Paion |
Near-term filings in the US and Japan on track |
Q318 update |
Pharma & biotech |
12 November 2018 |
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Paion is approaching several important milestones, with partners on track to file for approval of remimazolam in the US, Japan and Russia in the next few months. Its Phase III study of remimazolam in general anaesthesia (GA) in Europe is progressing well and is on track to complete recruitment in 2019, while partner R-Pharm recently completed a successful Phase III in GA in Russia. The filings will be an important step towards establishing Paion as a leader in acute and critical care. We have made minor revisions to the timing of R&D expenditure in line with revised guidance and rolled forward our DCF model, which lifts our valuation to €291m or €4.56/share.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
4.3 |
(25.1) |
(37.8) |
0.0 |
N/A |
N/A |
12/17 |
5.8 |
(15.9) |
(20.5) |
0.0 |
N/A |
N/A |
12/18e |
3.1 |
(13.6) |
(17.9) |
0.0 |
N/A |
N/A |
12/19e |
10.5 |
(9.4) |
(10.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding, exceptionals and share-based payments.
Filings on track in the US and Japan
Remimazolam is Paion’s ultra-short-acting intravenous (IV) sedative/anaesthetic which combines the best features of the approved IV agents Midazolam and Propofol. Partner Cosmo is on track to file for US approval in procedural sedation, as planned, in Q418 or Q119. Mundipharma is on track to file for approval in Japan towards year-end. Paion expects to receive ~€2m in milestones following a filing in Japan and €7.5m for the US filing.
Progressing GA phase III in Europe
The European Phase III study of remimazolam in 500 elderly or unwell patients undergoing GA for elective surgery is on track to complete recruitment in 2019. The primary endpoint is non-inferiority compared to propofol in successfully completing the procedure. A key secondary endpoint is to show fewer episodes of low blood pressure, which can lead to negative outcomes in these patients.
Partners progressing development in other territories
The company’s partner R-Pharm intends to file for approval of Remimazolam in Russia in Q119, having successfully completed its Phase III in GA. Hana Pharm has completed recruitment in a GA Phase III in South Korea and expects to file for approval in 2020 after production has been established in that country. Partners in several other territories plan to file based on the US or Japanese dossier.
Valuation: Lifted to €291m
We roll forward our DCF model and lift our valuation to €291m, or €4.56/share, from €283m, or €4.44/share. Paion has lowered its guidance for R&D spend in 2018 by €3m to €12-14m to reflect some items of expenditure that have been deferred until 2019. As a consequence, we have revised our forecast R&D spend down by €3m in 2018 and up by €3m in 2019. Paion is funded until H120 assuming the filings in the US and Japan proceed as planned. A further €10m would be required until filing in Europe (we model these funds coming from approval milestones).
Exhibit 1: Financial summary
€'000s |
2015 |
2016 |
2017 |
2018e |
2019e |
||
Year end 31 December |
|||||||
PROFIT & LOSS |
|||||||
Revenue |
|
|
61 |
4,262 |
5,811 |
3,100 |
10,475 |
Cost of sales |
0 |
0 |
0 |
0 |
0 |
||
Gross profit |
61 |
4,262 |
5,811 |
3,100 |
10,475 |
||
R&D expenditure |
(29,385) |
(23,408) |
(17,854) |
(13,000) |
(16,000) |
||
General, administrative & selling |
(5,729) |
(5,129) |
(3,828) |
(3,820) |
(3,935) |
||
Other |
965 |
(807) |
(2) |
51 |
51 |
||
Operating profit |
(34,088) |
(25,841) |
(16,219) |
(14,069) |
(9,709) |
||
Depreciation and amortisation |
0 |
(759) |
(347) |
(400) |
(300) |
||
Share-based payments |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(34,088) |
(25,082) |
(15,872) |
(13,669) |
(9,409) |
Operating profit (before GW and except) |
(34,088) |
(25,082) |
(15,872) |
(13,669) |
(9,409) |
||
Net interest |
42 |
21 |
20 |
20 |
20 |
||
Profit before tax (norm) |
|
|
(34,046) |
(25,061) |
(15,852) |
(13,649) |
(9,389) |
Profit before tax (reported) |
|
|
(34,046) |
(25,061) |
(15,852) |
(13,649) |
(9,389) |
Tax |
5,834 |
4,944 |
3,759 |
2,470 |
2,880 |
||
Profit after tax (norm) |
(28,212) |
(20,118) |
(12,093) |
(11,179) |
(6,509) |
||
Profit after tax (reported) |
(28,212) |
(20,118) |
(12,093) |
(11,179) |
(6,509) |
||
Average number of shares outstanding (m) |
50.7 |
53.2 |
59.1 |
62.5 |
63.9 |
||
EPS - normalised (c) |
|
|
(55.7) |
(37.8) |
(20.5) |
(17.9) |
(10.2) |
EPS - reported (c) |
|
|
(55.7) |
(37.8) |
(20.5) |
(17.9) |
(10.2) |
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 |
|
|
3,417 |
2,855 |
2,529 |
2,529 |
2,529 |
Intangible assets |
3,362 |
2,688 |
2,415 |
2,415 |
2,415 |
||
Tangible assets |
56 |
167 |
114 |
114 |
114 |
||
Refund from assumption of dev costs |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Current assets |
|
|
40,051 |
35,128 |
29,357 |
23,245 |
16,736 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
37 |
25 |
25 |
||
Cash |
32,680 |
30,111 |
24,839 |
18,739 |
12,230 |
||
Other |
7,371 |
5,017 |
4,481 |
4,481 |
4,481 |
||
Current liabilities |
|
|
(7,901) |
(13,040) |
(6,656) |
(6,656) |
(6,656) |
Trade payables |
(7,332) |
(6,353) |
(5,921) |
(5,921) |
(5,921) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Provisions |
(224) |
(555) |
(391) |
(391) |
(391) |
||
Finance lease liabilities |
0 |
0 |
0 |
0 |
0 |
||
Other current liabilities |
(305) |
(359) |
(325) |
(325) |
(325) |
||
Current deferred income |
(39) |
(5,774) |
(19) |
(19) |
(19) |
||
Long-term liabilities |
|
|
(6) |
0 |
0 |
0 |
0 |
Long-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Provisions |
0 |
0 |
0 |
0 |
0 |
||
Long-term deferred income |
(6) |
0 |
0 |
0 |
0 |
||
Deferred taxes |
0 |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
35,562 |
24,943 |
25,229 |
19,117 |
12,608 |
CASH FLOW |
|||||||
Operating cash flow |
|
|
(28,212) |
(17,135) |
(22,318) |
(13,657) |
(9,409) |
Net interest |
43 |
19 |
20 |
20 |
20 |
||
Tax |
2,575 |
5,529 |
4,577 |
2,470 |
2,880 |
||
Capex |
0 |
7 |
0 |
0 |
0 |
||
Purchase of intangibles |
(33) |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
(199) |
(25) |
0 |
0 |
||
Equity Financing |
22 |
9,212 |
12,494 |
5,067 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Net cash flow |
(25,605) |
(2,567) |
(5,251) |
(6,100) |
(6,509) |
||
Opening net debt/(cash) |
|
|
(58,912) |
(32,680) |
(30,111) |
(24,839) |
(18,739) |
Effect of exchange rate changes |
(66) |
(2) |
(22) |
0 |
0 |
||
Other |
-560 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(32,680) |
(30,111) |
(24,839) |
(18,739) |
(12,230) |
Source: Edison Investment Research, Paion accounts
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