T-cells attacking cancer cell illustration of microscopic photos

One dose safer than two

Kiadis Pharma 6 January 2017 Update

Kiadis Pharma

One dose safer than two

Clinical update

Pharma & biotech

6 January 2017

Price

€8.63

Market cap

€121m

US$1.11/€

Net cash (€m) at June 2016
(excludes Hospira debt)

16.2

Shares outstanding

13.97m

Free float

31.1%

Code

KDS

Primary exchange

Euronext Amsterdam

Secondary exchange

Euronext Brussels

Share price performance

%

1m

3m

12m

Abs

(6.7)

(21.0)

(28.9)

Rel (local)

(12.9)

(26.0)

(36.4)

52-week high/low

€12.3

€8.3

Business description

Kiadis Pharma is a Dutch biotech company focused on cell-based immunotherapies to overcome complications associated with stem cell transplants in blood diseases. Lead product ATIR101 for leukaemia is undergoing a Phase II trial and will file for EU approval and initiate a Phase III study imminently. ATIR201 is in preclinical stage and has potential for thalassemia. A Phase I/II study will start in early 2017.

Next events

ATIR101 Phase III start

Q117

ATIR201 Phase I/II start

Q117

ATIR101 EU filing

Q117

ATIR101 two-year data

H217

Analysts

Juan Pedro Serrate

+44 (0)20 3681 2534

Lala Gregorek

+44 (0)20 3681 2527

Kiadis Pharma is a research client of Edison Investment Research Limited

Kiadis has announced an update on the second dose Phase II study of ATIR101 in patients with haematological malignancies to investigate whether a second dose could be administered if needed. There were cases of grade III/IV Graft vs Host Disease (GVHD) in some of the six patients who underwent a second dose of the product. Kiadis shares initially dropped 8% on the news, but have since recovered some of the losses. We see no impact on our valuation or forecasts following this news, as the market opportunity we forecast is predicated on a single dose of ATIR101, which will be investigated in the upcoming Phase III trial. Furthermore, safety has already been established for the single dose in previous studies. This second dose trial was purely to see if a second dose strategy could improve patient outcomes. We maintain our valuation of €383.2m.

Year
end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/14

0.00

(7.21)

(0.75)

0.0

N/A

N/A

12/15

0.00

(17.35)

(1.36)

0.0

N/A

N/A

12/16e

0.00

(10.00)

(0.72)

0.0

N/A

N/A

12/17e

0.00

(13.47)

(0.96)

0.0

N/A

N/A

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

Study update: No second dose for now

Data from an exploratory Phase II study (n=15) have been announced. So far, at least one dose of ATIR101 has been administered to 10 patients and safety has been consistent with the previous Phase II study, showing no grade III/IV GVHD. A second dose of ATIR101 was administered to six patients to investigate whether this approach could further improve the outcome of haematopoietic stem cell transplantation (HSCT). Some of the six patients experienced grade III/IV GVHD, which prompted the Independent Data Monitoring Committee (IDMC) to recommend proceeding with the study with only one dose. The IDMC review was a pre-planned safety measure of the study protocol.

Concerns overstated, investment thesis unchanged

We believe the market may have overestimated the potential revenues from a second dose of ATIR101. This put Kiadis shares under pressure when the study results were announced. We believe the market overreacted and maintain our investment thesis, which is based on only one single dose; we did not assign any value to a second dose. Furthermore, the Phase III study will test only one dose; its design has been published on clinicaltrials.gov which should mean it can start imminently, broadly in line with management’s targeted timelines.

Valuation: No changes to our rNPV of €383.2m

Our valuation stands at €383.2m or €27.4 per share. We maintain the probability of success for ATIR101 in the EU at 75% to reflect our positive stance on Kiadis receiving EMA approval, based on positive Phase II data and the precedent of MolMed (see our previous note).

Exhibit 1: Financial summary

€'000s

2013

2014

2015

2016e

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

0

0

0

0

0

3,906

Cost of Sales

0

0

0

0

0

(1,953)

Gross Profit

0

0

0

0

0

1,953

R&D expenses

(3,548)

(4,692)

(7,715)

(7,230)

(10,000)

(10,000)

SG&A expenses

(1,444)

(1,476)

(8,292)

(1,476)

(2,000)

(4,000)

EBITDA

 

 

(4,890)

(6,042)

(15,867)

(8,606)

(11,900)

(12,142)

Operating Profit (before GW and except.)

(4,992)

(6,168)

(16,007)

(8,706)

(12,000)

(12,242)

Intangible Amortisation

0

0

0

0

0

0

Exceptionals/Other

0

0

0

0

0

0

Operating Profit

(4,992)

(6,168)

(16,007)

(8,706)

(12,000)

(12,242)

Net Interest

(831)

(1,045)

(1,344)

(1,292)

(1,466)

(1,437)

Exceptionals

0

0

0

0

0

0

Other

(1,062)

(598)

894

0

0

0

Profit Before Tax (norm)

 

 

(5,823)

(7,213)

(17,351)

(9,998)

(13,466)

(13,680)

Profit Before Tax (IFRS)

 

 

(6,885)

(7,811)

(16,457)

(9,998)

(13,466)

(13,680)

Tax

0

(2)

(1)

0

0

0

Discontinued operations

0

0

0

0

0

0

Profit After Tax (norm)

(6,885)

(7,813)

(16,458)

(9,998)

(13,466)

(13,680)

Profit After Tax (IFRS)

(6,885)

(7,813)

(16,458)

(9,998)

(13,466)

(13,680)

Average Number of Shares Outstanding (m)

10.90

10.47

12.06

13.97

13.97

13.97

EPS - normalised (€)

 

 

(0.63)

(0.75)

(1.36)

(0.72)

(0.96)

(0.98)

EPS - IFRS (€)

 

 

(0.63)

(0.75)

(1.36)

(0.72)

(0.96)

(0.98)

Dividend per share (€)

0.00

0.00

0.00

0.00

0.00

0.00

Gross Margin (%)

N/A

N/A

N/A

N/A

N/A

N/A

EBITDA Margin (%)

N/A

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

N/A

BALANCE SHEET

Fixed Assets

 

 

13,428

14,100

13,047

13,047

13,047

13,047

Intangible Assets

13,148

13,687

12,714

12,614

12,514

12,414

Tangible Assets

280

413

333

433

533

633

Other

0

0

0

0

0

0

Current Assets

 

 

6,760

6,112

29,229

19,232

17,765

3,891

Stocks

0

0

0

0

0

98

Debtors

51

196

145

145

145

391

Cash

6,482

5,674

28,666

18,669

17,202

2,984

Other

227

242

418

418

418

418

Current Liabilities

 

 

(1,619)

(8,727)

(2,913)

(1,747)

(1,746)

(1,745)

Creditors

(1,235)

(1,598)

(1,747)

(1,747)

(1,747)

(1,747)

Short term borrowings

(384)

(7,129)

(1,166)

0

0

0

Deferred revenues

0

0

0

0

0

0

Other short term liabilities

0

0

0

0

1

2

Long Term Liabilities

 

 

(13,210)

(8,820)

(13,713)

(14,879)

(26,879)

(26,684)

Long term borrowings

(10,021)

(5,090)

(13,713)

(14,879)

(26,879)

(26,684)

Deferred revenues

0

0

0

0

0

0

Other long term liabilities

(3,189)

(3,730)

0

0

0

0

Net Assets

 

 

5,359

2,665

25,650

15,653

2,187

(11,491)

CASH FLOW

Operating Cash Flow

 

 

(4,369)

(6,062)

(7,955)

(8,606)

(11,900)

(12,485)

Net Interest

(28)

(13)

(141)

(1,292)

(1,466)

(1,437)

Tax

0

0

0

0

0

0

Capex

(102)

(259)

(59)

(100)

(100)

(100)

Acquisitions/disposals

0

0

1

2

3

4

Financing

0

5,051

31,229

0

0

0

Dividends

0

0

0

0

0

0

Other

89

28

4

0

0

0

Net Cash Flow

(4,410)

(1,255)

23,079

(9,996)

(13,463)

(14,019)

Opening net debt/(cash)

 

 

(505)

3,923

6,545

(13,787)

(3,790)

9,677

HP finance leases initiated

0

0

0

0

0

1

Exchange rate movements

25

(8)

22

0

0

0

Other

(43)

(1,359)

(2,769)

(1)

(3)

(5)

Closing net debt/(cash)

 

 

3,923

6,545

(13,787)

(3,790)

9,677

23,699

Source: Source: Edison Investment Research, Kiadis Pharma.

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Kiadis and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Kiadis and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

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