vital sign monitoring concept. 3d rendering. abstract mixed media.

DSR reduces congestion in heart failure

Sequana Medical 15 December 2021 Update
Download PDF

Sequana Medical

DSR reduces congestion in heart failure

SAHARA DESERT interim study update

Pharma & biotech

15 December 2021

Price

€7.86

Market cap

€146m

$1.13/€

Net cash (€m) at 30 June 2021 (excluding €0.3m lease liabilities)

14.7

Shares in issue

18.58m

Free float

50%

Code

SEQUA

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.7

21.7

13.3

Rel (local)

9.0

23.2

0.9

52-week high/low

€11.80

€6.22

Business description

Based in Belgium, Sequana Medical develops devices based on its alfapump platform for the treatment of diuretic-resistant fluid overload in liver disease, malignant ascites and heart failure. Alfapump is CE marked for refractory ascites and is in a pivotal North American study for this indication.

Next events

Completion of implantations within POSEIDON alfapump study

Q122

Top line results of SAHARA DESERT study

H222

Analysts

Pooya Hemami, CFA

+1 646 653 7026

Maxim Jacobs, CFA

+1 646 653 7027

Edison profile page

Sequana Medical is a research client of Edison Investment Research Limited

Sequana Medical recently announced positive interim data on six patients in its two-phase SAHARA DESERT study in decompensated heart failure (HF) patients with persistent congestion despite maximal diuretic therapy. While the sample size is small, alfapump DSR was shown to eliminate persistent congestion, restore normal bodily fluid volume and improve diuretic response. The market need for improved HF congestion control is significant, given that there are over one million hospitalisations in the United States annually relating to HF, with c 90% relating to fluid overload (congestion). Sequana expects to report top line data from both phases of the study in H222, which should provide further insight into how effectively once-monthly maintenance DSR therapy can sustain the treatment effect.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

1.0

(14.9)

(1.22)

0.0

N/A

N/A

12/20

1.0

(19.0)

(1.25)

0.0

N/A

N/A

12/21e

0.5

(22.7)

(1.25)

0.0

N/A

N/A

12/22e

1.2

(22.8)

(1.22)

0.0

N/A

N/A

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

Robust treatment effect seen to date

Among evaluable patients in the two-phase study, an average weight loss of c 6kg (c 7% of body weight) versus baseline was observed at the end of Phase I. Diuretic response was also markedly improved compared to baseline, showing a more than doubling of sodium excretion levels (towards near-normal levels). Among four patients who, on average, had reached c 90 days into Phase II, the mean loop diuretics dose was reduced to less than 10% of the baseline (pre-study) dose level. Hence, early indications suggest an intense round of initial direct sodium removal (DSR) therapy, followed by a more convenient ‘maintenance-level’ treatment once-monthly can sustainably reduce congestion and the need for loop diuretics medication, even in patients with persistent congestion despite maximum therapy.

Safety profile generally favourable

There were no clinically significant changes in electrolytes after intense DSR therapy, and the reported adverse events were not substantial, in our view. There was one patient death in a severely ill subject who had a cardiac arrest three days after study initiation, although study site investigators deemed this event as unrelated to the study therapy, procedure or device. The Data Monitoring Committee (DMC) assessed the event as possibly related to the study therapy but recommended that the clinical study continue as planned.

Valuation: Minor adjustments to rNPV

After adjusting our forex assumptions, we obtain a new pipeline rNPV valuation of €255.7m (versus €246.4m previously). After adding H121 net cash of €14.7m (excluding lease liabilities), we obtain an equity valuation of €270.4m or €14.55 per share (€13.30 fully diluted). We expect that Sequana’s funds on hand (€21.8m gross cash as of 30 June 2021) should be sufficient for it to maintain operations into Q222, and we model it will raise €20m in 2022.

SAHARA DESERT interim data show benefit in HF

Sequana Medical announced on 7 December positive interim data on six patients in its SAHARA DESERT study in HF patients with persistent congestion.

As explained in our initiation report, HF can often lead to sodium retention and resulting fluid retention and accumulation (congestion). Congestion in HF patients is generally treated with diuretics in the first line, most commonly loop diuretics (eg furosemide, bumetanide and torsemide), but these drugs become less effective with disease progression. Consequently, there are over one million hospitalisations for HF per year in the United States1 and in Europe and of such admissions, c 90% is due to fluid overload2. Sequana’s DSR approach aims to resolve persistent congestion through the periodic and controlled introduction of a zero-sodium infusate solution, which is designed to remove excess sodium in patients and would then be expected to lead to more regular fluid release into the kidneys and excretion.

. Jackson SL, Tong X, King RJ et al. Circ Heart Fail. 2018 Dec;11(12):e004873. doi: 10.1161/CIRCHEARTFAILURE.117.004873. PMID: 30562099

Costanzo MR, Ronco C, Abraham WT et al. J Am Coll Cardiol. 2017 May 16; 69(19): 2428–2445. doi: 10.1016/j.jacc.2017.03.528

The SAHARA DESERT interim results suggest that alfapump DSR can effectively and rapidly eliminate persistent congestion and restore euvolemia (normal bodily fluid volume) in diuretic-resistant HF patients.

Review of SAHARA DESERT study protocol

In May 2021, the company reported positive data from the RED DESERT study of repeated-dose alfapump DSR in chronic HF patients (taking high doses of oral diuretics), showing that the treatment led to significant and sustained reductions in patients’ required dosing of diuretics after the six weeks of DSR treatment, lasting several months after the last treatment. The SAHARA DESERT trial assesses alfapump DSR in a more severely diseased HF population, namely those with decompensated HF with persistent congestion who were resistant to diuretic medication at study onset. Whereas patients in RED DESERT could manage their fluid overload with high-dose loop diuretics, the SAHARA DESERT study will enrol c 20 evaluable patients in the Republic of Georgia, who even despite taking high dose loop diuretics, still suffer from persistent congestion or fluid volume overload. Initial enrolment began in June 2021 and the open label randomised study consists of two arms (10–12 subjects each); where each arm uses alfapump DSR therapy, but one arm will also add the use of the SGLT2 inhibitor dapagliflozin (orally) to see if the drug provides added benefit. No specific data relating to the use of dapagliflozin were provided in the interim results.

At study onset, subjects are implanted with the alfapump device and discontinue all loop diuretics and then undergo DSR therapy in two phases: an intensive treatment phase (Phase I), followed by maintenance treatment and follow-up phase (Phase II) of 16 weeks.

Exhibit 1: SAHARA DESERT trial protocol

Source: Sequana Medical presentation

The intensive treatment phase (Phase I) lasts between two and six weeks (depending on patient response). In Phase I, DSR treatment will be performed for each subject with the baseline treatment regimen being 1L DSR infusate with a two-hour dwell time. Patients then receive up to once daily titrated DSR treatments for the remainder of Phase I. At the end of two weeks, if certain criteria are met including normalisation in fluid volume, the patient can move on to Phase II. If not Phase I can be repeated two more times up to a maximum of three two-week sessions lasting six weeks in total. During Phase II, all subjects will receive DSR in a monthly maintenance treatment session for four months in total. At study onset, patients underwent an IV diuretic challenge to measure their ‘baseline’ diuretic responsiveness and sodium content in urine output. Additional diuretic challenges are performed in the transition between both phases, and also at the end of Phase II, to evaluate the change in response compared to baseline.

Interim data shows improved diuretic response and euvolemia

All six evaluable patients had severe HF at baseline, as mean left ventricle ejection fraction (LVEF) and NT-proBNP (N-terminal pro b-type natriuretic peptide; levels increase when the heart is not pumping sufficient blood) were in the low 20% range and >6,000pg/mL respectively, versus typical values seen in healthy individuals of 5070% and <125pg/mL (or <450pg/mL for those above the age of 75), respectively. Of the six evaluable patients, one had completed Phase II, three were still within the Phase II stage, one had completed Phase I (and was about to enter Phase II), and one was in the Phase I stage.

The results showed that at the end of Phase I, evaluable patients (n=6) had an average weight loss of c 6kg (c 7% of body weight) versus baseline. DSR therapy was rapidly effective, as three patients only required one two-week session of intensive therapy to meet the criteria needed for entering Phase II, whereas the other evaluable patients met the criteria after two two-week sessions.

Diuretic response at the end of Phase I markedly improved compared to baseline, showing a more than doubling of sodium excretion levels (towards near-normal levels, although specific figures were not provided), as measured by six-hour excretion of sodium after IV administration of 40mg furosemide. Four patients (to date) who had entered Phase II were able to reduce their loop diuretics dose to less than 10% of the baseline (pre-study) dose level, when evaluated on average at c 90 days into Phase II. Hence, while we caution that the sample size remains small at this stage, it appears that the company’s proposed approach of an intense round of initial DSR therapy, followed by a more convenient once-monthly maintenance-level treatment round thereafter can sustainably reduce congestion and the need for loop diuretics medication, even in patients for whom there was persistent congestion pre-DSR despite maximum loop diuretic therapy.

There was also a benefit of cardio-renal status shown at the end of Phase I, as the mean NT-proBNP level was reduced by more than 30% versus baseline. eGFR (estimated glomerular filtration rate) and creatinine measures were similar to baseline (quantities not specified), which the company views as a positive, as it had anticipated that a worsening in kidney function could occur in severely-ill HF patients immediately following rapid and significant volume removal, but this does not appear to be the case in the results to date. We believe it could be possible that in the Phase II (maintenance) part of the study, there could be potential improvements in renal parameters (eg increases in eGFR, as was shown in the six-week RED DESERT trial) as the reduction in sodium levels and congestion following the DSR treatment rounds, if maintained, would reduce kidney function burden.

Safety profile generally favourable to date

There were no clinically significant changes in serum sodium or in other electrolytes after intense DSR therapy, and the reported adverse events [diarrhoea (n=1), catheter blockage (n=1), smart charger communication error (n=2)] were not substantial or indicative of any particular concern with the DSR treatment or alfapump device safety. However, there was one patient death in a severely ill subject who had a cardiac arrest three days after study initiation (and who was in intensive care even prior to the study). The study site investigators deemed this event as unrelated to the study therapy, procedure or device. The clinical study’s Data Monitoring Committee (DMC) assessed the event as possibly related to the study therapy but not related to the procedure or device. Overall, we believe the DMC has a more peripheral awareness of the event than the actual study site investigators who determined that the event was fully unrelated to alfapump DSR device or treatment considerations. In any event, to our understanding, the DMC has reviewed the event and conducted a meeting with the company and recommended that the clinical study continue as planned. Top line SAHARA DESERT data continue to be expected in H222.

Altogether, the interim SAHARA DESERT data to date suggest that alfapump DSR treatment, at least after an initial intense round, can result in improved control of fluid overload in HF patients with persistent congestion despite standard of care therapy. We expect the top line data to provide further insight into how effectively once-monthly maintenance therapy can sustain the resolution of persistent congestion, including the level to which systemic loop diuretics therapy can be reduced (vs baseline pre-treatment), as well as provide further indications of cardio-renal function (eg whether eGFR rates will improve versus baseline after Phase II).

RED DESERT follow-up data show continued effect

Sequana also reported expanded follow-up data for the RED DESERT study. Following the six-week trial, in a modified protocol, several patients were followed to determine whether the DSR treatment regimen continued to have sustained effects (ie if they were able to continue to control their fluid congestion at lower doses of loop diuretic drugs compared to baseline (pre-treatment)). Patients have been followed for up to 19 months to date. All patients had a reduction in their oral loop diuretic dose ranging from 40% to 96% at their last visit (versus baseline) within the extended follow-up period (9–19 months after the last DSR treatment in the study), showing a significant durability to the improvement in diuretic responsiveness following alfapump DSR therapy. One patient died nine months after the end of the study (this was deemed unrelated to DSR therapy).

Exhibit 2: RED DESERT longer-term follow-up data

Source: Company presentation

Altogether, these extended results are encouraging as they continue to demonstrate that even several months after the discontinuation of a DSR infusion, there are lasting effects in terms of reducing a HF patient’s need for diuretic medications to control their fluid overload.

DSR Infusate 2.0 progressing and MOJAVE DESERT on track

The company has also reported continued progress on its development of a proprietary DSR Infusate 2.0, which is designed to deliver a superior therapeutics profile (ie potentially reducing the amount of infusate that needs to be administered to render an equivalent therapeutic response) while providing the potential for a higher-margin recurring revenue stream. The infusate solution is a vital part of the DSR treatment approach since it will need to be administered repeatedly (providing revenue per infusion), and a simple 10% dextrose solution (ie the current DSR formulation) would not carry the premium pricing potential of a more specialised formulation (eg DSR Infusate 2.0).

DSR Infusate 2.0 is a proprietary formulation of the sugars, dextrose and icodextrin, and Sequana indicates pre-clinical development work and chemistry, manufacturing and control activities on it are progressing well and it expects to complete the process in or around mid-2022. We expect all human DSR studies after SAHARA DESERT will employ DSR Infusate 2.0 (as will the commercial products assuming eventual approval), starting with the MOJAVE DESERT study. MOJAVE DESERT is a US study on short-term DSR therapy in chronic HF patients with persistent congestion and it remains on track to start in H222.

As a reminder, short-term DSR therapy will involve repeated DSR treatment for c two weeks, using DSR Infusate 2.0 in combination with a peritoneal catheter (instead of requiring alfapump implantation). Similar to alfapump DSR, the goal of short-term DSR therapy would be to treat fluid overload by allowing the renal system to itself excrete excess sodium more effectively with diuretics (improving the patient’s diuretic response) and improve cardio-renal parameters. The short-term DSR approach would require insertion or usage of a peritoneal catheter each time DSR therapy is applied, whereas the implantation of the alfapump (‘alfapump DSR’, also referred to as ‘long-term DSR approach’) avoids the need for repeated catheter insertion.

We believe that the company’s rationale for advancing short-term DSR (without alfapump) therapy is primarily to provide clinicians with the option of a ‘gateway’ or one-off treatment for HF patients with persistent congestion, with the goal of transitioning them to alfapump DSR as the DSR interventions become required more often. Adding a short-term DSR approach (ie as a ‘gateway product’) may not increase the potential market for HF patients suffering from congestion, in our view, but could help accelerate DSR product adoption among clinicians by providing them with one-off DSR treatment options.

The company expects to start the first anticipated North American-based alfapump DSR trial, SONORAN (not a registration study) in H223, after the completion of long-term good laboratory practice (GLP) animal safety studies (expected in early 2023). We anticipate the completion of SONORAN in H224. For alfapump DSR and short-term DSR, we expect Sequana to enter into a sales and distribution partnership or agreement with an established medical device marketer with experience in the cardiovascular markets.3 We expect the company to enter into such discussions while the SONORAN study is ongoing.

We believe Sequana Medical may also consider partnering the alfapump DSR and short-term DSR programmes with a pharmaceutical company, but we believe an arrangement with a medical devices company is more likely.

Exhibit 3: DSR therapy and alfapump DSR for fluid overload in HF milestones and timelines

Event

Start date

Approx. completion

Start SAHARA feasibility study in decompensated HF patients

Q221

Mid-2022

Formulation and manufacturing of DSR Infusate 2.0

Ongoing

Mid-2022

GLP animal study for short-term DSR (w/o alfapump)

Mid-2022

H222

MOJAVE Proof-of-concept short-term DSR US study

H222

Mid-2023

Phase IIb study for short-term DSR

Mid-2023

Mid-2024

GLP animal study for alfapump DSR

Mid-2022

Mid-2023

SONORAN alfapump DSR US study

H223

H224

Registration-enabling alfapump DSR and short-term DSR studies

Late 2024 (*)

H126 (*)

Partnership negotiations for alfapump DSR and short-term DSR

Mid-2023 (*)

Mid-2026 (*)

Potential US launch

H226 (*)

Potential European launch

2028 (*)

Source: Sequana Medical guidance and *Edison Investment Research estimates

Financials and valuation

Sequana had a net cash position of €14.7m at 30 June 2021 (€21.8m in cash offset by €7.1m in long-term debt) excluding €0.3m in lease liabilities. We have not modified our forecasts in local currency terms (for instance, in US dollars for the US market) and we continue to forecast net operating cash burn rates for 2021 and 2022 of €22.6m and €23.9m. We continue to expect that Sequana’s funds on hand should be sufficient for it to maintain operations into Q222 and we believe the company will likely raise additional funds in the coming months. Our fundraising forecast needs are unchanged. We model that it will need to raise a total of €125m up until it starts to generate sustained positive operating cash flows in H127. We assume the company will raise €20m in 2022, €25m in 2023 and an additional €80m before FY27.

We continue to value Sequana Medical using a risk-adjusted NPV model with a 12.5% cost of capital for alfapump (in recurrent and refractory ascites, or RRA) in North America and alfapump DSR, and a 10% rate for alfapump in ex-North American markets (where it is commercialised). We are encouraged by the interim SAHARA DESERT data to date, showing that the treatment appears to address persistent congestion and improve diuretic response in HF patients with persistent congestion, and we await the release of top line results prior to reassessing our current probability of success estimate of 25% for the programme. We continue to apply a 60% probability of success for alfapump in RRA.

Exhibit 4: Sequana Medical rNPV assumptions

Product contribution

Indication

Stage

NPV
(€m)

Probability of success

rNPV
(€m)

rNPV/
basic share (€)

Launch year

Sales (€m) in 2032

alfapump in North America (net of R&D and SG&A costs)

Refractory and recurrent ascites and malignant ascites

Pivotal studying ongoing

219.3

60%

126.1

6.79

Mid-2024

184.9

alfapump in Europe and ex-NA regions (net of SG&A costs)

Refractory and recurrent ascites and malignant ascites

Commercial/marketed

2.2

100%

2.2

0.12

2013

3.4

alfapump DSR and short-term DSR

Fluid overload in HF

Human feasibility studies

801.4

25%

185.0

9.96

H226 in US

457*

Corporate costs

(57.6)

100%

(57.6)

(3.10)

Total

965.4

255.7

13.76

Net cash (H121) excluding lease liabilities

14.7

14.7

0.79

Total equity value

980.0

270.4

14.55

Basic shares outstanding (000)

18,577

Outstanding warrants and share options

1,747

FD shares outstanding (000)

20,324

Source: Edison Investment Research. Note: *Reflects estimate of projected transfer pricing revenue to Sequana Medical rather than end-market commercial sales.

We have made a slight revision to our forex assumptions ($1.13/€ versus $1.16/€ previously), resulting in a new pipeline rNPV valuation of €255.7m (versus €246.4m previously). After adding H121 net cash of €14.7m (excluding lease liabilities), we obtain an equity valuation of €270.4m or €14.55 per share (€13.30 fully diluted).

Exhibit 5: Financial summary

€’000s

2018

2019

2020

2021e

2022e

2023e

2024e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,029

971

963

525

1,214

1,396

3,716

Cost of Sales

(158)

(198)

(202)

(105)

(243)

(279)

(743)

Gross Profit

871

773

761

420

971

1,117

2,973

General & Administrative

(8,206)

(7,102)

(6,738)

(7,103)

(7,038)

(8,529)

(13,791)

Net Research & Development

(5,816)

(7,652)

(11,835)

(15,606)

(15,500)

(12,000)

(12,500)

Operating profit before exceptionals

(13,150)

(13,981)

(17,813)

(22,289)

(21,567)

(19,412)

(23,318)

EBITDA

 

 

(13,070)

(13,737)

(17,506)

(22,117)

(21,380)

(19,275)

(23,214)

Depreciation & other

(81)

(244)

(307)

(172)

(187)

(137)

(104)

Operating Profit (before amort. and except.)

 

(13,150)

(13,981)

(17,813)

(22,289)

(21,567)

(19,412)

(23,318)

Exceptionals including asset impairment

74

18

41

17

0

0

0

Operating Profit

(13,077)

(13,964)

(17,771)

(22,272)

(21,567)

(19,412)

(23,318)

Net Interest

(883)

(878)

(1,178)

(416)

(1,229)

(3,157)

(5,255)

Profit Before Tax (norm)

 

 

(14,033)

(14,859)

(18,991)

(22,705)

(22,795)

(22,569)

(28,573)

Profit Before Tax (FRS 3)

 

 

(13,960)

(14,841)

(18,949)

(22,688)

(22,795)

(22,569)

(28,573)

Tax

(24)

(136)

(157)

(129)

0

0

0

Profit After Tax and minority interests (norm)

(14,057)

(14,995)

(19,148)

(22,834)

(22,795)

(22,569)

(28,573)

Profit After Tax and minority interests (FRS 3)

(13,983)

(14,977)

(19,106)

(22,817)

(22,795)

(22,569)

(28,573)

Average Number of Shares Outstanding (m)

10.0

12.3

15.3

18.3

18.7

18.7

18.8

EPS - normalised (€)

 

 

(1.41)

(1.22)

(1.25)

(1.25)

(1.22)

(1.20)

(1.52)

EPS - normalised and fully diluted (€)

 

 

(1.41)

(1.22)

(1.25)

(1.25)

(1.22)

(1.20)

(1.52)

EPS - (IFRS) (€)

 

 

(1.40)

(1.22)

(1.25)

(1.25)

(1.22)

(1.20)

(1.52)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

242

829

772

640

486

385

374

Tangible Assets

184

765

705

561

407

305

294

Investments in long-term financial assets

58

63

67

79

79

79

79

Current Assets

 

 

3,099

8,522

13,441

12,142

8,372

10,295

7,444

Short-term investments

0

0

0

0

0

0

0

Cash

1,318

5,586

11,016

11,035

7,099

9,705

5,678

Other

1,782

2,935

2,425

1,107

1,273

590

1,766

Current Liabilities

 

 

(18,727)

(5,315)

(5,966)

(4,950)

(3,464)

(2,490)

(2,829)

Creditors

(6,654)

(4,855)

(5,966)

(4,950)

(3,464)

(2,490)

(2,829)

Short term borrowings

(12,073)

(459)

0

0

0

0

0

Long Term Liabilities

 

 

(3,374)

(3,110)

(8,135)

(7,839)

(27,839)

(52,839)

(77,839)

Long term borrowings

(2,582)

(2,261)

(7,473)

(7,089)

(27,089)

(52,089)

(77,089)

Other long term liabilities

(792)

(849)

(662)

(750)

(750)

(750)

(750)

Net Assets

 

 

(18,760)

926

113

(8)

(22,445)

(44,650)

(72,851)

CASH FLOW

Operating Cash Flow

 

 

(8,987)

(17,596)

(15,791)

(22,087)

(22,674)

(19,202)

(23,679)

Net interest and financing income (expense)

(883)

(878)

(1,178)

(416)

(1,229)

(3,157)

(5,255)

Tax

(5)

(9)

(36)

(85)

0

0

0

Net Operating Cash Flow

 

 

(9,875)

(18,482)

(17,005)

(22,588)

(23,902)

(22,360)

(28,934)

Capex

(39)

(106)

(138)

(71)

(34)

(35)

(93)

Acquisitions/disposals

0

0

0

0

0

0

0

Financing

2

26,165

19,000

22,768

0

0

0

Dividends

0

0

0

0

0

0

0

Other

0

0

0

0

0

0

0

Net Cash Flow

(9,912)

7,576

1,857

109

(23,936)

(22,394)

(29,027)

Opening net debt/(cash)

 

 

0

13,337

(2,866)

(3,543)

(3,946)

19,990

42,384

HP finance leases initiated

0

0

0

0

0

0

0

Other

(3,425)

8,627

(1,179)

293

(0)

(0)

(0)

Closing net debt/(cash)

 

 

13,337

(2,866)

(3,543)

(3,946)

19,990

42,384

71,411

Lease debt

na

504

387

343

343

343

343

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

13,337

(2,362)

(3,157)

(3,603)

20,333

42,727

71,754

Source: Company data, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Sequana Medical and prepared and issued by Edison, in consideration of a fee payable by Sequana Medical. Edison Investment Research standard fees are £60,000 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 2021 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

Share this with friends and colleagues