Paion |
GA data enable an application for surgical use |
Phase III data |
Pharma & biotech |
27 November 2020 |
Share price performance
Business description
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Analysts
Paion is a research client of Edison Investment Research Limited |
The Remimazolam Phase III general anaesthesia (GA) trial in Europe has released initial data. Remimazolam was as effective as propofol in maintaining anaesthesia in major surgery so met the primary endpoint. More importantly, fewer hypotensive episodes were noted on average in the remimazolam arm; these are common and may lead to post-surgical morbidity. For at risk patients (ASA Class III or IV), this safety gain could be critical in justifying remimazolam’s price premium over propofol. In the US, remimazolam (ByFavo) is expected to be launched soon for procedural sedation (PS). Paion indicates that it has cash until H221. Our valuation remains €283m.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
2.77 |
(12.45) |
(15.9) |
0.0 |
N/A |
N/A |
12/19 |
8.00 |
(9.35) |
(10.8) |
0.0 |
N/A |
N/A |
12/20e |
20.30 |
2.42 |
5.9 |
0.0 |
46.6 |
N/A |
12/21e |
4.21 |
(20.88) |
(31.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding exceptional items.
Superior haemodynamic stability in at risk patients
The European GA Phase III has reported data on 365 patients. The data showed an anaesthesia score of 60 or below for 95.7% of the time with remimazolam and 99.1% with propofol. This was statistically the same effect (p=0.0001). The number of hypotensive events within 15 minutes of surgical incision occurred on average 62.62 times per patient (±39.46, 270 patients) using remimazolam compared to 71.03 times using propofol (±41.12, 95 patients). After statistical adjustments, this was significant (p=0.015).
Market potential relative to generic propofol
Remimazolam is undergoing a European Medicines Agency review for PS with the initial (CHMP) opinion now expected by Paion by the end of January with formal approval in H121. A GA abbreviated filing will then follow. GA is potentially the larger remimazolam indication in Europe, according to Paion management. We note that most anaesthesia (well over 90%) uses anaesthetic gas to maintain sedation after propofol is used to induce anaesthesia; it is uncommon to use a continuous infusion of propofol. Nonetheless, for Class III and IV patients who are more likely to receive only propofol, remimazolam appears to be haemodynamically safer.
Valuation: Unchanged at €283m
Paion expects royalties to be under €1m in 2020 and the US Q420 ByFavo launch will be ‘soft’ due to COVID-19. In Europe, Paion hopes to in license other products to sustain a direct European salesforce in some Northern territories or, if this is not feasible, remimazolam will be partnered elsewhere. Paion had €24.5m in cash (30 September) after receiving the €15m US approval milestone in Q3. Paion also has an EIB loan facility of up to €20m. Our indicative value remains €283m.
Exhibit 1: Financial summary
€'000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 December |
||||||
PROFIT & LOSS |
||||||
Revenue |
|
|
2,766 |
8,000 |
20,295 |
4,207 |
Cost of sales |
0 |
0 |
(120) |
(1,284) |
||
Gross profit |
2,766 |
8,000 |
20,175 |
2,924 |
||
Operating profit |
(12,711) |
(9,346) |
2,210 |
(21,096) |
||
Depreciation and amortisation |
(256) |
(120) |
(214) |
(214) |
||
Share-based payments |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(12,455) |
(9,226) |
2,424 |
(20,882) |
Operating profit (before amort. and except.) |
|
|
(12,455) |
(9,226) |
2,424 |
(20,882) |
Net Interest |
6 |
(122) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(12,449) |
(9,348) |
2,424 |
(20,882) |
Profit before tax (reported) |
|
|
(12,449) |
(9,448) |
2,230 |
(21,076) |
Tax |
2,510 |
2,432 |
1,500 |
0 |
||
Profit after tax (norm) |
(9,939) |
(6,916) |
3,924 |
(20,882) |
||
Profit after tax (reported) |
(9,939) |
(7,016) |
3,730 |
(21,076) |
||
Average number of shares outstanding (m) |
62.5 |
63.9 |
66.0 |
67.0 |
||
EPS - normalised (c) |
|
|
(15.9) |
(10.8) |
5.9 |
(31.2) |
EPS - reported (c) |
|
|
(15.9) |
(11.0) |
5.7 |
(31.5) |
Dividend per share (c) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
Gross margin (%) |
N/A |
N/A |
N/A |
N/A |
||
EBITDA margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
2,286 |
2,262 |
2,068 |
1,874 |
Intangible assets |
2,212 |
2,137 |
1,943 |
1,749 |
||
Tangible assets |
74 |
46 |
46 |
46 |
||
Refund from assumption of dev costs |
0 |
0 |
0 |
0 |
||
Other |
0 |
79 |
79 |
79 |
||
Current assets |
|
|
22,037 |
22,650 |
23,048 |
12,165 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
1,500 |
500 |
0 |
464 |
||
Cash |
17,227 |
18,787 |
22,252 |
10,905 |
||
Other |
3,311 |
3,363 |
796 |
796 |
||
Current liabilities |
|
|
(3,501) |
(10,179) |
(3,800) |
(3,800) |
Trade payables |
(2,218) |
(4,843) |
(2,843) |
(2,843) |
||
Short-term borrowings |
0 |
(4,354) |
0 |
0 |
||
Provisions |
(630) |
(956) |
(956) |
(956) |
||
Other current liabilities |
(654) |
(26) |
0 |
0 |
||
Long-term liabilities |
|
|
0 |
0 |
0 |
(10,000) |
Long-term borrowings |
0 |
0 |
0 |
(10,000) |
||
Provisions |
0 |
0 |
0 |
0 |
||
Long-term deferred income |
0 |
0 |
0 |
0 |
||
Deferred taxes |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
20,822 |
14,733 |
21,316 |
240 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(16,547) |
(5,274) |
944 |
(21,326) |
Net interest |
5 |
(8) |
0 |
0 |
||
Tax |
3,729 |
2,435 |
2,567 |
0 |
||
Capex |
0 |
(15) |
(20) |
(20) |
||
Purchase of intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
(13) |
1 |
0 |
0 |
||
Equity Financing |
5,214 |
0 |
4,354 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
4,421 |
(4,380) |
10,000 |
||
Net cash flow |
(7,612) |
1,560 |
3,465 |
(11,346) |
||
Opening net debt/(cash) |
|
|
(24,839) |
(17,227) |
(14,433) |
(22,252) |
Effect of exchange rate changes |
(0) |
0 |
0 |
0 |
||
Other |
0 |
(4,354) |
4,354 |
(10,000) |
||
Closing net debt/(cash) |
|
|
(17,227) |
(14,433) |
(22,252) |
(905) |
Source: Company data, Edison Investment Research
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