Medigene |
Continuing to take steps to focus on core |
Out-licensing agreement |
Pharma & biotech |
21 December 2016 |
Share price performance
Business description
Next events
Analysts
Medigene is a research client of Edison Investment Research Limited |
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Medigene has announced that it has granted an exclusive worldwide licence for the development and commercialisation of its preclinical-stage adeno-associated virus-like particles (AAVLP) technology to 2A Pharma, a Swedish biotech company. The financial details of the agreement are not disclosed, although Medigene has indicated that it will receive clinical, regulatory and commercial milestone payments, as well as royalties on net sales based on the technology. This is another positive development, with Medigene continuing to streamline its focus on its immunotherapy programmes, while retaining potential value from its non-core assets. We maintain our valuation at €233m.
Year end |
Revenue (€m) |
PBT* (€m) |
EPS* (€) |
DPS (€) |
P/E (x) |
Yield (%) |
12/14 |
13.8 |
(5.3) |
(0.42) |
0.0 |
N/A |
N/A |
12/15 |
6.8 |
(12.8) |
(0.74) |
0.0 |
N/A |
N/A |
12/16e |
7.1 |
(13.1) |
(0.66) |
0.0 |
N/A |
N/A |
12/17e |
10.7 |
(10.2) |
(0.50) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Non-core AAVLP technology out-licensed
Medigene’s AAVLP technology has undergone initial preclinical tests, conducted by academic partners. According to the company, it offers the potential to develop vaccines against various indications, including cancer and infectious diseases. Out-licensing the technology while retaining the potential to benefit from any future success is a positive step for Medigene as it continues to concentrate on its core business: the development of T-cell receptor (TCR) modified T-cells and next-generation dendritic cell (DC) vaccines.
Recent progress: TCR technology platform
Medigene has recently made significant progress, announcing its first commercial partnering agreement based on its proprietary TCR technology platform with bluebird bio. The collaboration will seek to identify four TCR therapeutic candidates against four targets. This was a positive development as it validates Medigene’s core TCR technology and makes use of technological synergies to develop new immuno-oncology products, which could prove beneficial. Importantly, it does this while retaining all rights for its proprietary TCR development programme and TCR library.
Valuation: Maintained at €233m
Our rNPV-based valuation remains at €233m or €11.8 per share. We have updated the model to include Q3 reported cash of €43.6m plus the upfront payment from the bluebird bio deal received in early Q4 (€14.4m). We do not include any financial metrics from the AAVLP deal, but note that there is potential for upside if it develops successfully. The rest of our valuation assumptions are unchanged. Medigene is well funded and focused on executing its clinical development strategy over the next few years.
Exhibit 1: Financial summary
€'000s |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
13,784 |
6,808 |
7,056 |
10,667 |
of which: Veregen revenues (royalties/milestones/supply) |
5,195 |
3,101 |
3,462 |
3,737 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
6,096 |
1,214 |
1,100 |
1,100 |
||
Non-cash income (Eligard) |
2,493 |
2,493 |
2,493 |
2,493 |
||
Bluebird bio partnership |
3,338 |
|||||
Cost of sales |
(2,086) |
(1,103) |
(1,305) |
(1,415) |
||
Gross profit |
11,698 |
5,705 |
5,751 |
9,253 |
||
Selling, general & administrative spending |
(7,081) |
(7,615) |
(7,833) |
(8,057) |
||
R&D expenditure |
(7,498) |
(8,529) |
(9,808) |
(10,789) |
||
Other operating spending |
0 |
. |
0 |
0 |
||
Operating profit |
(2,881) |
(10,439) |
(11,890) |
(9,593) |
||
Goodwill & intangible amortisation |
(527) |
(526) |
(525) |
(524) |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Share-based payment |
(66) |
(111) |
(50) |
(50) |
||
EBITDA |
|
|
(2,005) |
(9,384) |
(11,090) |
(8,794) |
Operating profit (before GW and except.) |
|
|
(2,288) |
(9,802) |
(11,315) |
(9,019) |
Net interest |
(1,774) |
(2,914) |
(2,529) |
(2,361) |
||
Other (forex gains/losses; associate profit/loss) |
(1,257) |
(46) |
719 |
1,204 |
||
Profit before tax (norm) |
|
|
(5,319) |
(12,762) |
(13,126) |
(10,177) |
Profit before tax (FRS 3) |
|
|
(5,912) |
(13,399) |
(13,701) |
(10,751) |
Tax |
155 |
400 |
0 |
0 |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(5,164) |
(12,362) |
(13,126) |
(10,177) |
||
Profit after tax (FRS 3) |
(5,757) |
(12,999) |
(13,701) |
(10,751) |
||
Average number of shares outstanding (m) |
12.2 |
16.8 |
19.9 |
20.2 |
||
EPS - normalised (€) |
|
|
(0.42) |
(0.74) |
(0.66) |
(0.50) |
EPS - FRS 3 (€) |
|
|
(0.47) |
(0.77) |
(0.69) |
(0.53) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
46,617 |
53,631 |
45,730 |
46,309 |
Intangible assets & goodwill |
38,377 |
37,792 |
35,188 |
34,664 |
||
Tangible assets |
951 |
2,502 |
3,605 |
4,708 |
||
Other non-current assets |
7,289 |
13,337 |
6,937 |
6,937 |
||
Current assets |
|
|
24,666 |
59,900 |
67,714 |
54,524 |
Stocks |
4,406 |
6,654 |
6,654 |
6,654 |
||
Debtors |
1,733 |
763 |
763 |
763 |
||
Cash |
14,976 |
46,759 |
59,029 |
45,839 |
||
Other |
3,551 |
5,724 |
1,268 |
1,268 |
||
Current liabilities |
|
|
(7,755) |
(9,664) |
(8,376) |
(8,376) |
Trade accounts payable |
(1,785) |
(1,354) |
(1,354) |
(1,354) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Deferred income |
(57) |
(226) |
(226) |
(226) |
||
Other |
(5,913) |
(8,084) |
(6,796) |
(6,796) |
||
Long-term liabilities |
|
|
(14,457) |
(13,879) |
(27,229) |
(23,892) |
Pension provisions |
(413) |
(359) |
(359) |
(359) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(3,221) |
(2,915) |
(2,915) |
(2,915) |
||
Deferred revenues (Eligard non-cash income & bluebird bio) |
(10,823) |
(10,605) |
(23,955) |
(20,618) |
||
Net assets |
|
|
49,071 |
89,988 |
77,839 |
68,565 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(8,765) |
(10,585) |
3,855 |
(11,002) |
Net interest |
9 |
(20) |
(1,029) |
(861) |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(873) |
(1,328) |
(1,328) |
(1,328) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
9,953 |
0 |
||
Equity financing |
14,502 |
43,695 |
819 |
0 |
||
Other |
(62) |
21 |
0 |
0 |
||
Net cash flow |
4,811 |
31,783 |
12,270 |
(13,191) |
||
Opening net debt/(cash) |
|
|
(10,166) |
(14,976) |
(46,759) |
(59,029) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
(1) |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(14,976) |
(46,759) |
(59,029) |
(45,839) |
Source: Medigene and Edison Investment Research
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