Medigene |
Next step taken toward its first TCR clinical trial |
CTA submitted |
Pharma & biotech |
11 July 2017 |
Share price performance
Business description
Next events
Analyst
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medigene has announced that it has submitted a clinical trial authorisation application (CTA) to begin its first clinical trial with its proprietary T-cell receptor (TCR) modified T cells. If approved, the trial will evaluate it as an immunotherapy to treat a range of blood cancer indications and will be one of the first in Germany of TCR-modified cells. The trial is expected to start by the end of 2017. This submission triggers a final milestone payment of €2m for the Trianta acquisition (January 2014). We maintain our valuation of €315m but note the company is well-funded to deliver important milestones from progressing its clinical programme.
Year end |
Revenue (€m) |
PBT* (€m) |
EPS* (€) |
DPS (€) |
P/E (x) |
Yield (%) |
12/15 |
6.8 |
(12.8) |
(0.74) |
0.0 |
N/A |
N/A |
12/16 |
9.7 |
(11.3) |
(0.56) |
0.0 |
N/A |
N/A |
12/17e |
9.0 |
(18.6) |
(0.89) |
0.0 |
N/A |
N/A |
12/18e |
9.3 |
(20.2) |
(0.91) |
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 application submitted for its TCR CIT
In 2017 we expect Medigene to take significant steps with its TCR programme, primarily with the initiation of its own TCR clinical study. The announcement on 10 July indicates that the company’s plans are on track and, subject to regulatory approval, a combined Phase I/II safety and feasibility clinical trial will start in H217. This is a significant milestone as the company’s first clinical study for its proprietary modified T cells and one of the first TCR trials in Germany. The TCR therapy targets PRAME (preferentially expressed antigen in melanoma) and will be evaluated in patients with advanced haematological diseases. For an overview of the company-initiated trial (CIT) design and Medigene’s TCR technology please see our recent note here.
Completion of the transformative Trianta acquisition
In 2014 Medigene completed an all-share purchase of privately-held Trianta Immunotherapies, for a total value of €10m (€4m upfront and the remainder linked to milestones). The CTA submission triggers a final milestone payment of €2m to the former shareholders of Trianta Immunotherapies, to be made within the next five months. This is intended to be settled through the issuance of new shares from authorised capital. This milestone payment will be the third and final payment from the Trianta acquisition. This deal has proved transformational to Medigene, in our opinion, as it has given it access to three types of immunotherapy assets (DC vaccine, T-cell receptor-based adoptive cell therapy, and T-cell-directed antibodies) and enabled it to progress to be a promising immunotherapy player.
Valuation: Maintained but continuing to progress
We maintain our rNPV-based valuation at €315m or €14.23/share. Medigene is well funded and we expect a number of important milestones in 2017; specifically, completed enrolment in Phase I/II studies for its DC vaccines in AML, start of its first company-initiated T-cell receptor (TCR) clinical study and potential newsflow relating to the progression of TCR leads resulting from its bluebird bio deal.
Exhibit 1: Financial summary
€'000s |
2014 |
2015 |
2016 |
2017e |
2018e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
13,784 |
6,808 |
9,749 |
8,959 |
9,263 |
of which: Veregen revenues (royalties/milestones/supply) |
5,195 |
3,101 |
3,048 |
3,128 |
3,433 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
6,096 |
1,214 |
3,155 |
0 |
0 |
||
Non-cash income (Eligard) |
2,493 |
2,493 |
2,493 |
2,493 |
2,493 |
||
Bluebird bio partnership |
1,053 |
3,338 |
3,338 |
||||
Cost of sales |
(2,086) |
(1,103) |
(1,402) |
(1,231) |
(1,353) |
||
Gross profit |
11,698 |
5,705 |
8,347 |
7,728 |
7,910 |
||
Selling, general & administrative spending |
(7,081) |
(7,615) |
(7,942) |
(8,286) |
(8,524) |
||
R&D expenditure |
(7,498) |
(8,529) |
(11,538) |
(17,884) |
(19,672) |
||
Other operating spending |
0 |
. |
0 |
0 |
0 |
||
Operating profit |
(2,881) |
(10,439) |
(6,891) |
(18,443) |
(20,286) |
||
Goodwill & intangible amortisation |
(527) |
(526) |
(525) |
(524) |
(523) |
||
Exceptionals |
0 |
0 |
4,242 |
0 |
0 |
||
Share-based payment |
(66) |
(111) |
(50) |
(50) |
(50) |
||
EBITDA |
|
|
(2,005) |
(9,384) |
(10,238) |
(17,644) |
(19,488) |
Operating profit (before GW and except.) |
|
|
(2,288) |
(9,802) |
(10,558) |
(17,869) |
(19,713) |
Net interest |
(1,774) |
(2,914) |
(1,009) |
(1,495) |
(1,928) |
||
Other (forex gains/losses; associate profit/loss) |
(1,257) |
(46) |
263 |
720 |
1,489 |
||
Profit before tax (norm) |
|
|
(5,319) |
(12,762) |
(11,304) |
(18,644) |
(20,152) |
Profit before tax (FRS 3) |
|
|
(5,912) |
(13,399) |
(7,637) |
(19,218) |
(20,725) |
Tax |
155 |
400 |
228 |
0 |
0 |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(5,164) |
(12,362) |
(11,076) |
(18,644) |
(20,152) |
||
Profit after tax (FRS 3) |
(5,757) |
(12,999) |
(7,409) |
(19,218) |
(20,725) |
||
Average number of shares outstanding (m) |
12.2 |
16.8 |
20.0 |
21.0 |
22.1 |
||
EPS - normalised (€) |
|
|
(0.42) |
(0.74) |
(0.56) |
(0.89) |
(0.91) |
EPS - FRS 3 (€) |
|
|
(0.47) |
(0.77) |
(0.37) |
(0.91) |
(0.94) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||
Fixed assets |
|
|
46,617 |
51,552 |
47,742 |
50,012 |
52,282 |
Intangible assets & goodwill |
38,377 |
35,713 |
35,767 |
35,243 |
34,720 |
||
Tangible assets |
951 |
2,502 |
3,323 |
6,117 |
8,910 |
||
Other non-current assets |
7,289 |
13,337 |
8,652 |
8,652 |
8,652 |
||
Current assets |
|
|
24,666 |
59,900 |
63,973 |
61,190 |
36,767 |
Stocks |
4,406 |
6,654 |
7,866 |
7,866 |
7,866 |
||
Debtors |
1,733 |
763 |
1,175 |
1,175 |
1,175 |
||
Cash |
14,976 |
46,759 |
52,630 |
49,847 |
25,424 |
||
Other |
3,551 |
5,724 |
2,302 |
2,302 |
2,302 |
||
Current liabilities |
|
|
(7,755) |
(9,664) |
(11,966) |
(11,966) |
(11,966) |
Trade accounts payable |
(1,785) |
(1,354) |
(973) |
(973) |
(973) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Deferred income |
(57) |
(226) |
(3,575) |
(3,575) |
(3,575) |
||
Other |
(5,913) |
(8,084) |
(7,418) |
(7,418) |
(7,418) |
||
Long-term liabilities |
|
|
(14,457) |
(13,879) |
(21,157) |
(17,820) |
(14,482) |
Pension provisions |
(413) |
(359) |
(408) |
(408) |
(408) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(3,221) |
(2,915) |
(2,395) |
(2,395) |
(2,395) |
||
Deferred revenues (Eligard non-cash income & bluebird bio) |
(10,823) |
(10,605) |
(18,354) |
(15,017) |
(11,679) |
||
Net assets |
|
|
49,071 |
87,909 |
78,592 |
81,416 |
62,601 |
CASH FLOW |
|||||||
Operating cash flow |
|
|
(8,765) |
(10,585) |
(3,611) |
(19,469) |
(20,977) |
Net interest |
9 |
(20) |
(45) |
5 |
(428) |
||
Tax |
0 |
0 |
(102) |
0 |
0 |
||
Capex |
(873) |
(1,328) |
(1,677) |
(3,019) |
(3,019) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
10,537 |
0 |
0 |
||
Equity financing |
14,502 |
43,695 |
(77) |
19,700 |
0 |
||
Other |
(62) |
21 |
846 |
0 |
0 |
||
Net cash flow |
4,811 |
31,783 |
5,871 |
(2,783) |
(24,424) |
||
Opening net debt/(cash) |
|
|
(10,166) |
(14,976) |
(46,759) |
(52,630) |
(49,847) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
(1) |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(14,976) |
(46,759) |
(52,630) |
(49,847) |
(25,424) |
Source: Medigene and Edison Investment Research
|
|
