Iris II receives CE mark clearance

Pixium Vision 27 July 2016 Update

Pixium Vision

Iris II receives CE mark clearance

Update – CE mark

Healthcare equipment
& services

27 July 2016

Price

€8.07

Market cap

€103m

Net cash (€m) at 30 June 2016

16.1

Shares in issue

12.8m

Free float

26%

Code

PIX

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

11.5

3.3

28.9

Rel (local)

4.4

6.3

47.2

52-week high/low

€8.40

€4.48

Business description

Pixium Vision is a French medical device company developing retinal implants for patients with retinitis pigmentosa and macular degeneration. CE mark clearance was recently received on its initial product, Iris. A sub-retinal implant, Prima, is also being developed simultaneously.

Next events

First in-human dosing for Prima

H216

Discussions with FDA on Iris and Prima US clinical trial requirements

H216

Analysts

Pooya Hemami

+1 646 653 7026

Maxim Jacobs

+1 646 653 7027

Pixium Vision is a research client of Edison Investment Research Limited

Pixium announced on 25 July that its Iris II epi-retinal implant has received CE mark clearance from European regulatory authorities. This pivotal step helps validate the device’s safety and can enable the first stage of a commercial roll-out of this device in certain European markets. Our rNPV, inclusive of net cash, is €11.62 per share (vs €10.28 previously).

Year
end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/14

2.4

(11.6)

(1.18)

0.0

N/A

N/A

12/15

3.3

(15.6)

(1.23)

0.0

N/A

N/A

12/16e

2.9

(14.2)

(1.11)

0.0

N/A

N/A

12/17e

5.5

(24.1)

(1.89)

0.0

N/A

N/A

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

Clinical trial and reimbursement activities underway

We expect Pixium to implement the first phase of an EU commercial roll-out and seek reimbursement in Germany, France, the UK, Spain and Austria. Emphasis will be placed on selected ophthalmic surgery centres of excellence, particularly those sites that have participated in earlier trials of the earlier-generation Iris I implant. We believe that Second Sight’s Argus II implant is reimbursed at €96,000 in France (Pixium’s home market). We believe this can bode well for Pixium, as the Iris II has significantly more electrodes than the Argus II (150 vs 60), which may improve the level of visual resolution perceived by the user.

Iris II study underway, discussions with FDA in H216

A multi-centre 10-patient European study of Iris II in visually blind patients with retinal disease started in January 2016 and will assess the effectiveness of the device for at least 18 months. Interim data from the trial should further assist reimbursement applications in EU territories. Pixium plans to discuss the US clinical development strategy for both Iris II and its next-generation Prima sub-retinal implant with the FDA in H216. We continue to model US Iris II commercialisation in 2018 and Prima launches in 2019 for the EU and in 2021 for the US.

Valuation: Raising rNPV to $132m

Following CE mark clearance, we have raised our Iris II commercial probability of success estimate to 55% (from 40%, previously), with US regulatory risk and commercialisation risks (market acceptance, reimbursement) remaining as risk-adjustment factors. Our pipeline rNPV is €132.3m (vs €113.5m, previously). After including H116 net cash of €16.1m (€16.2m gross cash minus €0.2m in short-term advances), we obtain an equity valuation of €148.3m, or €11.62 per share (vs €10.28 previously). We model a 2016 operating cash burn rate of €15.1m, and continue to assume Pixium will raise €20m in financing in 2016 and €30m in both 2017 and 2018. For illustrative purposes only, we added these requirements to long-term debt, and our model does not include the potential dilutive impacts of future equity offerings.

Exhibit 1: Financial summary

€000s

2014

2015

2016e

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

2,427

3,296

2,866

5,525

25,875

Cost of Sales

0

0

0

(1,894)

(12,154)

General & Administrative

(2,299)

(2,680)

(3,893)

(6,495)

(9,600)

Research & Development

(10,963)

(15,169)

(12,301)

(20,000)

(22,000)

EBITDA

 

 

(10,835)

(14,552)

(13,328)

(22,864)

(17,878)

Depreciation

(813)

(1,144)

(1,086)

(1,265)

(1,430)

Amortization

0

0

0

0

0

Operating Profit (before exceptionals)

 

(11,648)

(15,697)

(14,414)

(24,129)

(19,308)

Exceptionals

0

0

0

0

0

Other

0

0

0

0

0

Operating Profit

(11,648)

(15,697)

(14,414)

(24,129)

(19,308)

Net Interest

37

52

240

16

(401)

Profit Before Tax (norm)

 

 

(11,611)

(15,644)

(14,174)

(24,113)

(19,710)

Profit Before Tax (FRS 3)

 

 

(11,611)

(15,644)

(14,174)

(24,113)

(19,710)

Tax

0

0

0

0

0

Profit After Tax and minority interests (norm)

(11,611)

(15,644)

(14,174)

(24,113)

(19,710)

Profit After Tax and minority interests (FRS 3)

(11,611)

(15,644)

(14,174)

(24,113)

(19,710)

Average Number of Shares Outstanding (m)

9.8

12.7

12.8

12.8

12.8

EPS - normalised (€)

 

 

(1.18)

(1.23)

(1.11)

(1.89)

(1.54)

EPS - normalised and fully diluted (€)

 

 

(1.18)

(1.23)

(1.11)

(1.89)

(1.54)

EPS - (IFRS) (€)

 

 

(1.18)

(1.23)

(1.11)

(1.89)

(1.54)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

9,932

11,087

11,106

12,341

14,911

Intangible Assets

9,259

8,822

8,494

8,494

8,494

Tangible Assets

673

2,265

2,613

3,848

6,417

Current Assets

 

 

44,866

27,682

33,279

37,735

47,298

Short-term investments

0

0

0

0

0

Cash

42,132

24,354

28,501

30,780

34,044

Other

2,735

3,328

4,778

6,955

13,254

Current Liabilities

 

 

(4,051)

(3,498)

(2,325)

(1,231)

(2,156)

Creditors

(4,051)

(3,498)

(2,325)

(1,231)

(2,156)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(245)

(315)

(20,337)

(50,337)

(80,337)

Long term borrowings

(167)

(164)

(20,165)

(50,165)

(80,165)

Other long term liabilities

(78)

(151)

(172)

(172)

(172)

Net Assets

 

 

50,503

34,956

21,723

(1,491)

(20,284)

CASH FLOW

Operating Cash Flow

 

 

(8,426)

(15,584)

(15,060)

(25,236)

(22,335)

Net Interest

37

52

240

16

(401)

Tax

0

0

0

0

0

Capex

(1,772)

(2,106)

(1,097)

(2,500)

(4,000)

Acquisitions/disposals

0

0

0

0

0

Financing

42,705

56

63

0

0

Net Cash Flow

32,543

(17,582)

(15,854)

(27,720)

(26,737)

Opening net debt/(cash)

 

 

(9,420)

(41,965)

(24,190)

(8,335)

19,385

HP finance leases initiated

0

0

0

0

0

Other

1

(193)

0

0

(0)

Closing net debt/(cash)

 

 

(41,965)

(24,190)

(8,335)

19,385

46,122

Source: Edison Investment Research, Pixium Vision accounts. Note: 2014 and 2015 revenues include tax credits and subsidies, which are forecast at approximately $3m per year through 2018.

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Germany

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United Kingdom

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