Endoxifen complements Atossa’s cancer focus

Atossa Genetics 30 November 2016 Update

Atossa Genetics

Endoxifen complements Atossa’s cancer focus

Pipeline update

Pharma & biotech

30 November 2016

Price

US$1.76

Market cap

US$7m

Net cash ($m) at Q316e

4.4

Shares in issue

3.8m

Free float

92%

Code

ATOS

Primary exchange

NASDAQ

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(9.7)

(53.6)

(82.2)

Rel (local)

(10.9)

(53.1)

(82.9)

52-week high/low

US$13.0

US$2.0

Business description

Based in Seattle, WA, Atossa Genetics is focused on the development of locally administered pharmaceuticals for the treatment of pre-cancer and breast cancer. Intraductal microcatheter-delivered fulvestrant is currently under investigation in a Phase II study.

Next events

Q316 results

November 2016

IDMC-fulvestrant interim Phase II data

Q416

Analysts

Pooya Hemami, CFA

+1 646 653 7026

Maxim Jacobs, CFA

+1 646 653 7027

Atossa Genetics is a research client of Edison Investment Research Limited

Atossa raised $2.875m in an equity raise in September 2016. We expect the proceeds to be allocated to Atossa’s two active pipeline programs: its 30-pt Phase II study on its intraductal microcatheter (IDMC) delivering fulvestrant to breast ducts in patients scheduled for mastectomy or lumpectomy, and its oral endoxifen candidate, expected to start human studies in 2017 as potential treatment for breast cancer patients refractory to tamoxifen. We obtain an rNPV-based equity valuation of $10.7m.

Year
end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/14

0.0

(7.3)

(4.57)

0.0

N/A

N/A

12/15

0.0

(9.8)

(5.15)

0.0

N/A

N/A

12/16e

0.0

(7.7)

(2.57)

0.0

N/A

N/A

12/17e

0.0

(14.2)

(3.57)

0.0

N/A

N/A

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

IDMC-fulvestrant interim data expected shortly

Atossa’s IDMC intends to deliver fulvestrant to the breast with potentially higher local exposure and lower systemic risks vs the established intramuscular delivery approach. We expect the firm to provide interim clinical data for the ongoing 30-patient Phase II study by Q117, after which we expect a larger pivotal study would be required for approval under the FDA 505(b)2 process. We assume the study would start in late 2017 or early 2018, with commercialization in 2020 and peak sales of $183m in 2025, and that Atossa would earn a 20% royalty on net sales.

Oral endoxifen in tamoxifen-refractory patients

About 20% of the 300,000 US women currently taking tamoxifen (primarily to prevent recurrence of breast cancer) do not achieve sufficient concentrations of the active estrogen receptor blocking metabolite, endoxifen, and may have increased the risk of cancer recurrence. Atossa plans to start human studies of its endoxifen formulation in 2017, which seeks to address this shortfall and which we estimate could reach the market in 2020 and generate $161m in peak (2025) sales. A key sensitivity risk is that a research group from Mayo Clinic and the National Cancer Institute are also running endoxifen human trials, which could lead to IP challenges and competition risk.

Valuation: Equity valuation of $10.7m

Atossa’s Q316 net cash position is $4.4m and, given its $4.0m 9M16 burn rate, we assume the firm will need to raise funds in H117. Our model assumes a 2017 burn rate of $13.3m and that Atossa will raise $20m in funding in 2017. As per our usual policy, for modelling purposes we assign these financings to long-term debt. After including the endoxifen program (12.5% success probability) in our model, removing the Afimoxifene Topical Gel program (whose rights were relinquished to Besins in a Q316 settlement) and rolling forward our forecasts, we now obtain an rNPV of $6.2m (up from $2.3m previously). After including Q316 net cash of $4.4m, we obtain an equity valuation of $10.7m, or $2.82 per share.

Capital raise to fund endoxifen and IDMC-fulvestrant

Atossa completed a $2.875m equity raise (1.15m shares sold at $2.50 per share) in early September 2016, increasing its outstanding shares to 3.78m shares. We expect the proceeds to be allocated to Atossa’s two active pipeline programs: its 30-pt Phase II study on its proprietary IDMC-delivering fulvestrant to breast ducts in patients scheduled for mastectomy or lumpectomy, and its oral endoxifen candidate, presently in pre-IND (investigational new drug) development stage as a potential treatment for breast cancer patients refractory to tamoxifen. We expect Atossa to report initial data from the IDMC-fulvestrant study by Q117, and the firm believes it could start human endoxifen studies in 2017.

IDMC-fulvestrant study continues to move ahead

Atossa’s IDMC intends to deliver therapeutics for breast cancer and/or precancerous conditions, with potentially higher local exposure and lower systemic exposure vs established therapies or delivery approaches. Atossa’s internal analysis suggests that the drug levels in breast tissue might be more than 20,000 times more concentrated with IDMC versus systemic administration.

The current IDMC clinical program is designed to irrigate and deliver fulvestrant (marketed as Faslodex by AstraZeneca) to each of the five to seven breast ducts. Fulvestrant is FDA-approved for estrogen receptor-positive (ER+) metastatic breast cancer (with $704m in global 2015 sales) and is normally administered by intramuscular (IM) injection (to the buttocks), usually consisting of a monthly dose of two injections (costing $10,000-14,000 a month in the US).

The ongoing open-label Phase II study, taking place at Columbia University, is comparing the safety, tolerability and pharmacokinetics following the IDMC instillation of fulvestrant, compared to IM administration, in a neoadjuvant setting1 in women scheduled for mastectomy or lumpectomy (with either breast cancer or ductal carcinoma in situ, or DCIS). Six patients will receive 500mg IM fulvestrant and 24 patients will receive up to 500mg of IDMC-fulvestrant. The study will also measure changes in the expression of Ki-672 as well as estrogen and progesterone receptors, between biopsies taken prior to fulvestrant therapy, and post-treatment surgical specimen. Breast imaging before and after drug administration in both groups will also examine any potential treatment effects on the lesions or on breast density.

A neoadjuvant treatment refers to a therapy provided as a first step to shrink or control a tumor before the main (or more involved) treatment, usually surgery, is provided. In the ongoing Phase II IDMC-fulvestrant trial, the neoadjuvant treatment (fulvestrant by IM or IDMC administration) is provided 30-45 days before surgery.

Ki-67 is a protein marker for cellular proliferation whose density level correlates with cancer growth and progression.

Management expects to present the study at the CTRC-AARC San Antonio Breast Cancer Symposium to be held on 6-10 December 2016. It is unclear whether interim study data will be provided at this symposium but, if not, we anticipate interim clinical data will be provided by the end of Q117. We expect a larger pivotal study would be required for approval under the FDA 505(b)2 process. Under 505(b)(2), Atossa may be able to rely on much of the existing safety, efficacy and preclinical data already established on fulvestrant. If the 505(b)2 pathway is accepted by the FDA (as we forecast in our model), Atossa may only be required to complete pharmacokinetic equivalency studies (the current trial) and possibly only a relatively small Phase III study to gain regulatory approval (ie smaller in size and scope than conventional 505(b)1 new drug application pivotal trials). Atossa believes that IDMC administration could provide more effective targeting, potentially resulting in lower doses to achieve therapeutic efficacy and/or a less frequent dosing schedule, leading to improved convenience and potential cost savings for patients and/or insurers.

IDMC-fulvestrant model review

We assume that after the current IDMC-fulvestrant trial, a larger (200- to 400-patient) pivotal study will be needed before approval. We expect the company to partner the IDMC-fulvestrant program with an oncology-experienced medical devices and/or pharma firm before or in parallel to starting this pivotal study, with Atossa entitled to 20% royalties on net IDMC sales.

We expect the start of pivotal studies in late 2017 or early 2018, leading to potential product launch in 2020. This differs somewhat from management’s guidance, at it anticipates that the FDA may require fewer clinical data to approve IDMC-fulvestrant, and that the product could be launched as early as 2018. If Atossa is successful in obtaining IDMC-fulvestrant approval earlier than our estimates, there could be upside to our forecasts.

We assume that IDMC-fulvestrant will be used in the neoadjuvant setting in the treatment of DCIS and ER+ breast cancers. The American Cancer Society estimates that about 246,660 new cases of invasive breast cancer will be diagnosed in women per year and about 61,000 new cases of carcinoma in situ (CIS) will be diagnosed (CIS is non-invasive and is the earliest form of breast cancer). Approximately 75-80% of breast cancers are ER+3 (ie they grow in response to estrogen).

Onitilo AA, Engel JM, Greenlee RT, et al. Clin Med Res. 2009 Jun; 7(1-2): 4–13.

Our model anticipates that IDMC-fulvestrant will be used in a peak case of 25% of neoadjuvant treatment scenarios (reflecting only up to 40% of diagnosed ER+ breast cancers, primarily those at Stage II and III). We continue to estimate that the IDMC single-use device will be sold at launch at $3,500 per monthly application, with expected peak IDMC-fulvestrant product sales (consisting of the IDMC device and separate from the cost of the fulvestrant drug) of $182.8m in 2025 (leading to royalties to Atossa of $36.6m). We expect commercialization through 2030, when the IDMC technology’s core patents expire. While the IDMC device could be extended to other breast cancer drugs, we are currently only modeling the fulvestrant application.

Exhibit 1: IDMC-fulvestrant sales forecasts

Year-end Dec 31

2020e

2021e

2022e

2023e

2024e

2025e

US market

Estimated breast cancer incidence (000)

258.6

262.5

266.4

270.4

274.5

278.6

Estrogen receptor-positive proportion (%)

75.0

75.0

75.0

75.0

75.0

75.0

Neoadjuvant therapy eligible proportion (%)

40.0

40.0

40.0

40.0

40.0

40.0

IDMC-fulvestrant market share (%)

2.8

9.6

15.6

20.6

24.7

25.0

Number of IDMC-fulvestrant units sold

2,185

7,537

12,492

16,736

20,328

20,893

Average IDMC selling price ($)

3,500

3,675

3,859

4,052

4,254

4,467

Total IDMC-fulvestrant product revenues ($000)

7,647

27,699

48,205

67,808

86,482

93,329

Royalty rate (%)

20.0

20.0

20.0

20.0

20.0

20.0

Net revenue to Atossa ($000)

1,529

5,540

9,641

13,562

17,296

18,666

Europe and ex-US markets

Total IDMC-fulvestrant product revenues ($000)

7,330

26,549

46,204

64,993

82,893

89,455

Royalty rate (%)

20.0

20.0

20.0

20.0

20.0

20.0

Net revenue to Atossa ($000)

1,466

5,310

9,241

12,999

16,579

17,891

Worldwide IDMC-fulvestrant sales ($000)

14,978

54,248

94,409

132,801

169,375

182,783

Worldwide IDMC-fulvestrant royalties to Atossa ($000)

2,996

10,850

18,882

26,560

33,875

36,557

Source: Edison Investment Research

Oral endoxifen for patients refractory to tamoxifen

In June 2016, Atossa announced that it was developing endoxifen as a treatment for breast cancer patients refractory to tamoxifen. Following surgical treatment for atypical hyperplasia (AH) or non-invasive ER+ breast cancers (such as DCIS), additional treatment with a selective estrogen receptor modulation (SERM) drug such as tamoxifen or raloxifene (Evista) is often recommended. A large-scale randomized study (IBIS-I) found that tamoxifen reduced breast cancer incidence in high-risk women by 30-50% over five years of treatment, for ER+ cancer and DCIS. Recent studies have shown that extended use of tamoxifen (10 years versus five years) further reduces recurrence risk and mortality, so US clinical practice guidelines now recommend consideration of adjuvant tamoxifen therapy for 10 years.4 5 6

Davies C, Pan H, Godwin J, et al. Lancet. 2012.

Davies C, Pan H, Godwin J, et al. Lancet. 2013;381: 805-816.

Burstein HJ, Temin S, Anderson H, et al. J Clin Oncol. 2014;32: 2255-2269.

Tamoxifen is effective in both pre-menopausal and post-menopausal cancers, and raloxifene, a newer SERM drug with a more advantageous AE profile vs tamoxifen,7 is only approved for use in post-menopausal women. Aromatase inhibitors, discussed in our initiation report, are another chemopreventative therapeutic option for post-menopausal women. However, given their well-documented long history of use and relatively inexpensive cost (ZenRx estimates that the wholesale cost of a daily 20mg tablet of generic oral tamoxifen can be as little as $0.15), tamoxifen remains the mainstay preventative or post-surgical treatment for ER+ breast cancers (or related conditions such as AH), particularly in pre-menopausal women.

Vogel VG, Costantino JP, Wickerham DL, et al. JAMA. 2006 Jun 21; 295(23):2727-41.

Endoxifen could benefit those who do not properly metabolize tamoxifen

Orally dosed tamoxifen is metabolized in the liver by enzymes (including cytochrome P450 isoforms) into multiple metabolites, yet only a few of these metabolites have an active ER antagonist effect (blocking estrogen from binding to its receptors). The most significant of these (in terms of ER antagonism contribution and plasma concentration in patients with normal tamoxifen metabolism) are endoxifen (4-hydroxy-N-desmethyltamoxifen) and, to a lesser extent, 4-hydroxytamoxifen;8 9 both have at least 100-fold higher ER binding and cancer cell proliferation suppression than the parent compound.10 11

Clin Pharmacol Ther. 2011 May;89(5):708-17. doi: 10.1038/clpt.2011.27.

Schroth W, Antoniadou L, Fritz P, et al. J Clin Oncol. 2007 Nov 20;25(33):5187-93.

Johnson MD, Zuo H, Lee KH, et al. Breast Cancer Res Treat 2004; 85: 151–159.

Lim YC, Desta Z, Flockhart DA, et al. Cancer Chemother Pharmacol 2005; 55: 471–478.

Several researchers found that patients with a deficiency (due to genetic or other factors) in cytochrome P450 enzyme CYP2D6 have an impaired ability to metabolize tamoxifen into endoxifen, and that up to 15-20% of Europeans carry genetic CYP2D6 variants associated with an impairment in forming anti-estrogenic tamoxifen metabolites.9 Variations in other enzymes, including CYP3A, and several other factors (including which other systemic medications are taken) can also influence endoxifen levels12. Fox et al. found that that over 50% of tamoxifen-dosed patients with low endoxifen have no obvious cause.13

ter Heine R, Binkhorst L, de Graan AJ, et al. Br J Clin Pharmacol 2014;78:572–86

Fox P, Balleine RL, Lee C, et al. Clin Cancer Res. 2016 Jul 1;22(13):3164-71.

Fox et al. found that in 122 patients taking 20mg/day of tamoxifen (the standard dose), 24% had blood endoxifen levels of below 15 nmol/L, and suggests that 15nmol/L may be the critical level needed or anticancer effect. Several groups found that those with impaired tamoxifen metabolism (or low endoxifen) may have higher risk of cancer recurrence compared to those with normal metabolism; Madlensky et al. found that in 1,370 ER+ breast cancer patients taking tamoxifen, those in the lowest quintile for endoxifen concentration had a 35% increased recurrence rate than remaining patients.14 Saladores et al. found in a study of 587 pre-menopausal women taking tamoxifen that low plasma endoxifen was associated with shorter distant relapse-free survival and a 1.6-1.9 increased hazards ratio for cancer recurrence.15

Madlensky L, Natarajan L, Tchu S, et al. Clin Pharmacol Ther. 2011 May;89(5):718-25.

Saladores P, Mürdter T, Eccles D et al. The Pharmacogenomics Journal (2015) 15, 84–94.

These studies form a basis for dosing endoxifen directly in such patients. Atossa has filed composition of matter and methods of treatment patent applications (with patent lives potentially into 2036) for its endoxifen formulation, secured manufacturing with a Taiwan-based manufacturer (KriSan Biotech) and is working to file an IND to start human (Phase II) studies in 2017.

The planned Phase II study will be in pre-menopausal women with ER+ breast cancer in patients already taking tamoxifen (20mg/day). A companion diagnostic test will be used to measure plasma endoxifen levels in the blood. Patients below a pre-specified threshold of endoxifen will take the company’s endoxifen formulation (1-2mg/day) and those above that threshold will continue on tamoxifen (20mg/day). The study will compare blood endoxifen levels between both groups, as well as assess pharmacokinetics (PK) and safety.

Endoxifen program could fall under 505(b)2 approval timelines

As tamoxifen has a long-established history of systemic use, and as endoxifen is a metabolite of this drug (and with a similar “active moiety”16), Atossa believes it could be eligible for the 505(b)2 registration pathway. FDA draft guidance for 505(b)2 class applications indicates that product candidates which are active metabolites of existing approved drugs can in some cases be covered under this registration pathway.17 Under this scenario, a clinical trial demonstrating endoxifen’s efficacy may not be necessary for approval, and regulators may only require safety and PK studies.

The FDA defines “active moiety” as the part of “the molecule or ion” (excluding certain appended portions or other non-covalent attachments) “responsible for the physiological or pharmacological action of the drug substance”.

http://www.fda.gov/downloads/Drugs/.../Guidances/ucm079345.pdf

While no details have been provided as to the study length and recruitment size of the currently planned endoxifen Phase II trial, we currently assume that the FDA will allow the program to be assessed under 505(b)2 criteria, which we believe will require an additional trial for approval. We estimate that the currently planned study will finish in H118, with the registration-enabling study to start in mid-2018 and lead to approval in 2020. Rather than commercialize endoxifen itself, we believe Atossa will seek to partner its endoxifen formulation with a pharma company in 2018 (prior to starting the pivotal trial), and will be entitled to 20% in net royalties.

Under 505(b)2, we do not believe that efficacy data showing improved survival rates (or lower recurrence rates) vs tamoxifen would be needed for approval. However, such data could strengthen the clinical case for physicians to select endoxifen vs tamoxifen in clinical settings, so we anticipate that Atossa’s commercial partner will eventually conduct a head-to-head, post-marketing trial vs tamoxifen.

NCI/Mayo Clinic group also studying endoxifen hydrochloride

A team of investigators at Mayo Clinic (Goetz M, Ames M, and collaborators) and the National Cancer Institute (NCI) reported in late 2013 that in a 22-patient Phase I study in women with ER+ breast cancer, a formulation of Z-endoxifen hydrochloride was safe (at doses up to 160mg per day) and showed early evidence of anti-tumor activity. The same group is currently conducting a 94-patient randomized Phase II trial comparing its endoxifen formulation with tamoxifen in treating patients with ER+ breast cancer (but negative for HER receptors) that has spread to nearby tissue or lymph nodes or other parts of the body (data, including progression-free survival, expected in mid-2017). The group is also conducting an ongoing 62-pt, open-label, dose-ranging Phase I study (seeking to find a maximum tolerated dose, with data expected in H117). The NCI is also conducting another dose-ranging Phase I study on this formulation (n=72; data expected in Q416).

While Atossa is filing patents for its own endoxifen formulation and methods of treatment, there is a material risk that competing studies from the Mayo/NCI investigators, should they lead to registration or commercialization-stage end products, could lead to intellectual property (IP) related competition challenges to Atossa’s eventual endoxifen product.

Endoxifen revenue assumptions

Approximately 300,000 US women take tamoxifen18 (for either cancer prevention or an adjunctive treatment to prevent recurrence) and approximately one million women take the drug worldwide. Madlensky et al.12 estimate that 20% of women currently taking tamoxifen do not achieve sufficient endoxifen concentrations, which is comparable with Fox et al.’s findings shown above. We assume that this (20%) reflects the potential target market for oral endoxifen (thus 60,000 persons in the US), and that peak market share for Atossa’s product would be 50% of this group, which would be attained within five years of launch (2025). Using the current price of branded oral SERM drug raloxifene (also used in the breast cancer prevention market) as a guide, we model a starting net price of $200/month for the drug on launch (in 2020). Given these assumptions, we anticipate peak sales in 2025 of $91m and $161m in the US and worldwide, respectively which, at our 20% assumed royalty rate, leads to net royalties of $32.1m to Atossa in 2025.

Waters EA, McNeel TS, Stevens WM et al. “Use of tamoxifen and raloxifene for breast cancer chemoprevention in 2010” (2012). Cancer Prevention Faculty Publications. Paper 6. http://digitalcommons.wustl.edu/canpre_pubs/6.

We highlight that there is the potential for some variability in our market size estimates. A study19 on 279 Polish women taking tamoxifen found that nearly 60% of these (including over 30% of patients with fully functional CYP2D6 status) had endoxifen concentrations below the predefined threshold of therapeutic efficacy. If convincing clinical data can be developed for physicians, patients and stakeholders on the potential benefits of oral endoxifen (vs tamoxifen) to a wider range of the current tamoxifen treatment population than we currently assume (20%), then there can be upside to our peak sales estimates.

Hennig EE, Piatkowska M, Karczmarski J, et al. BMC Cancer. 2015 Aug 1;15:570.

Q316 results show lower cash burn rate

Atossa reported Q316 results on 14 November 2016, with net income of $0.2m ($0.07 per share given 2.8m average shares outstanding in Q316); the results were buoyed by the one-time $1.76m payment (recorded as other income) from Besins Healthcare. This payment resulted from the company’s settlement agreement, under which Atossa relinquished its rights to the Afimoxifene Topical Gel (AfTG) program. Atossa acquired exclusive rights for AfTG from Besins Healthcare in 2015 to develop and commercialize it for breast hyperplasia but, in February 2016, entered into a legal dispute with Besins given Besins’ own AfTG development plans. Both parties agreed in August 2016 to terminate the original licence agreement and settle all claims and counterclaims, leading to the one-time $1.76m payment to Atossa. We had previously valued (in our 27 May 2016 update note) the discounted AfTG revenue opportunity to Atossa at $15.5m.

Excluding this one-time payment, Atossa reported an adjusted $1.56m loss ($0.56 per share). Q316 R&D costs were $0.085m and 9M16 R&D costs were $0.4m. We expect R&D costs to rise in coming quarters as recruitment for the ongoing fulvestrant study progresses and as the endoxifen program starts in-human studies.

Financials and valuation

As stated above, in addition to the $2.875m equity raise, Atossa received $1.76m from Besins during Q316. Atossa had a 9M16 cash burn rate (operating cash flow including net interest, minus net capex) of $4.0m. It had $4.4m net cash on 30 September 2016, and we assume the burn rate will increase slightly in coming quarters following increasing R&D costs. We estimate that Atossa’s burn rate in Q416 would be $2.1m. We believe the company will need to raise funds again in H117 to fund its operations. The company entered a $10m equity line of credit with Aspire Capital in May 2016, which could help satisfy the funding requirement. Our model assumes a 2017 burn rate of $13.3m, and that Atossa will raise $20m in funding in 2017. As per our usual policy, for modelling purposes, we assign these financings to long-term debt.

Exhibit 2: Atossa Genetics rNPV assumptions

Product contributions (net of R&D costs)

Indication

rNPV
($m)

rNPV/
share ($)

Probability of success

Launch year

Peak US market share

Peak WW sales (US$m)

Intraductal Microcatheter (for Fulvestrant)

Breast cancer

25.0

6.61

25.0%

2020

50%

183 in 2025

Oral endoxifen

Breast cancer

12.0

3.18

12.5%

2020

12.5% of patients taking tamoxifen

161 in 2025

Corporate costs & expenses

SG&A expenses

(24.0)

(6.32)

Net capex, NWC & taxes

(6.9)

(1.82)

Total rNPV

6.2

1.64

Net cash (debt) (Q316)

4.4

1.17

Total equity value

10.7

2.82

FD shares outstanding (000) (Q316)

3,788

Source: Edison Investment Research

Our rNPV valuation now includes the prospects of the company’s oral endoxifen program, in addition to the IDMC program (previously also included in our model) and the AfTG opportunity has been removed (as AfTG rights were transferred back to Besins). We assume that Atossa will spend $4.6m in R&D on the IDMC-fulvestrant program in 2017 before partnering it, and that it will spend $6.5m on oral endoxifen R&D across 2017 and H118 (prior to entering a licence agreement on this program). We assign a 12.5% probability of success to the oral endoxifen program, which takes into account product development risk, as well as the IP risk and competitive risk from the Mayo/NCI investigations and trials for their own endoxifen formulation. We continue to apply a 25% probability for the IDMC-fulvestrant program. Given the addition of the endoxifen program, the removal of AfTG and rolling forward our forecasts, we now obtain an rNPV of $6.2m (up from $2.3m previously). The inclusion of the endoxifen program and rolling forward our forecasts leads to an increase in our rNPV. After including Q316 net cash of $4.4m, we obtain an equity valuation of $10.7m, or $2.82 per share.

Exhibit 3: Financial summary

US$(000)

2014

2015

2016e

2017e

2018e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

40

2

0

0

0

Cost of Sales

0

(132)

0

0

0

General & Administrative

(8,360)

(9,996)

(6,427)

(5,800)

(4,573)

Research & Development

(1,110)

(2,360)

(1,004)

(8,100)

(3,650)

EBITDA

 

 

(6,943)

(9,484)

(7,431)

(13,900)

(8,223)

Depreciation

(388)

(273)

(296)

(257)

(234)

Amortization

0

0

0

0

0

Operating Profit (before exceptionals)

 

(7,331)

(9,756)

(7,727)

(14,157)

(8,456)

Exceptionals

(2,352)

0

1,763

0

0

Other

(2,487)

(3,002)

0

0

0

Operating Profit

(12,171)

(12,758)

(5,964)

(14,157)

(8,456)

Net Interest

0

0

17

(41)

(227)

Profit Before Tax (norm)

 

 

(7,331)

(9,756)

(7,710)

(14,198)

(8,683)

Profit Before Tax (FRS 3)

 

 

(12,171)

(12,758)

(5,947)

(14,198)

(8,683)

Tax

0

0

0

0

0

Profit After Tax and minority interests (norm)

(7,331)

(9,756)

(7,710)

(14,198)

(8,683)

Profit After Tax and minority interests (FRS 3)

(12,171)

(12,758)

(5,947)

(14,198)

(8,683)

Average Number of Shares Outstanding (m)

1.6

1.9

3.0

4.0

4.2

EPS - normalised ($)

 

 

(4.57)

(5.15)

(2.57)

(3.57)

(2.04)

EPS - normalised and fully diluted ($)

 

 

(4.57)

(5.15)

(2.57)

(3.57)

(2.04)

EPS - (IFRS) ($)

 

 

(7.59)

(6.73)

(1.99)

(3.57)

(2.04)

Dividend per share (C$)

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

2,424

1,948

1,701

1,510

1,419

Intangible Assets

1,887

1,701

1,402

1,402

1,402

Tangible Assets

537

248

299

108

17

Current Assets

 

 

9,340

4,295

2,476

9,131

16,018

Short-term investments

0

275

55

55

55

Cash

8,501

3,716

2,300

8,955

15,842

Other

839

304

121

121

121

Current Liabilities

 

 

(2,263)

(2,502)

(864)

(864)

(666)

Creditors

(2,263)

(2,502)

(864)

(864)

(666)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(2)

0

0

(20,000)

(35,000)

Long term borrowings

0

0

0

(20,000)

(35,000)

Other long term liabilities

(2)

0

0

0

0

Net Assets

 

 

9,498

3,742

3,313

(10,223)

(18,230)

CASH FLOW

Operating Cash Flow

 

 

(10,555)

(13,953)

(6,069)

(13,237)

(7,744)

Net Interest

0

0

17

(41)

(227)

Tax

0

0

0

0

0

Capex

(5)

(131)

(60)

(66)

(143)

Acquisitions/disposals

(339)

(158)

0

0

0

Financing

13,156

9,457

4,696

0

0

Net Cash Flow

2,257

(4,785)

(1,416)

(13,344)

(8,113)

Opening net debt/(cash)

 

 

(6,327)

(8,501)

(3,991)

(2,355)

10,990

HP finance leases initiated

0

0

0

0

0

Other

(83)

275

(220)

0

(0)

Closing net debt/(cash)

 

 

(8,501)

(3,991)

(2,355)

10,990

19,103

Source: Atossa Genetics reports, Edison Investment Research

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. 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

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Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Atossa Genetics 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.
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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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, 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. 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 Atossa Genetics 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 St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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 St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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