adult-close-up-eye-946727

IOPtiMate relative safety highlighted in publication

BioLight Life Sciences 22 December 2016 Update

BioLight Life Sciences

IOPtiMate relative safety highlighted in publication

Quarterly update

Pharma & biotech

22 December 2016

Price*

NIS8.87

Market cap

NIS23m

*Priced at 20 December 2016

NIS3.80/US$

Net cash (NISm) at 30 September 2016

31.8

Shares in issue

2.6m

Free float

45%

Code

BOLT

Primary exchange

TASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(12.7)

(31.3)

(70.0)

Rel (local)

(15.6)

(30.5)

(68.5)

52-week high/low

NIS34.7

NIS10.1

Business description

Based in Israel, BioLight is an emerging ophthalmic company focused on the development and commercialisation of products and product candidates that address ocular conditions. Lead products IOPtiMate and VS-101 are directed towards the treatment of glaucoma.

Next events

FDA guidance on IOPtiMate regulatory strategy

H117

EyeD VS-101 Phase I/IIa data

H117

Analysts

Pooya Hemami, CFA

+1 646 653 7026

Maxim Jacobs, CFA

+1 646 653 7027

A recent publication on a 111-patient trial on BioLight’s IOPtiMate CO2 laser surgical system suggests it provides intraocular pressure (IOP) reduction comparable to trabeculectomy, but potentially with a better safety profile. Sales in Europe and Asia are ongoing, and we expect clarity on a US regulatory strategy in H117. The firm had NIS31.8m in net cash at 30 September 2016 and we derive an rNPV valuation of NIS90.5-104.2m.

Year end

Revenue (NISm)

PBT*
(NISm)

EPS*
(NIS)

DPS
(NIS)

P/E
(x)

Yield
(%)

12/14

0.9

(30.1)

(8.91)

0.0

N/A

N/A

12/15

1.4

(25.1)

(6.96)

0.0

N/A

N/A

12/16e

2.3

(23.9)

(5.98)

0.0

N/A

N/A

12/17e

6.6

(33.8)

(11.82)

0.0

N/A

N/A

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

IOPtiMate reduces IOP by 43-47%, minimal VA loss

A mean IOP reduction of 43-47% vs baseline was measured across three years, and adverse events (including macroperforations, iris incarceration, the need for goniopuncture or needling) were well managed and without permanent visual acuity (VA) loss. Only 0.9% of patients had VA loss of more than two lines at three years, which is significantly less than what would be expected with trabeculectomy, historically the surgical procedure of choice for advanced chronic glaucoma. In a separate study (the TVT study), over 40% of patients undergoing trabeculectomy experienced VA loss at five years.

Q316 financials mostly in line with our projections

BioLight reported Q316 revenue, EBITDA loss and adjusted net loss per share of NIS0.92m, NIS5.1m and NIS1.50. These compare to our Q316 estimates of NIS0.35m, NIS5.6m and NIS1.92. IOPtiMate sales to customers in ex-US markets account for the bulk of BioLight revenue. The net loss figure removes NIS2.3m of non-controlling interest-associated loss belonging to the Micromedic subsidiary (BioLight owns 48% of Micromedic’s outstanding shares and has consolidated its results). The Q316 operating cash burn (including the consolidation of Micromedic’s financials) rate was NIS5.7m, and its 9M16 burn rate was NIS20.0m (we estimate NIS6-8m of this reflects Micromedic’s operations).

Valuation: rNPV of NIS90.5-104.2m

On 30 September 2016, BioLight held NIS31.8m in net cash (NIS31.4m cash and equivalents and NIS0.4m in short-term deposits); most of these funds are held within BioLight’s IOPtima subsidiary. After rolling forward our forecasts, we now have an rNPV of NIS90.5-104.2m (up from NIS90.5-97.6m, previously). We believe R&D spending and other operating costs will exceed IOPtiMate sales growth near term and we forecast the operating cash burn rate to increase to NIS31.7m in 2017 and NIS32.6m in 2018. We model that BioLight will need to raise NIS30.0m in both 2017 and 2018 to sustain its operations and R&D projects. For modelling purposes, we assign these financings to long-term debt.

New published study on IOPtiMate multicentre trial

Geffen et al.1 recently reported updated data from an 111-patient open-label study between 2007 and 2011 across nine sites spanning seven countries (Mexico, India, Russia, Italy, Spain, Switzerland and Israel) on BioLight’s IOPtiMate device. IOPtiMate is carbon-dioxide (CO2) laser-assisted sclerectomy (CLASS) system designed to reduce IOP for the treatment of glaucoma. Recruited patients had definitive glaucoma diagnoses and baseline IOP above 18mmHg despite taking maximal tolerated topical IOP-lowering (hypotensive) drug therapy and, given the stage of their disease, were all indicated for filtration surgery (trabeculectomy).

Geffen N, Mimouni M, Sherwood M, et al. J Glaucoma. 2016 Dec;25(12):946-951.

As discussed in our initiation report, BioLight believes the IOPtiMate CLASS system provides a safer and more precise alternative to trabeculectomies and glaucoma drainage implants (GDIs), with comparable IOP-lowering levels, a lower risk of complications, shorter recovery times and fewer post-op office visits. The IOPtiMate CLASS procedure involves cutting a section (flap) of sclera, temporarily lifting it and applying the CO2 laser beneath, to thin the scleral wall underneath. One of the risks with CLASS described in this study is that excessive thinning of the sclera can lead to macroperforations, which require additional corrective treatment (such as trabeculectomy).

In the study, complete success was defined as IOP measurements of 5-18mm Hg and an IOP reduction of at least 20% compared with baseline IOP, without the need for future hypotensive medications or repeat surgery. Qualified success referred to patients meeting the same parameters, but also included subjects who required hypotensive medications post-operatively.

Failure was defined as an IOP outside the above range, an IOP reduction below 20% compared to baseline IOP, severe loss of vision, intra-operative device-related macroperforations, or the need to undergo additional glaucoma procedures other than goniopuncture or bleb needling (two relatively minor in-office surgical procedures that can accompany glaucoma surgeries, and have low complication rates). Goniopuncture was performed in 18 (18.5%) patients and needling in 12 (12.4%) patients. In both cases, the procedures were performed in the first year of the study and there were no procedure-related complications.

Comparable IOP lowering efficacy to trabeculectomy

Data were collected on all 108 enrolled participants who received IOPtiMate CLASS treatment, and no technical device malfunctions occurred. The efficacy data are cited below and overall show an IOP reduction of 43-47% across the three years, which is comparable to the levels generally associated with trabeculectomy. Nearly 58% of patients reached complete success and did not require IOP-lowering medications after 24 months; the qualified success rate reached a peak of 91% at this period, although we highlight that both groups included patients requiring additional needling or goniopuncture procedures.

Exhibit 1: Efficacy data for IOPtiMate multinational study

Time Period

Mean IOP reduction (%)

*Complete success rate (%)

**Qualified success rate (%)

12 months

45.1

60.2

79.6

24 months

46.8

57.9

91.2

36 months

42.5

47.8

84.8

Source: Geffen N, Mimouni M, Sherwood M, et al. J Glaucoma. 2016 Dec; 25(12):946-951. Note: *IOP measurements between 5-18mm Hg and an IOP reduction of at least 20% compared with baseline, and without the need for medications or added surgery. **Same as complete success rate, but including patients requiring IOP-lowering medications.

IOPtiMate-related adverse events manageable without lasting visual effects

There were five CLASS procedure-related macroperforations (4.6% of patients) that occurred as a result of excessive scleral tissue ablation. The study authors indicate that each case was successfully converted to trabeculectomy. They suggest that as CLASS has a learning curve, the rate of macroperforations could decrease as surgeons become more familiar with the treatment technique. There was also a relatively high rate of iris incarceration (nine cases, accounting for 8.3% of patients). In all cases, the iris incarcerations were successfully treated with YAG laser iridoplasty or surgical iris repositioning. Nonetheless, the reported rate of iris incarceration was typically higher than would be expected with GDIs, MIGS or filtration surgery.

IOPtiMate appears to carry less risk than filtration surgery

While this was an open-label study, some of the adverse-event levels can be compared to data from the the Tube vs Trabeculectomy study (TVT)2, a five-year investigation that compared tube shunt surgery to trabeculectomy. The rates of hyphema and hypotony (both shorter-term post-surgical risks) for IOPtiMate were 4.6% and 2.8%, respectively, compared to 8% and 5%, respectively, for the trabeculectomy arm in the TVT study.

Gedde SJ, Herndon LW, Brandt JD et al. Am J Ophthalmol. 2012 May;153(5):804-814.e1.

Best-corrected visual acuity (BCVA), likely the most significant long-term parameter affecting patients’ visual function and quality of life, appears to show a more striking difference between trabeculectomy and IOPtiMate. The current IOPtiMate study showed that after three years, only 0.9% of patients experienced a significant BCVA loss of at least two Snellen chart lines. However, 43% of patients undergoing trabeculectomy in the TVT study experienced BCVA loss based on the same criteria. We note that differing time measurement periods (three years for the IOPtiMate study vs. five years for the TVT trial), may complicate direct comparisons between both studies.

While this IOPtiMate study shows that a reasonable number of treated patients had non-visually threatening adverse events (macroperforations, iris incarcerations, or events requiring goniopuncture or needling procedures, etc), they were largely well managed and did not appear to affect visual outcomes.

Limitations of current comparisons, possible directions for future studies

While this study suggests IOPtiMate may offer comparable IOP reduction to trabeculetomy and an overall safer profile, comparisons are limited by the absence of a control group, which may have affected subjects’ randomization and treatment masking, and added subjectivity to the analysis. Thus, a direct comparison with trabeculectomy may not be fully reliable based on this study alone. The authors also suggest that a further limitation of this study is the loss of subjects to follow-up, which reached 58% at three years and may have led to selection bias. Finally, visual field deterioration (one of the hallmark parameters to measure glaucoma progression) was not evaluated during this study.

Hence, we estimate that further studies will be needed to persuade eye surgeons (particularly in developed markets) of the potential advantages of IOPtiMate vs competing glaucoma procedures, and strengthen the commercial case for the product. Further, as also stated in our initiation report, GDIs and minimally invasive glaucoma surgeries (MIGS) are increasingly replacing trabeculectomy in many clinical settings, and a more clinically pertinent head-to-head comparison could be done for the efficacy and safety of IOPtiMate to these procedures, rather than trabeculectomy.

Valuation

Our BioLight valuation continues to include the prospects for IOPtiMate, Eye-D VS-101 and TeaRx. We apply a risk-adjusted net present value (nNPV) model with a 12.5% cost of capital. For each of these projects, we provide a weighted rNPV based on BioLight’s ownership in the associated parent company. For IOPtiMate, we continue to apply a lower probability of success for our US forecasts than our ex-US market forecasts, as the product has yet to receive US regulatory clearance, while it is already cleared for sale in Europe and China. Eye-D VS-101, an extended-dose implant delivering sustained release of latanoprost, remains the largest potential source of revenue for the company and our 20% probability of success estimate reflects its early clinical development stage.

Exhibit 2: BioLight’s upcoming catalysts

Event

Timing

Guidance from FDA on regulatory pathway for IOPtiMate

H117

VS-101 Phase I/IIa data

H117

TeaRx 510(k) clearance and US launch

2017

Event

Guidance from FDA on regulatory pathway for IOPtiMate

VS-101 Phase I/IIa data

TeaRx 510(k) clearance and US launch

Timing

H117

H117

2017

Source: Company reports

We have maintained our operating revenue and timing forecasts for 2017 and beyond, and rolled forward our forecasts. Given these changes we now obtain an rNPV of NIS90.5-104.2m (up from NIS90.5-97.6m, previously).

Exhibit 3: BioLight rNPV assumptions

Product contributions (net of R&D costs)

Indication

rNPV
(NISm)

rNPV/share (NIS)

Probability of success

Launch year

Peak sales (US$m)

IOPtiMate for ex-US markets (70% weighted)

Glaucoma

91.2

34.99

70.0%

2015

21.4 in 2023

IOPtiMate in US market (70% weighted)

Glaucoma

27.2

10.44

40.0%

2020

21.9 in 2025

VS-101 (97% weighted)

Glaucoma

81.0

31.06

20.0%

2020

69.8 in 2026

TeaRx (80% weighted)

DES diagnosis

29.7

11.40

50.0%

2017

19.8 in 2024

Corporate costs & expenses

SG&A expenses

(59.1)

(22.66)

Net capex, NWC & taxes

(79.9)

(30.66)

Value of Micromedic shares (MCTC, TASE)*

6.4

2.44

Total rNPV

96.4

37.00

Net cash (debt) (Q316)

31.8

12.20

Total equity value**

128.2

49.20

FD shares outstanding (000) (Q316)

2,607

Source: Edison Investment Research. Note: *5.29m shares held with 13 December 2016 price of NIS0.92 per share; **excludes the impacts from any dilution resulting from any future equity offerings

Financials: Q316 results mostly within expectations

BioLight reported Q316 financials in November 2016, with revenue, EBITDA loss and adjusted net loss per share of NIS0.92m, NIS5.1m and NIS1.50. These compare to our Q316 estimates of NIS0.35m, NIS5.6m and NIS1.92. The bulk of company revenue reflects IOPtiMate sales to customers in ex-US markets. The adjusted net loss calculation excludes the NIS0.03m expense item relating to the company’s share of losses of an affiliate accounted for at equity. Including this figure, the reported IFRS net loss was NIS1.51 per share. Both these net loss figures remove NIS2.3m of loss reflecting the non-controlling interest attributed to the Micromedic subsidiary (BioLight owns 48% of the outstanding shares of Micromedic). Our financial forecasts do not include projections or considerations for Micromedic.

The Q316 operating cash burn (including the consolidation of Micromedic’s financials) rate was NIS5.7m, and its 9M16 burn rate was NIS20.0m. On 30 September 2016, BioLight held NIS31.8m in net cash (NIS31.4m cash and equivalents and NIS0.4m in short-term deposits); most of these funds are held within BioLight’s IOPtima subsidiary. We estimate NIS6-8m of BioLight’s 9M16 burn rate reflects Micromedic’s operations.

We continue to forecast IOPtiMate sales of NIS5.7m in 2017 and NIS11.7m in 2018 (with NIS0.9m and NIS5.7m in 2017 and 2018 TeaRx sales, respectively). SG&A costs are projected to rise from NIS8.2m in 2017 to NIS10.6m in 2018. We expect R&D costs over this period will be driven by Eye-D VS-101 and IOPtiMate US clinical studies, with R&D costs projected to rise to NIS27.6m in 2017 and NIS25.2m in 2018 (from NIS13.0m in 2015).

Hence, while we expect IOPtiMate revenue to increase in coming quarters, we believe R&D spending and other operating costs will exceed such sales growth near term and we forecast the operating cash burn rate to increase to NIS31.7m in 2017 and NIS32.6m in 2018. We model that BioLight will need to raise NIS30.0m in both 2017 and 2018 to sustain its operations and R&D projects. For modelling purposes, we assign these financings to long-term debt.

BioLight’s reported financials consolidate the results from Micromedic, although BioLight has no direct liability or obligation to it. Micromedic has near-zero revenue (under NIS0.05m per year) and had a 2015 segment loss of NIS8.3m. Our model does not include forecasts for Micromedic.

Exhibit 4: Financial summary

NIS(000)

2013

2014

2015

2016e

2017e

2018e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

82

941

1,391

2,300

6,617

17,425

Cost of Sales

(23)

(538)

(734)

(934)

(2,978)

(7,841)

Sales, General & Administrative

(9,016)

(8,529)

(11,956)

(11,570)

(8,245)

(10,614)

Research & Development

(18,419)

(18,560)

(13,045)

(12,298)

(27,600)

(25,200)

EBITDA

 

 

(27,376)

(26,686)

(24,344)

(22,502)

(32,206)

(26,230)

Depreciation

(1,066)

(3,884)

(1,306)

(667)

(1,836)

(2,400)

Amortization

0

0

0

0

0

0

Operating Profit (before exceptionals)

 

(28,442)

(30,570)

(25,650)

(23,170)

(34,041)

(28,630)

Exceptionals

(1,220)

(5,886)

(2,475)

(5,133)

0

0

Other

0

0

0

0

0

0

Operating Profit

(29,662)

(36,456)

(28,125)

(28,303)

(34,041)

(28,630)

Net Interest

500

448

543

(753)

237

(347)

Profit Before Tax (norm)

 

 

(27,942)

(30,122)

(25,107)

(23,922)

(33,804)

(28,978)

Profit Before Tax (FRS 3)

 

 

(29,162)

(36,008)

(27,582)

(29,055)

(33,804)

(28,978)

Tax

0

0

0

0

0

0

Profit After Tax and minority interests (norm)

(17,617)

(17,216)

(16,784)

(15,598)

(30,892)

(27,827)

Profit After Tax and minority interests (FRS 3)

(18,837)

(23,102)

(19,259)

(20,731)

(30,892)

(27,827)

Average Number of Shares Outstanding (m)

1.4

1.9

2.4

2.6

2.6

2.6

EPS - normalised (NIS)

 

 

(12.87)

(8.91)

(6.96)

(5.98)

(11.82)

(10.60)

EPS - normalised and fully diluted (NIS)

 

(12.87)

(8.91)

(6.96)

(5.98)

(11.82)

(10.60)

EPS - (IFRS) (NIS)

 

 

(13.76)

(11.96)

(7.98)

(7.95)

(11.82)

(10.60)

Dividend per share (NIS)

0.0

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

13,323

8,002

9,832

8,004

10,600

16,490

Intangible Assets

12,307

7,106

6,869

6,691

6,691

6,691

Tangible Assets

1,016

896

2,963

1,313

3,909

9,799

Current Assets

 

 

21,009

32,432

53,439

28,978

25,651

18,038

Short-term investments

185

6,408

385

372

372

372

Cash

17,716

22,196

50,697

27,953

22,083

10,810

Other

3,108

3,828

2,357

652

3,196

6,855

Current Liabilities

 

 

(4,898)

(6,552)

(6,605)

(5,428)

(5,428)

(1,367)

Creditors

(4,898)

(6,552)

(6,605)

(5,428)

(5,428)

(1,367)

Short term borrowings

0

0

0

0

0

0

Long Term Liabilities

 

 

(7,325)

(8,144)

(9,605)

(10,110)

(40,110)

(70,110)

Long term borrowings

0

0

0

0

(30,000)

(60,000)

Other long term liabilities

(7,325)

(8,144)

(9,605)

(10,110)

(10,110)

(10,110)

Net Assets

 

 

22,109

25,738

47,061

21,443

(9,287)

(36,949)

CASH FLOW

Operating Cash Flow

 

 

(26,725)

(27,435)

(24,580)

(22,539)

(31,676)

(32,635)

Net Interest

500

448

543

(753)

237

(347)

Tax

0

0

0

0

0

0

Capex

(201)

(402)

(182)

(512)

(4,432)

(8,290)

Acquisitions/disposals

(37)

0

(837)

(227)

0

0

Financing

11,152

38,374

47,320

2,554

0

0

Net Cash Flow

(15,311)

10,985

22,264

(21,477)

(35,870)

(41,272)

Opening net debt/(cash)

 

 

(215)

(17,901)

(28,604)

(51,082)

(28,325)

7,545

HP finance leases initiated

0

0

0

0

0

0

Other

32,997

(282)

214

(1,280)

0

0

Closing net debt/(cash)

 

 

(17,901)

(28,604)

(51,082)

(28,325)

7,545

48,818

Source: Company reports, Edison Investment Research. Note: The reported financial results consolidate Micromedic’s financials, and

forecast financial results (2016e and beyond) do not include Micromedic operations.


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

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been 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

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

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

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

Share this with friends and colleagues