Paion |
Near-term EU sedation filing added to the list |
2018 results |
Pharma & biotech |
1 April 2019 |
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Following discussions with the EMA, Paion has added filing for procedural sedation (PS) in Europe to the list of potential near-term filings for remimazolam. Mundipharma filed for approval in general anaesthesia (GA) in Japan in December 2018, while Cosmo is expected to file for PS in the US shortly. Paion’s GA Phase III in Europe is on track to complete recruitment by the end of 2019. The filings will be an important step towards commercialising remimazolam and establishing Paion as a leader in acute and critical care. We have made minor revisions to expenditure in line with guidance, accelerated early ramp-up of sales in Europe and rolled forward our DCF model, which lifts our valuation to €303m or €4.74/share.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
5.8 |
(15.9) |
(20.5) |
0.0 |
N/A |
N/A |
12/18 |
2.8 |
(12.4) |
(15.9) |
0.0 |
N/A |
N/A |
12/19e |
10.5 |
(8.6) |
(9.3) |
0.0 |
N/A |
N/A |
12/20e |
20.0 |
5.8 |
11.8 |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding exceptionals and share-based payments.
Clinical data likely sufficient for PS filing in Europe
After a successful pre-submission meeting with the European Medicines Authority (EMA) in February, Paion assumes that the existing data package will be sufficient for filing in Europe (ie no extra trials needed). It will meet with an EMA rapporteur and anticipates updating the market as to potential timing with the H1 report. We understand that converting a US dossier into a format acceptable to the EMA is complex, and expect that it would take six to 12 months to prepare an EU filing submission if, as we assume, Paion decides to proceed.
Early introduction to EU clinicians and regulators
While initial sales of remimazolam in PS in Europe may be modest, in our view a filing in this indication would be an excellent opportunity to familiarise regulators, anaesthesiologists and other clinicians with the product. It could also bring an early start to the process of getting remimazolam listed on hospital formularies. These factors should lead to a faster uptake of remimazolam in GA (if approved).
US filing expected shortly – other territories to follow
Partner Cosmo has missed its target to file for US approval in PS by the end of Q119, but Paion expects it to complete the submission soon. Paion expects to receive €7.5m in milestones for the US filing. R-Pharm plans to file for GA in Russia by the end of 2019. Partners plan to file in Canada and Turkey based on the US or Japanese dossiers. Hana Pharm plans to file in South Korea in 2020.
Valuation: Lifted to €303m
We roll forward our DCF model and lift our valuation to €303m, or €4.74/share, from €291m, or €4.56/share. We have adjusted our near-term forecasts in line with guidance (R&D down ~€2m, SG&A up ~€0.5m), but have then added €0.5m to R&D spend in each of 2019 and 2020 to cover filing in PS in Europe. Paion is funded until H120 assuming the US filing proceeds as planned. A further €10m would be needed until filing in Europe (we model the funds coming from approval milestones from signed milestone agreements).
Exhibit 1: Financial summary
€'000s |
2016 |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
|||||||
PROFIT & LOSS |
|||||||
Revenue |
|
|
4,262 |
5,811 |
2,766 |
10,475 |
20,003 |
Cost of sales |
0 |
0 |
0 |
0 |
0 |
||
Gross profit |
4,262 |
5,811 |
2,766 |
10,475 |
20,003 |
||
R&D expenditure |
(23,408) |
(17,854) |
(12,167) |
(14,500) |
(9,500) |
||
General, administrative & selling |
(5,129) |
(3,828) |
(3,408) |
(4,601) |
(4,739) |
||
Other |
(807) |
(2) |
354 |
51 |
51 |
||
Operating profit |
(25,841) |
(16,219) |
(12,711) |
(8,875) |
5,515 |
||
Depreciation and amortisation |
(759) |
(347) |
(256) |
(300) |
(300) |
||
Share-based payments |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(25,082) |
(15,872) |
(12,455) |
(8,575) |
5,815 |
Operating profit (before GW and except) |
(25,082) |
(15,872) |
(12,455) |
(8,575) |
5,815 |
||
Net interest |
21 |
20 |
6 |
20 |
20 |
||
Profit before tax (norm) |
|
|
(25,061) |
(15,852) |
(12,449) |
(8,555) |
5,835 |
Profit before tax (reported) |
|
|
(25,061) |
(15,852) |
(12,449) |
(8,555) |
5,835 |
Tax |
4,944 |
3,759 |
2,510 |
2,610 |
1,710 |
||
Profit after tax (norm) |
(20,118) |
(12,093) |
(9,939) |
(5,945) |
7,545 |
||
Profit after tax (reported) |
(20,118) |
(12,093) |
(9,939) |
(5,945) |
7,545 |
||
Average number of shares outstanding (m) |
53.2 |
59.1 |
62.5 |
63.9 |
63.9 |
||
EPS - normalised (c) |
|
|
(37.8) |
(20.5) |
(15.9) |
(9.3) |
11.8 |
EPS - reported (c) |
|
|
(37.8) |
(20.5) |
(15.9) |
(9.3) |
11.8 |
Dividend per share (c) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Gross margin (%) |
NA |
NA |
NA |
NA |
NA |
||
EBITDA margin (%) |
NA |
NA |
NA |
NA |
NA |
||
Operating margin (before GW and except.) (%) |
NA |
NA |
NA |
NA |
NA |
||
BALANCE SHEET |
|||||||
Fixed assets |
|
|
2,855 |
2,529 |
2,286 |
2,286 |
2,286 |
Intangible assets |
2,688 |
2,415 |
2,212 |
2,212 |
2,212 |
||
Tangible assets |
167 |
114 |
74 |
74 |
74 |
||
Refund from assumption of dev costs |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Current assets |
|
|
35,128 |
29,357 |
22,037 |
16,093 |
23,638 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
37 |
1,500 |
25 |
25 |
||
Cash |
30,111 |
24,839 |
17,227 |
12,757 |
20,302 |
||
Other |
5,017 |
4,481 |
3,311 |
3,311 |
3,311 |
||
Current liabilities |
|
|
(13,040) |
(6,656) |
(3,501) |
(3,501) |
(3,501) |
Trade payables |
(6,353) |
(5,921) |
(2,218) |
(2,218) |
(2,218) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Provisions |
(555) |
(391) |
(630) |
(630) |
(630) |
||
Finance lease liabilities |
0 |
0 |
0 |
0 |
0 |
||
Other current liabilities |
(359) |
(325) |
(654) |
(654) |
(654) |
||
Current deferred income |
(5,774) |
(19) |
0 |
0 |
0 |
||
Long-term liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Long-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Provisions |
0 |
0 |
0 |
0 |
0 |
||
Long-term deferred income |
0 |
0 |
0 |
0 |
0 |
||
Deferred taxes |
0 |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
24,943 |
25,229 |
20,822 |
14,878 |
22,423 |
CASH FLOW |
|||||||
Operating cash flow |
|
|
(17,135) |
(22,318) |
(16,547) |
(7,100) |
5,815 |
Net interest |
19 |
20 |
5 |
20 |
20 |
||
Tax |
5,529 |
4,577 |
3,729 |
2,610 |
1,710 |
||
Capex |
7 |
0 |
0 |
0 |
0 |
||
Purchase of intangibles |
0 |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
(199) |
(25) |
(13) |
0 |
0 |
||
Equity Financing |
9,212 |
12,494 |
5,214 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Net cash flow |
(2,567) |
(5,251) |
(7,612) |
(4,470) |
7,545 |
||
Opening net debt/(cash) |
|
|
(32,680) |
(30,111) |
(24,839) |
(17,227) |
(12,757) |
Effect of exchange rate changes |
(2) |
(22) |
(0) |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(30,111) |
(24,839) |
(17,227) |
(12,757) |
(20,302) |
Source: Edison Investment Research, Paion accounts
Disclaimer
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