Focused on the upcoming paediatric AKI results

BioPorto Diagnostics 13 May 2021 Update
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BioPorto Diagnostics

Focused on the upcoming paediatric AKI results

Earnings update

Healthcare equipment
& services

13 May 2021

Price

DKK3.97

Market cap

DKK1,062

DKK6.31/US$

Net cash (DKKm) at March 2021 adjusted for capital increase

91.1

Shares in issue

267.8m

Free float

86%

Code

BIOPOR

Primary exchange

Nasdaq Copenhagen

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(26.2)

(36.7)

72.9

Rel (local)

(28.1)

(38.2)

32.1

52-week high/low

DKK7.78

DKK1.90

Business description

BioPorto Diagnostics is a diagnostic company focused on the development and commercialisation of biomarker-based assays. Its portfolio includes the NGAL Test, for prediction of acute kidney injury, and an extensive antibody library.

Next events

Paediatric AKI study complete

Summer 2021

COVID-19 gRAD results

Q221

Analyst

Nathaniel Calloway

+1 646 653 7036

BioPorto Diagnostics is a research client of Edison Investment Research Limited

BioPorto has reported its results for Q121, which included DKK5.6m in sales from all its research use only products. This is up from Q120 (DKK4.2m) but comparable to Q119 (DKK5.5m). The biggest near-term driver for the company’s revenue will be the pending results of its pivotal paediatric acute kidney injury (AKI) clinical study, which is slated to complete in summer 2021, and the subsequent regulatory submission to the FDA for De Novo 510(k) clearance.

Year end

Revenue (DKKm)

PBT*
(DKKm)

EPS*
(DKK)

DPS
(DKK)

P/E
(x)

Yield
(%)

12/19

26.6

(71.1)

(0.39)

0.0

N/A

N/A

12/20

23.2

(61.5)

(0.28)

0.0

N/A

N/A

12/21e

32.2

(74.5)

(0.25)

0.0

N/A

N/A

12/22e

179.3

65.2

0.21

0.0

19

N/A

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

Research use only NGAL sales flat

Sales of the research use only (RUO) NGAL test were flat from Q120 at DKK2.1m. Historically Q1 sales have been lower than other quarters. Although these sales are small on an absolute basis, we use the RUO NGAL test sales to gauge the eventual interest in the clinical tests in the future. The trajectory for RUO sales have generally been positive: ~24% CAGR since 2018, and we hope that the product will remain on this trajectory in future periods.

Big turning points coming

BioPorto is facing a major turning point as it continues the enrolment of its pivotal study of paediatric AKI. The study is using NGAL measured in urine to gauge the risk of AKI in paediatric patients, and the company recently guided towards the study being completed in summer 2021. BioPorto expects to file an application for De Novo 510(k) clearance shortly thereafter. Moreover, this study and the results of the application will inform how the company will pursue clearance for the adult NGAL Test, which is expected to progress after the FDA response.

Shakeup in upper management

The company announced two departures from its C-suite in Q221: both the company’s CEO and CFO will be moving on from the company. The tenue of CFO Ole Larsen will end in May 2021, whereas the CEO Peter Mørch Eriksen will remain with BioPorto until early 2022 and remain CEO until a successor is found.

Valuation: DKK916m or DKK3.42 per share

Our valuation is up slightly: DKK916m from DKK909m previously, and DKK3.42/share from DKK3.41/share. This does not include the contribution from the COVID-19 program, as in previous reports. Our valuations increased from rolling forward our NPVs, but this was offset by lower net cash (DKK91.1m pro forma following recent warrant exercises from DKK108m at the end of Q420).

Commercial and financial update

BioPorto continues to market its suite of RUO products, and it reported sales of DKK5.6m for Q121. This is up from DKK4.2m in Q120 (33%), but that prior quarter had uncommonly low sales, and current sales are more in line with Q119 (DKK5.5m). The increase in revenue in Q121 was driven by sales of antibodies (DKK2.9m compared to DKK1.7m for Q120). Sales of RUO NGAL tests were flat from Q120 at DKK2.1m (Exhibit 1). Sales of NGAL tests have always been seasonally low in Q1, but the year-on-year trends have generally been positive (a 24% CAGR using an exponential regression). We view the growing adoption of NGAL for research as an indicator for the future commercial interest in the test assuming it becomes approved for the detection of AKI. If growth in the product sales remains flat, that may indicate that the product has fully penetrated the RUO market, but it is too early to draw conclusions on that score. Moreover, the biggest determinants of future sales will likely be the results from the ongoing paediatric AKI study and the subsequent regulatory clearance decisions.

Exhibit 1: RUO NGAL sales

Source: BioPorto reports

BioPorto’s results for the quarter were generally consistent with our estimates. The loss for the quarter was DKK15.3m. We now forecast the company will report a loss of DKK74.9m for 2021, which remains largely unchanged from our previous estimate (DKK75.2m). This assumes that BioPorto will be undergoing launch activities for the NGAL test following a positive clearance decision from the FDA. If the company does not receive positive results from the ongoing paediatric study or is not cleared by the FDA, we would expect losses more similar to 2020 (DKK61.6m as reported). The company also maintained its 2021 guidance of DKK30m in revenue and an EBIT loss of DKK73m.

BioPorto ended March 2021 with DKK86.7m in cash, which we expect will be sufficient to complete the paediatric study and submit the NGAL Test to the FDA. We currently forecast the company reaching profitability in 2022 if the NGAL test is approved in the US, but BioPorto may need to seek additional financing if this application is rejected.

Management departures

BioPorto announced recently in Q221 that both the CFO Ole Larsen and CEO Peter Mørch Eriksen would be leaving the company. Mr Larsen announced in April 2021 that he would be leaving for other opportunities and would stay with the company through the current Q121 report. Mr Eriksen followed this with an announcement in May 2021 that he would be resigning as CEO, but would be staying on with the company during the search for a replacement and will remain CEO until a replacement is found. He stated that as the company approaches the commercial launch of the NGAL test that it would be seeking out a successor to guide the company through this launch.

The optimistic view of these departures is that the company is shifting its operational focus to the potential commercial sales of the NGAL test once approved for clinical use (from the current focus on development) in the near future and that these departures are reflective of that. However, it is hard to ignore that these departures are coming very shortly before the ultimate culmination of the company’s hard work over the preceding years: the readout from the paediatric clinical trial and the subsequent De Novo submission. The company expects to complete the pivotal clinical study in the summer of 2021. The company also has an additional near-term clinical readout from the testing of its gRAD platform for the detection of COVID-19, which is expected in Q221.

Valuation

Our valuation is up slightly: DKK916m from DKK909 previously, and up on a per share basis to DKK3.42 from DKK3.41, previously. Our valuations increased from rolling forward our net present valuations (NPVs), but this was offset by lower net cash (DKK91.1m pro forma following DKK4.4m in warrant exercises after Q121, from DKK108m at the end of Q420). This does not include any value associated with the COVID-19 testing program. We as a policy are not valuing COVID-19 programs before the announcement of clinical data. Please see our previous report for an illustrative analysis of this asset.

Share counts increased slightly from employee warrant exercises (268m from 267m). Otherwise our valuation assumptions remain unchanged. We expect to update our valuation following the announcement of results from the paediatric clinical study and following its clearance decision.

Exhibit 2: Valuation of BioPorto

Program

Market

Probability of success

Peak revenue ($m)

Valuation (DKKm)

The NGAL Test

ICU

50%

176.6

612.0

ED

30%

167.1

308.7

Post-surgery

30%

54.1

88.2

Research

100%

3.8

6.5

Paediatrics

50%

15.4

15.2

Other products

Research

100%

1.5

2.6

Unallocated costs

(208.7)

Total

824.4

Net cash and equivalents (pro forma Q121 + warrant exercises) (DKKm)

91.1

Total firm value (DKKm)

915.6

Total shares (m)

267.8

Value per share (DKK)

3.42

Dilutive warrants (m)

4.6

Total diluted shares (m)

272.3

Value per diluted share (DKK)

3.41

Source: BioPorto reports, Edison Investment Research

Exhibit 3: Financial summary

DKK000s

2019

2020

2021e

2022e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

26,622

23,204

32,232

179,324

Cost of Sales

(9,293)

(9,865)

(13,169)

(26,468)

Gross Profit

17,329

13,339

19,063

152,855

Sales

(39,268)

(20,786)

(38,924)

(52,087)

R&D

(24,556)

(28,125)

(34,171)

(15,089)

Administrative

(27,804)

(28,018)

(26,701)

(26,701)

EBITDA

 

 

(68,333)

(54,280)

(71,423)

68,289

Operating Profit (before amort. and except.)

 

 

(71,190)

(58,274)

(75,417)

64,295

Amortisation of acquired intangibles

0

0

0

0

Exceptionals

0

0

0

0

Share-based payments

(3,109)

(5,316)

(5,316)

(5,316)

Reported operating profit

(74,299)

(63,590)

(80,733)

58,979

Net Interest

52

(3,244)

890

890

Joint ventures & associates (post tax)

0

0

0

0

Exceptionals

0

0

0

0

Profit Before Tax (norm)

 

 

(71,138)

(61,518)

(74,527)

65,185

Profit Before Tax (reported)

 

 

(74,247)

(66,834)

(79,843)

59,869

Reported tax

4,605

5,272

4,952

(3,713)

Profit After Tax (norm)

(66,726)

(57,702)

(69,905)

61,142

Profit After Tax (reported)

(69,642)

(61,562)

(74,891)

56,155

Minority interests

0

0

0

0

Discontinued operations

0

0

0

0

Net income (normalised)

(66,726)

(57,702)

(69,905)

61,142

Net income (reported)

(69,642)

(61,562)

(74,891)

56,155

Average Number of Shares Outstanding (m)

170

205

277

291

EPS - normalised (DKK)

 

 

(0.39)

(0.28)

(0.25)

0.21

EPS - diluted normalised (DKK)

 

 

(0.39)

(0.28)

(0.25)

0.21

EPS - basic reported (DKK)

 

 

(0.41)

(0.30)

(0.27)

0.19

Dividend (DKK)

0.00

0.00

0.00

0.00

BALANCE SHEET

Fixed Assets

 

 

8,218

15,506

12,827

10,148

Intangible Assets

4,799

11,412

11,412

11,412

Tangible Assets

1,710

2,448

(231)

(2,910)

Investments & other

1,709

1,645

1,645

1,645

Current Assets

 

 

34,464

124,780

66,168

130,925

Stocks

4,155

3,165

4,329

8,702

Debtors

5,695

6,886

3,974

22,108

Cash & cash equivalents

18,122

107,943

51,078

93,328

Other

6,492

6,786

6,786

6,786

Current Liabilities

 

 

(14,858)

(30,930)

(34,814)

(35,420)

Creditors

(3,237)

(4,636)

(8,520)

(9,126)

Tax and social security

(2,306)

(2,828)

(2,828)

(2,828)

Short term borrowings

0

0

0

0

Other

(9,315)

(23,466)

(23,466)

(23,466)

Long Term Liabilities

 

 

(2,502)

(8,444)

(8,444)

(8,444)

Long term borrowings

0

0

0

0

Other long term liabilities

(2,502)

(8,444)

(8,444)

(8,444)

Net Assets

 

 

25,322

100,912

35,737

97,208

Minority interests

0

0

0

0

Shareholders' equity

 

 

25,322

100,912

35,737

97,208

CASH FLOW

Op Cash Flow before WC and tax

(68,333)

(54,280)

(71,423)

68,289

Working capital

4,453

15,593

5,631

(21,901)

Exceptional & other

159

(1,672)

890

890

Tax

3,557

4,743

4,952

(3,713)

Net operating cash flow

 

 

(60,164)

(35,616)

(59,950)

43,565

Capex

(1,106)

(1,499)

(1,315)

(1,315)

Acquisitions/disposals

0

0

0

0

Net interest

0

0

0

0

Equity financing

35,983

130,064

4,400

0

Dividends

0

0

0

0

Other

(3,332)

(3,051)

0

0

Net Cash Flow

(28,619)

89,898

(56,865)

42,250

Opening net debt/(cash)

 

 

(46,709)

(18,122)

(107,943)

(51,078)

FX

32

(77)

0

0

Other non-cash movements

0

0

0

0

Closing net debt/(cash)

 

 

(18,122)

(107,943)

(51,078)

(93,328)

Source: BioPorto reports, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by BioPorto Diagnostics and prepared and issued by Edison, in consideration of a fee payable by BioPorto Diagnostics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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

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

General disclaimer and copyright

This report has been commissioned by BioPorto Diagnostics and prepared and issued by Edison, in consideration of a fee payable by BioPorto Diagnostics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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