Newron Pharmaceuticals |
Next up - R&D day |
Interim results |
Pharma & biotech |
11 October 2018 |
Share price performance
Business description
Next events
Analysts
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Newron continued to made steady progress in H118. A fuller debrief of pipeline assets including sarizotan (Rett syndrome) and Evenamide (schizophrenia) will take place at the R&D day in NYC, scheduled for 31 October. Royalty income from sales of Xadago (Parkinson’s disease, PD) rose by 54% to €2m, driven mainly by increased sales in the EU and Switzerland. However, the US sales contribution remained small (launched by partner US WorldMeds in H217). In H118 Newron reported an operating loss of €7.6m (vs a profit of €2.3m in H117 due to a €10.3m one-time milestone payment in the period), and revised cash and financial investments of €50.6m at July 2018 should enable funding to key value inflection points in 2020. We value Newron at CHF788m.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
6.7 |
(15.2) |
(1.04) |
0.0 |
N/A |
N/A |
12/17 |
13.4 |
(5.3) |
(0.32) |
0.0 |
N/A |
N/A |
12/18e |
5.6 |
(24.6) |
(1.38) |
0.0 |
N/A |
N/A |
12/19e |
10.7 |
(28.2) |
(1.58) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Xadago sales uplift needed
Newron has reported €2.0m in Xadago (safinamide) royalties in H118 (vs €2.8m in FY17 and €1.3m in H117). Xadago is now available in 14 European countries as an add-on therapy to levodopa in mid- to late-stage PD. The drug was also launched in H217 into the US market for PD patients (as add-on therapy), and regional partner US WorldMeds expects an uplift in sales in 2019 once its Medicare negotiations come to fruition. Xadago is making slow and steady progress, but a ramp-up in sales is required if it is to reach our global peak sales of €653m (in PD alone). Partner Meiji Seika plans to file for marketing approval in Japan in H218 (following positive Phase II/III data in Japanese patients).
Pipeline progressing; R&D day 31 October 2018
R&D highlights for the period include: 1) progress with patient enrolment into the Sarizotan Treatment of Apneas in Rett Syndrome (STARS) potentially pivotal Phase II/III clinical trial, study now expected to in report in H119 (previously late 2018); 2) Evenamide for schizophrenia – two Phase II/III pivotal efficacy studies to initiate in H119, one in patients with worsening psychosis despite atypical antipsychotic treatment and the other in clozapine-resistant schizophrenia; and 3) US partner Zambon is in advanced discussions with the FDA on the design of a potentially pivotal efficacy study to support Xadago’s use in levodopa-induced dyskinesia (PD LID).
Valuation: CHF788m or CHF44.3 per share
Our increased valuation of CHF788m (vs CHF758m) reflects end-June 2018 net cash and short-term investments of €50.6m and rolling forward our model. Our forecasts remain unchanged and include Xadago in PD and risk-adjusted contributions for the dyskinesia indication, sarizotan in Rett syndrome and Evenamide in schizophrenia.
Exhibit 1: Financial summary
€000s |
2015 |
2016 |
2017 |
2018e |
2019e |
||
Year end December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
2,380 |
6,726 |
13,428 |
5,625 |
10,671 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
2,380 |
6,726 |
13,428 |
5,625 |
10,671 |
||
Research and development (net) |
(11,724) |
(12,398) |
(8,596) |
(20,800) |
(29,160) |
||
EBITDA |
|
|
(17,604) |
(15,290) |
(4,298) |
(24,731) |
(28,281) |
Operating Profit (before amort. and except.) |
|
|
(17,668) |
(15,318) |
(4,332) |
(24,753) |
(28,303) |
Intangible Amortisation |
(7) |
(7) |
(14) |
(24) |
(24) |
||
Exceptionals |
(6,725) |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(24,400) |
(15,325) |
(4,346) |
(24,777) |
(28,327) |
||
Net Interest |
(583) |
121 |
(955) |
206 |
131 |
||
Profit Before Tax (norm) |
|
|
(18,251) |
(15,197) |
(5,287) |
(24,547) |
(28,172) |
Profit Before Tax (reported) |
|
|
(24,983) |
(15,204) |
(5,301) |
(24,571) |
(28,196) |
Tax |
2,167 |
(33) |
19 |
0 |
0 |
||
Profit After Tax (norm) |
(16,084) |
(15,230) |
(5,268) |
(24,547) |
(28,172) |
||
Profit After Tax (reported) |
(22,816) |
(15,237) |
(5,282) |
(24,571) |
(28,196) |
||
Average Number of Shares Outstanding (m) |
13.7 |
14.7 |
16.3 |
17.8 |
17.8 |
||
EPS - normalised (c) |
|
|
(117.21) |
(103.69) |
(32.32) |
(137.90) |
(158.27) |
EPS - (reported) (€) |
|
|
(1.66) |
(1.04) |
(0.32) |
(1.38) |
(1.58) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
406 |
451 |
224 |
240 |
256 |
Intangible Assets |
265 |
261 |
35 |
49 |
63 |
||
Tangible Assets |
79 |
120 |
107 |
109 |
111 |
||
Investments |
62 |
70 |
82 |
82 |
82 |
||
Current Assets |
|
|
43,974 |
56,140 |
72,800 |
51,900 |
27,311 |
Stocks |
38 |
5 |
5 |
98 |
98 |
||
Debtors |
3,005 |
9,667 |
12,714 |
3,883 |
3,883 |
||
Cash |
40,931 |
46,468 |
60,081 |
47,919 |
23,330 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(6,513) |
(6,645) |
(4,727) |
(6,653) |
(8,537) |
Creditors |
(6,151) |
(6,281) |
(4,727) |
(6,653) |
(8,537) |
||
Short term borrowings |
(362) |
(364) |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(755) |
(199) |
(576) |
(576) |
(576) |
Long term borrowings |
(364) |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(391) |
(199) |
(576) |
(576) |
(576) |
||
Net Assets |
|
|
37,112 |
49,747 |
67,721 |
44,911 |
18,454 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(10,695) |
(19,616) |
(8,404) |
(12,328) |
(24,658) |
Net Interest |
121 |
102 |
388 |
241 |
131 |
||
Tax |
(2,167) |
33 |
0 |
0 |
0 |
||
Capex |
(60) |
(69) |
(24) |
(24) |
(24) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
28,392 |
25,448 |
22,324 |
0 |
0 |
||
Other |
(4) |
(3) |
(300) |
(51) |
(38) |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
15,587 |
5,895 |
13,984 |
(12,162) |
(24,589) |
||
Opening net debt/(cash) |
|
|
(24,615) |
(40,205) |
(46,104) |
(60,081) |
(47,919) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
3 |
4 |
(7) |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(40,205) |
(46,104) |
(60,081) |
(47,919) |
(23,330) |
Source: Company accounts, Edison Investment Research
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