)

Walloon loans (non-current)

(10,778)

(10,484)

(9,280)

(9,280)

Other long term liabilities

(461)

(26,077)

(21,077)

(21,077)

Net Assets

24,014

111,474

78,755

38,672

CASH FLOW

Operating Cash Flow

(17,398)

(27,862)

(37,178)

(37,447)

Net Interest

(16)

558

645

123

Tax

0

0

0

0

Capex

(640)

(838)

(150)

(150)

Acquisitions/disposals

(1,550)

(5,186)

0

0

Financing

26,417

109,155

0

0

Dividends

0

0

0

0

Other

1,638

(3,287)

(1,151)

0

Net Cash Flow

8,451

72,540

(37,834)

(37,473)

Opening net debt/(cash)

(9,557)

(16,078)

(96,131)

(59,399)

HP finance leases initiated

0

0

0

0

Walloon loan recognition (non-cash)

(1,930)

7,513

1,102

6,603

Closing net debt/(cash)

(16,078)

(96,131)

(59,399)

(28,529)

Source: Edison Investment Research estimates, Celyad reports and announcements. Note, no deal or 2017 royalties are assumed ahead of the June 2016 CHART-1 readout.

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Celyad and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip Street, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Celyad and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip Street, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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