Intec Pharma — Ongoing AP clinical trials

Intec Pharma — Ongoing AP clinical trials

Intec Pharma’s clinical programmes to validate the utility of its unique drug delivery platform, the accordion pill (AP), are ongoing. The company announced with its Q317 report that patient enrolment for the Phase III AP-CDLD (carbidopa and levodopa) in Parkinson’s has been increased to 420 patients (from 328). We now expect full enrolment in Q318. Additionally, Intec is redesigning AP-CBD/THC (cannabidiol and tetrahydrocannabinol) for a second Phase I trial and the indication is not yet specified.

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Intec Pharma

Ongoing AP clinical trials

Outlook

Pharma & biotech

7 January 2018

Price*

NIS23.50

Market cap

NIS613m

*Priced at 4 January 2018

NIS3.51/$

Net cash ($m) at 30 September 2017

64.7

Shares in issue

26.1m

Free float

78%

Code

NTEC

Primary exchange

TASE

Secondary exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

22.3

(29.2)

16.7

Rel (local)

17.2

(33.6)

7.9

52-week high/low

NIS34.1

NIS15.4

Business description

Intec Pharma is a drug delivery company that has developed the accordion pill, a novel gastroretentive controlled release formulation. The company is currently using this technology to develop AP-CDLD for Parkinson’s (in Phase III) and AP-CBD/THC (in Phase I for pain indications).

Next events

AP-CBD/THC indication announced

H118

AP-CDLD enrolment complete

Q318

Analysts

Maxim Jacobs

+1 646 653 7027

Nathaniel Calloway

+1 646 653 7036

Intec Pharma’s clinical programmes to validate the utility of its unique drug delivery platform, the accordion pill (AP), are ongoing. The company announced with its Q317 report that patient enrolment for the Phase III AP-CDLD (carbidopa and levodopa) in Parkinson’s has been increased to 420 patients (from 328). We now expect full enrolment in Q318. Additionally, Intec is redesigning AP-CBD/THC (cannabidiol and tetrahydrocannabinol) for a second Phase I trial and the indication is not yet specified.

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/15

0.0

(7.2)

(0.92)

0.0

N/A

N/A

12/16

0.0

(13.4)

(1.17)

0.0

N/A

N/A

12/17e

0.0

(23.2)

(0.88)

0.0

N/A

N/A

12/18e

0.0

(18.2)

(0.65)

0.0

N/A

N/A

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

AP-CDLD enrolment upsized and trial delayed

Intec has announced that it is expanding target enrolment for the Phase III AP-CDLD trial to 420 patients (after downsizing enrolment to 328 from 460 patients), due to higher than expected dropout rates associated with endoscopy procedures prior to randomization and open-label Sinemet titration that comes before AP exposure. The company now expects completion of enrolment in Q318 (previously Q417). Provided that patients are followed for 26 weeks, we expect top-line data in mid-2019.

Redesigning AP-CBD/THC and a new Phase I

Although AP-CBD/THC improved exposure of CBD by 290% to 330% and THC by 25% to 50%, and increased time at peak concentration (2-3x longer) compared to Sativex without raising any safety or tolerability concerns in the Phase I trial, Intec recently stated that it is in the process of redesigning the AP for CBD/THC to improve efficacy and has plans to initiate an additional Phase I trial; however, timing has not been disclosed. The company has not yet specified the target indication (either low back pain or fibromyalgia). Due to these factors, we do not include the AP-CBD/THC programme in our valuation at this time.

Valuation: NIS619m ($176m) or NIS23.85/share ($6.79)

We have decreased our valuation to NIS619m ($176m) or NIS23.85 ($6.79) per basic share, from NIS737m ($205m) or NIS28.39 ($7.91) per basic share. This is driven by the de-prioritization of the AP-ZP (zaleplon) insomnia programme, higher development costs for the AP-CDLD programme due to enrolment expansion delaying complete enrolment to Q318 (previously Q417) and launch year to 2020 (previously 2019), and lower net cash. This is partially mitigated by rolling forward our NPVs. We expect to update our valuation to reflect data from the Phase III AP-CDLD trial and progression of the cannabinoid programme. We do not believe Intec will require any more cash to break even, which we estimate will be in 2020.

Investment summary

Company description: A unique drug delivery platform

Intec Pharma is a drug delivery company, which went public via an IPO on TASE in 2010 and NASDAQ in 2015. The company’s core technology is the accordion pill (AP), a controlled release drug delivery device in the form of layered membranes that are delivered in a normal capsule pill. The device expands in the stomach, leading to retention for up to 12 hours. This process is ideal for drugs that must be delivered to the upper digestive tract and drugs that dissolve poorly. Intec Pharma has developed AP-CDLD for Parkinson’s disease (in Phase III). The company completed a Phase I trial of cannabinoids for pain (and potentially other indications) in Q317. There is also an undisclosed product in Phase I for the prevention of NSAID induced ulcers of the stomach, duodenum and bowel. It has a development agreement with Biogen to develop an AP formulation of one of Biogen’s approved drugs.

Valuation: NIS619m ($176m) or NIS23.85 ($6.79) per share

We have decreased our valuation to NIS619m ($176m) or NIS23.85 ($6.79) per basic share from NIS737m ($205m) or NIS28.39 ($7.91) per basic share. This reduction is largely attributed to the removal of the AP-ZP (zaleplon) programme for the treatment of insomnia from our valuation as the company is currently focusing its resources towards the AP-CDLD and AP-CBD/THC development programmes. The change is also driven by the increase in development costs associated with the AP-CDLD programme due to enrolment expansion, which delays complete enrolment to Q318 and therefore launch year to 2020, and lower net cash. This is partially mitigated by increasing our US price growth rate assumption from 2% to 4% based on current pharmaceutical industry pricing power specifically within Parkinson’s Disease and rolling forward our NPVs. We expect to update our valuation to reflect data from the Phase III AP-CDLD trial, progression of the cannabinoid programme, and with more information on the two undisclosed programmes.

Financials: Increased R&D spending

We have increased our expected R&D spending for 2017 to $19.4m from $17.1m due to enrolment expansion for the AP-CDLD Phase III trial to 420 patients (from 328 patients). The company ended the period with $65m in cash and equivalents. We believe that this is sufficient capital for the company to break even, which we estimate will be in 2020.

Sensitivities: Commercial risks

Intec’s development risks are largely concentrated on whether the AP technology can provide a definitive benefit over other controlled release (CR) formulations. The company has MRI evidence that APs are effectively retained in the stomach, but the question remains as to how this translates into a benefit for any given compound. The advantages of the formulation are most well-established for AP-CDLD, which demonstrated superior results to existing CR carbidopa/levodopa in Phase II. Intec faces significant commercial risks, because Parkinson’s and insomnia are two markets dominated by generics, with very large numbers of treatment options. In the case of Parkinson’s, there are multiple programmes aimed at the same treatment axis as AP-CDLD and with regard to insomnia, prescription hypnotics are half the total number of prescriptions for the disease, but are dominated by OTC treatments. Financial risks for the company are limited, especially compared to other companies at this stage. The FDA confirmed 505(b)2 pathway eligibility for AP-CDLD, which limits development costs.

Company description: A better formulation option

Intec is an Israeli specialty pharmaceutical company developing new formulations of existing drugs using its proprietary accordion pill (AP) technology. Intec has five development programmes based on the AP technology. The most advanced programme is AP-CDLD, an AP formulation of the well-established Parkinson’s drugs carbidopa and levodopa, which have proved difficult to formulate effectively in an extended release pill for an array of reasons. The programme in is Phase III. Intec has also completed a Phase I trial of AP-CBD/THC, an AP with two primary cannabinoids in Cannabis sativa, cannabidiol (CBD) and tetrahydrocannabinol (THC) for treatment of “various indications, including low back pain and fibromyalgia”, although the company has made no commitments to study either. The company is currently redesigning AP-CBD/THC to improve performance and has stated that it plans to initiate a second Phase I study in the near future. Intec remains Phase III ready with AP-ZP, an AP with zaleplon for the treatment of insomnia; however the company has stated that it is not actively pursuing a partner to continue with development and potential commercialization at this time and is instead focusing its efforts on the AP-CDLD and AP-CBD/THC programmes. A fourth clinical programme is investigating a product to reduce the risk of NSAID induced ulcers in the stomach, duodenum and small bowel. Intestinal ulcers, unlike peptic ulcers, are poorly controlled with proton pump inhibitors. The details of this programme are undisclosed. Also undisclosed are the details of a preclinical partnership with Biogen to develop an AP formulation of one of Biogen’s approved medications. Although not a current focus for the company, Intec is entitled to $8m upfront, $39m in milestones and a low single-digit royalty on sales up to $100m, should Biogen exercise the option.

Exhibit 1: Intec pipeline

Programme

Stage

Indication

Molecule(s)

AP-CDLD

Phase III

Parkinson's

Carbidopa and levodopa

AP-CBD/THC

Phase I

Multiple including pain

Cannabinoids

AP-ZP

Phase III ready

Insomnia

Zaleplon

Undisclosed drug

Phase I

Prevention of NSAID induced gastroduodenal and small bowel ulcers

Undisclosed

Biogen partnership

Preclinical

Undisclosed

Approved Biogen drug

Source: Intec Pharma

AP drug delivery

Intec’s key innovation is the development of the AP drug delivery platform. The AP technology uses a typical gel-cap pill, which dissolves in the stomach to release a folded, two-dimensional, composite film impregnated with the drug of interest. The AP expands on exposure to the gastric medium to 3.5cm in length, and is retained in the stomach while drug is released.

Exhibit 2: AP drug release profile

Key feature

Notes

Inner drug matrix

Polymer matrix impregnated with the drug of interest and designed to dissolve when exposed to the gastric medium.

Outer membranes

“Envelope” that surrounds the inner matrix. These membranes are hydrophilic and swell on exposure to the gastric medium, but are resistant to degradation in the stomach. The swelling of these membranes exposes the inner drug layer to the gastric juices allowing it to dissolve, while retaining the physical profile of the AP. This layer fully dissolves in the lower digestive tract.

Optional immediate release layer

Layer of drug in a matrix or film applied to the outside of the AP, designed to dissolve immediately after the drug reaches the stomach.

Key feature

Inner drug matrix

Outer membranes

Optional immediate release layer

Notes

Polymer matrix impregnated with the drug of interest and designed to dissolve when exposed to the gastric medium.

“Envelope” that surrounds the inner matrix. These membranes are hydrophilic and swell on exposure to the gastric medium, but are resistant to degradation in the stomach. The swelling of these membranes exposes the inner drug layer to the gastric juices allowing it to dissolve, while retaining the physical profile of the AP. This layer fully dissolves in the lower digestive tract.

Layer of drug in a matrix or film applied to the outside of the AP, designed to dissolve immediately after the drug reaches the stomach.

Source: Intec Pharma

Intec is currently investigating the formulation for a series of controlled release (CR) applications because of a set of distinct advantages the AP has over other existing CR formulations. One of the central characteristics of the AP is that its expansion in the stomach leads to unprecedented gastric retention times (eight to 12 hours), as measured through MRI imaging. The gastric retention is driven by the device’s physical size, its two-dimensional profile and its rigidity, which discourage passage through the pylorus. Unlike other CR formulations that release drug continuously though their passage of the digestive tract, the AP isolates this dissolution to the stomach and the drug is absorbed primarily in the duodenum and proximal small intestine, which can be important for drugs that have local activity or specific absorption in these regions. This provides a uniform absorption profile and can potentially improve plasma levels by prolonging the absorption phase. Moreover, the solubilisation of the drug is aided by the high concentration of bile acids. This consideration is important as an increasing number of new drugs are of low solubility, up to 60% by some measures.1

  Ku, MS (2008) Use of the Biopharmaceutical Classification System in Early Drug Development. AAPS J. 10, 208-212.

AP-CDLD: The lead development programme

Intec’s lead product is an AP co-formulation of carbidopa and levodopa (AP-CDLD) for the treatment of Parkinson’s disease. Parkinson’s disease is a neurodegenerative disease in which the dopamine secreting (dopaminergic) neurons in the brain are lost, leading to severe motor defects and cognitive impairment. Approximately one million people in the US have Parkinson’s and it affects 1.75% of people over 60.2,3

  Parkinson’s Disease Foundation.

  Cleveland Clinic.

Carbidopa and levodopa is the most widely used treatment for Parkinson’s worldwide. Levodopa, (L-DOPA) is a precursor to dopamine which, unlike the neurotransmitter, is able to cross the blood-brain barrier. High doses of this molecule can increase dopamine concentrations in the brain and alleviate some of the symptoms associated with the loss of dopaminergic neurons. However, the molecule is also quickly converted into dopamine outside the brain, which is associated with gastrointestinal and other side effects, and significantly reduces the concentration of drug available to the brain. This effect is circumvented by the co-administration of carbidopa, which inhibits this conversion in peripheral tissue. Despite this, however, there are significant limitations to the administration of levodopa that limit its utility. Even with the co-administration of carbidopa, levodopa is still metabolised quickly with a half-life of 1.5 hours, leading to a pharmacokinetic profile with high peaks and deep valleys throughout the day. The valleys are associated with the motor defects typical of the disease, also known as being “off”, and the peaks can cause dyskinesia that interferes with normal function, leaving a fraction of a patient’s day where s/he is well treated. As the disease progresses, the therapeutic window for the drug gets smaller, leaving limited time in which the patient is in an “on” state without troublesome dyskinesia.

Intec has developed AP-CDLD to address the issues of existing formulations. The properties of the AP lend themselves well to the delivery of these drugs, and the drug is formulated with levodopa in the controlled release inner layer and carbidopa in an immediate release layer. Levodopa is only absorbed in the upper gastrointestinal (GI) tract because it requires an active transporter to ferry it across the intestinal wall that is only present in this location. Moreover, the controlled release properties of AP-CDLD could potentially improve the pharmacokinetic profile of the drug, reducing peaks and valleys and therefore reducing off time and dyskinesia.

Phase II results and Phase III enrolment

AP-CDLD for the treatment of moderate to severe Parkinson’s in a Phase II study demonstrated superior results to existing CR carbidopa/levodopa. The trial consisted of multiple sub-studies designed to examine the dosing, pharmacokinetics (PK) and efficacy of the formulation.

In the PK portion of the trial, eight patients were stabilised on either AP-CDLD with 50mg carbidopa and 375mg levodopa twice a day, or an equivalent amount of both drugs in an immediate release formulation four times a day, and the daily time course of levodopa blood concentration was measured. The study found that the AP formulation of these chemicals substantially reduces the “peak and valley” profile typical of levodopa administration. Patients were able to maintain a relatively constant blood concentration of levodopa, with only a threefold change in the ratio of maximum and minimum exposure. Also interesting was discovering that patients on AP-CDLD woke up with 500ng/mL of levodopa in their system, meaning that the kinetic profile of the drug was able to maintain some exposure throughout the night and into the morning following the day’s last dose (12 hours before waking). Although it is not likely that this low concentration supressed symptoms, the result suggests that AP-CDLD could potentially be effective as an overnight drug. Morning off states are typically the most severe of the day for patients with Parkinson’s and there are currently no options for oral carbidopa and levodopa that last through the night.

In the efficacy portion of the Phase II trial, two arms had a crossover design structured to investigate AP-CDLD at two different doses compared to the same patients on their optimised current carbidopa/levodopa-based treatment. The three endpoints were the difference in off time, on time with troublesome dyskinesia, and the number of additional levodopa doses needed. Of the patients that were comparable after three weeks in the study, 16 received AP-CDLD with 50mg carbidopa and 375mg levodopa (50/375) twice a day and 18 received AP-CDLD with 50mg carbidopa and 500mg levodopa twice a day (Exhibit 3).

Exhibit 3: AP-CDLD Phase II efficacy results

AP-CDLD 50/375mg (n=16)

AP-CDLD 50/500mg (n=18)

Rytary (n=393)

Comtan (n=205)

Current treatment

AP-CDLD

p

Current treatment

AP-CDLD

p

CDLD

Rytary

p

Placebo +CDLD

Comtan + CDLD

p

Off time (h)

4.3

2.4

<0.0001

5.1

2.8

<0.0001

4.88

3.87

<0.0001

5.3

4.2

<0.001

On time with troublesome dyskinesia (h)

0.7

0.6

N/S

1.2

0.7

0.002

0.45

0.52

N/S

increased4

0.002

Number of daily LD administrations

6.3

3.5

<0.0001

5.3

4

<0.0001

5.1

3.6

<0.0001

6.2

5.8

<0.001

Source: Intec Pharma, Rytary approval review documents, Comtan approval review documents, Parkinson’s Study Group. Note: Rytary and Comtan data reflect patients stabilised on different dosing regimens. CD = carbidopa, LD = levodopa, N/S = not significant.

The study found that AP-CDLD was more effective at reducing off time at both dosing regimens, and the result was statistically significant by a wide margin (p<0.0001). The total mean reduction in off time of 1.9 hours per day was larger for AP-CDLD than has been previously observed for either Rytary or Comtan (1.0 hours and 1.1 hours, respectively). Moreover, the mean amount of on time with troublesome dyskinesia was reduced at the higher dose by 0.5 hours per day. It is understandable that this effect was only seen at the higher dose because patients with more severe Parkinson’s disease on higher doses of levodopa tend to experience this side effect with higher frequency. This result was not seen in the Phase III studies of Rytary, although it should be noted that baseline troublesome dyskinesia was substantially lower (0.35-0.37 hours per day) than seen in patients in the AP-CDLD trial. Studies of Comtan have shown that it increases the rate of dyskinesia (53% of patients compared to 32% for placebo, p=0.002).4 It should be noted that in the Rytary and Comtan trials, patients were optimised to different dosing regimens, and the data reflect an average of these optimised treatments.

  Parkinson’s Study Group (1997) Entacapone Improves Motor Fluctuations in Levodopa-Treated Parkinson’s Disease Patients. Ann. Neurol. 42, 747-755.

The third measure of efficacy tracked in the study was the number of daily support doses of levodopa needed as part of the patient’s current treatment or on top of AP-CDLD. The number of additional pills was reduced by 2.8 per day on the lower AP-CDLD dose, and 1.3 on the higher dose. The reduction is not particularly surprising considering that AP-CDLD is providing a significant amount of levodopa and therefore reducing the total needed by a patient via other means throughout the day. However, this does give a measure of the pill burden for patients on this treatment whereas pill burden can be significant for Parkinson’s patients, considering the number of overlapping treatment regimens these patients require. This finding indicates that the lower dose AP-CDLD may reduce the overall pill burden (two pills of AP-CDLD but 2.8 fewer other pills) and, although patients requiring the higher dose may have an increased pill burden, it is small (approximately one extra pill) considering the benefit to off time and dyskinesia.

The FDA confirmed AP-CDLD eligibility for 505(b)2 pathway to approval, which enables a marketing application after just one Phase III trial. The study enrolled its first patient in April 2016 and consists of a head-to-head comparison between AP-CDLD and the immediate release carbidopa/levodopa drug Sinemet. The trial is randomized and double blind and will examine two dosage strengths of AP-CDLD (50mg carbidopa with either 400mg or 500mg levodopa) at two to three times daily. Prior to randomization, patients will be stabilised on both Sinemet and AP-CDLD to determine the correct dosing regimen, and will then receive one of the drugs concurrently with a dummy version of the other (to prevent unblinding due to different dosing frequencies). Patients will be able to take two to three pills per day of AP-CDLD at two different doses (50/400mg or 50/500mg of carbidopa/levodopa). An important difference from the Phase II is that patients on the AP-CDLD arm will not be supplementing with immediate release levodopa if needed, which may increase off time, although this will be mitigated by the ability to take up to three APs per day if needed. The primary endpoint of the trial will be the reduction in number of off hours, as reported by a patient diary, but other efficacy measures such as the change in troublesome dyskinesia and global assessments such as the Unified Parkinson’s Disease Rating scale (UPDRS) will be made.

The company announced on its Q317 call that it is upsizing target enrolment for the Phase III study to 420 patients, after previously reducing enrolment to 328 patients (from 460 patients announced in July). The company stated that the increase is due to higher than expected dropout rates associated with endoscopy procedures prior to randomization and open-label Sinemet titration that comes before AP exposure. Complete enrolment has been delayed to Q318 (from Q417) due to the increased patient target. Provided that patients are followed for 26 weeks, we expect top-line data in mid-2019. Following completion of the trial protocol, patients will be entered into an open label extension, data from which may provide early insights into efficacy.

Market and competitive environment

Parkinson’s disease treatment is multifaceted and typically requires several simultaneous pharmacological interventions on top of levodopa treatment to achieve optimal control. Treatment includes dopamine agonists, glutamate antagonists, monoamine oxidase inhibitors and other classes of drugs in addition to levodopa and drugs used in conjunction with it. Because of this, there are an exceptionally large number of drugs that are marketed or in development for this indication, measured in the hundreds. However, there are substantially fewer programmes directly addressing the levodopa treatment axis that might affect the potential market for AP-CDLD.

There are approximately 300k total prescriptions for carbidopa/levodopa per month in the US5 and the market is dominated by generics, which constitute 97% of these prescriptions. There are two branded controlled release formulations of carbidopa and levodopa that are commercially available: Sinemet CR and Rytary (Numient in Europe). Sinemet CR did not compete well against generic immediate release carbidopa/levodopa because the pill is both slow to relieve off states and had low systemic bioavailability, requiring increased dosing over immediate release products. Generic equivalents to Sinemet currently have 14% market share. Rytary, which was approved in 2015, was designed to address some of the limitations of Sinemet CR, and incorporates an immediate release component to provide instantaneous relief from off states. Sales of Rytary are not explicitly stated by sponsor Impax Laboratories, but Symphony Health reports US sales of $76.9m for FY16 and approximately 4% market share in 2017.

  Symphony Health

A prominent programme that has addressed the levodopa delivery problem is Duopa (AbbVie, Duodopa ex-US), which is a gel formulation of carbidopa and levodopa that is delivered directly to the duodenum via an implanted pump. This device continuously infuses the drugs and is effective at reducing off states (63% reduction, twice the effect of immediate release pills) and dyskinesia (86% more on time without dyskinesia compared to immediate release pills), but requires major surgery. We therefore expect it to be limited to only the most poorly controlled patients. The product was approved in the US in early 2015, but has been approved in Europe since 2004. In 2016 the product sold $293m, with 87% of sales in Europe.

We consider a number of programmes to be direct competitors to drugs like AP-CDLD and other attempts to achieve sustained levodopa serum levels (Exhibit 4). The vast majority of these programmes in development have remained relatively stagnant over the last year. Albeit this is quite common in the pharmaceutical industry, the apparent standstill potentially suggests that Parkinson’s is in fact a complex indication to treat.

Exhibit 4: Levodopa treatment axis programmes

Status

Name

Molecule(s)

Company

Notes

Approved

Comtan

entacapone

Novartis

First approved COMT inhibitor

Approved

Duopa

carbidopa; levodopa

AbbVie

Gel formulation delivered directly to duodenum via a pump

Approved

Rytary

carbidopa; levodopa

IMPAX Laboratories

Immediate and controlled release formulation

Approved

Sinemet CR

carbidopa; levodopa

Bristol-Myers Squibb

First approved controlled release CD LD formulation

Approved

Stalevo

carbidopa; entacapone; levodopa

Novartis

CD LD COMT combo pill, immediate release

Filed

Ongentys

opicapone

BIAL

"Third generation" COMT inhibitor

Phase III

LECIGon

carbidopa; entacapone; levodopa

LobSor Pharmaceuticals

Gel formulation deliver directly to duodenum via a pump

Phase III

CVT-301

levodopa

Acorda Therapeutics

Inhalable levodopa

Phase II

DM-1992

carbidopa; levodopa

Depomed

Gastroretentive immediate release/extended release co-formulation. Development suspended

Phase II

DopaFuse

carbidopa; levodopa

SynAgile

Drug delivered via a continuous oral pump

Phase II

IPX203

carbidopa; levodopa

IMPAX Laboratories

Follow on for Rytary. Fast onset followed by extended release

Phase II

ND0612H

carbidopa; levodopa

NeuroDerm

Liquid formulation delivered via a dermal pump

Phase II

XP21279

levodopa prodrug

XenoPort

Sustained release levodopa prodrug designed to improve absorption. Development halted pending a partnership

Preclinical

ATT-LD

levodopa prodrug

Aposense

Long-acting levodopa prodrug

Preclinical

CERC-406

-

Cerecor

COMT inhibitor that passes the blood brain barrier

Source: EvaluatePharma, company documents

AP pipeline progress

Intec has two additional, disclosed AP-based programmes: AP-CBD/THC, a co-formulation of two primary cannabinoids in Cannabis sativa, cannabidiol (CBD) and tetrahydrocannabinol (THC) potentially for the treatment of low back pain or fibromyalgia in Phase I, and AP-ZP, a formulation of zaleplon for the treatment of insomnia that is Phase III ready.

AP-CBD/THC: Another Phase I

Intec is developing a cannabidiol/tetrahydrocannabinol accordion pill as there are several aspects of cannabinoid pharmacology that could potentially be improved by the AP formulation. Cannabinoids have a low oral bioavailability measured at an average of 6% for THC6 and CBD,7 although with high levels of variability between individuals and doses even when administered under similar conditions. THC and CBD are very oily molecules that dissolve poorly in the aqueous gastric medium. The dissolution and absorption of the drug is aided in the gut by bile acids. The AP device is specifically designed to maximize the exposure of drugs to bile acids secreted in the upper gastrointestinal tract, and an AP-CBD/THC formulation may significantly improve the drug’s oral profile.

  Ohlsson A, et al (1980) Plasma delta-9 tetrahydrocannabinol concentrations and clinical effects after oral and intravenous administration and smoking. Clin. Pharmacol. Ther. 28, 409-16.

  Agurell S, et al. (1981). Interaction of THC with cannabinol and cannabidiol following oral administration in man. Assay of cannabinol and cannabidiol by mass fragmentography. Experientia 37, 1090–2.

The company completed the AP-CBD/THC Phase I study in August 2017 with the goal of investigating the safety and pharmacokinetics (PK) of two AP-CBD/THC formulations compared to Sativex (GW Pharmaceuticals), a cannabis extract formulated for buccal delivery that contains both CBD and THC in a randomized three-way crossover design that enrolled 21 healthy volunteers.

The company reported significant improvements in the PK of AP-CBD/THC compared to Sativex with an improvement of CBD exposure by 290% to 330% and THC exposure by 25% to 50%. It is difficult to speculate as to the reason for the increased exposure as there are multiple factors involved including different route of administration and different doses, but these data demonstrate that AP-CBD/THC had more than sufficient exposure of these molecules to reach pharmacologically relevant concentrations. An interesting finding from the study was that the AP-CBD/THC formulation showed a reduction in formation of THC metabolites of 25% or greater, which suggests that the rate of THC metabolism is reduced compared to Sativex. This is interesting considering that any THC delivered buccally will avoid first pass metabolism in the liver, whereas AP-CBD/THC is purely oral and cannot avoid hepatic exposure. This suggests some degree of non-linearity in the metabolism of THC, although the precise mechanism is unknown at this time. Moreover, Intec reported that the drug was safe and well tolerated, with no serious adverse effects, although this is not particularly surprising given the well understood safety profile of these molecules.

The two indications being pursued by the company were neuropathic low back pain and fibromyalgia, although it has made no commitments to study either. Both neuropathic low back pain and fibromyalgia are exceptionally large markets with a high degree of unmet medical need. Although both of these indications can be described as pain disorders, their etiologies are significantly different. Furthermore, the company recently stated that it is in the process of redesigning the AP for CBD/THC to improve efficacy and plans to initiate another Phase I to evaluate the PK of the revamped drug. It has not provided insight into when the trial will begin. For these reasons, we do not include the AP-CBD/THC programme in our valuation at this time.

Sensitivities

Because Intec is developing reformulations of approved pharmaceuticals for its original indications and the efficacy of these compounds is not under question, many of the development risks typically associated with pre-commercial pharmaceutical companies are mitigated in this case. However, the data supporting the clinical benefit of the AP technology over other formulations are limited. The potential benefit appears most pronounced in the case of AP-CDLD, in which the pharmacokinetics of levodopa support a gastroretentive formulation. This translated into better improvements in off time than the recently approved controlled release formulation Rytary. However, this effect required supplementation with additional immediate release levodopa pills, meaning that AP-CDLD alone may perform worse, although the Phase III permits an increased dosing frequency (three times a day), which may mitigate this risk.

The company will face significant commercial risks as AP-CDLD is entering an especially competitive market where potentially disruptive technology is being developed. AP-CDLD is a viable solution to the difficulties in levodopa-based therapy, but there are two products already available and others in various development stages. Additionally, there are marketed and development products that aim to achieve better disease control by using an alternative route of administration (ie the Duopa duodenal pump). Finally, the advancement of COMT inhibitors may further improve the pharmacokinetic profile of levodopa and limit the benefits of AP-CDLD over other formulations.

Valuation

We have decreased our valuation to NIS619m ($176m) or NIS23.85 ($6.79) per basic share from NIS737m ($205m) or NIS28.39 ($7.91) per basic share. This reduction is mainly attributed to the removal of the AP-ZP programme for the treatment of insomnia from our valuation as the company has stated it is currently concentrating its resources towards the AP-CDLD and AP-CBD/THC development programmes. The change is also driven by the increase in development costs associated with the AP-CDLD programme due to enrolment expansion, which delays complete enrolment to Q318 (previously Q417) and launch year to 2020 (previously 2019), and lower net cash. The AP-CDLD programme constitutes approximately 75% of Intec’s total valuation, corresponding to $247m in combined peak sales in the US and Europe. These effects were offset by increasing our US price growth rate assumption from 2% to 4% based on current pharmaceutical industry pricing power specifically within Parkinson’s disease and rolling forward our NPVs. We do not include the AP-CBD/THC programme in our valuation as the precise target indication has not been announced. However, we find the Phase I clinical results to be encouraging and expect to add this programme to our valuation with more details following the completion of the Phase I trial for the redesigned AP-CBD/THC. We also expect to update our valuation with the release of data from the Phase III study of AP-CDLD in 2019.

Exhibit 5: Valuation of Intec Pharma

Development Program

Clinical stage

Prob. of success

Launch year

Launch Pricing ($)

Peak sales ($m)

Patent/Exclusivity Protection

Royalty/ Margin

rNPV (NISm)

AP-CDLD, US

Phase III

60%

2020

8,200

140

2029

47%

299

AP-CDLD, Europe

Phase III

60%

2020

4,900

107

2029

40%

191

AP-CDLD development costs

Phase III

-28

Unallocated costs (administrative costs, etc.)

-69

Total

 

 

 

 

 

 

 

392

Net cash and equivalents (30 September 2017) (NISm)

227

Total firm value (NISm)

619

Total basic shares (m)

26.0

Value per basic share (NIS)

23.85

Options (m)

0.1

Total diluted shares (m)

26.1

Value per diluted share (NIS)

23.72

Source: Intec reports, Edison Investment Research

Financials

Intec reported a loss of $7.4m for Q317. This increase compared to Q316 ($3.3m) is due to the approximate 40% increase in R&D expenses associated with the AP-CDLD Phase III trial, the absence of capital from the Israel Innovation Authority (IIA) to offset R&D, and the 50% increase in general administrative expenses. Additionally, the company is expanding enrolment for the AP-CDLD Phase III trial to 420 patients (after downsizing enrolment to 328 from 460 patients in July of this year), which is due to a change in statistical assumptions. We have therefore increased our expected R&D spending for 2017 to $19.4m from $17.1m. The company ended the period with $65m in cash and equivalents, which was supplemented by the August 2017 public offering of $57.5m. We believe that this is sufficient capital for the company to break even, which we estimate will be in 2020.

Exhibit 6: Financial summary

$000s

2015

2016

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

0

0

0

0

Cost of Sales

0

0

0

0

Gross Profit

0

0

0

0

Research and development

(4,815)

(10,749)

(19,412)

(13,987)

Selling, general & administrative

(2,788)

(3,097)

(4,381)

(4,819)

EBITDA

 

 

(8,330)

(14,513)

(24,133)

(19,188)

Operating Profit (before amort. and except.)

(7,584)

(13,812)

(23,627)

(18,640)

Intangible Amortisation

0

0

0

0

Exceptionals/Other

0

0

0

0

Operating Profit

(7,584)

(13,812)

(23,627)

(18,640)

Net Interest

404

450

450

450

Other (change in fair value of warrants)

0

0

0

0

Profit Before Tax (norm)

 

 

(7,180)

(13,362)

(23,177)

(18,190)

Profit Before Tax (IFRS)

 

 

(7,180)

(13,362)

(23,177)

(18,190)

Tax

0

0

0

0

Deferred tax

0

0

0

0

Profit After Tax (norm)

(7,180)

(13,362)

(23,177)

(18,190)

Profit After Tax (IFRS)

(7,180)

(13,362)

(23,177)

(18,190)

Average Number of Shares Outstanding (m)

7.8

11.4

26.5

27.8

EPS - normalised (c)

 

 

(92.16)

(116.72)

(87.52)

(65.41)

EPS - IFRS ($)

 

 

(0.92)

(1.17)

(0.88)

(0.65)

Dividend per share (c)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

4,076

4,047

4,385

4,714

Intangible Assets

0

0

0

0

Tangible Assets

4,076

4,047

4,385

4,714

Other

0

0

0

0

Current Assets

 

 

33,096

20,674

64,330

46,228

Stocks

0

0

0

0

Debtors

2,361

2,384

1,333

1,333

Cash

30,673

18,228

62,929

44,827

Other

62

62

68

68

Current Liabilities

 

 

(614)

(1,152)

(1,921)

(1,519)

Creditors

(614)

(1,152)

(1,921)

(1,519)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

 

(327)

(97)

0

0

Long term borrowings

0

0

0

0

Other long term liabilities

(327)

(97)

0

0

Net Assets

 

 

36,231

23,472

66,793

49,423

CASH FLOW

Operating Cash Flow

 

 

(7,931)

(12,005)

(18,356)

(17,225)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(1,384)

(482)

(843)

(877)

Acquisitions/disposals

0

206

254

0

Financing

32,452

0

63,675

0

Dividends

0

0

0

0

Other

13

0

0

0

Net Cash Flow

23,150

(12,281)

44,729

(18,103)

Opening net debt/(cash)

 

 

(7,742)

(30,673)

(18,228)

(62,899)

HP finance leases initiated

0

0

0

0

Exchange rate movements

(232)

8

(58)

0

Other

13

(172)

0

0

Closing net debt/(cash)

 

 

(30,673)

(18,228)

(62,899)

(44,797)

Source: Intec Pharma reports, Edison Investment Research

Contact details

Revenue by geography

12 Hartomst. (RMPE building)
P.O.Box 45219
Jerusalem 91450
Israel
+97225864657
http://intecpharma.com/

N/A

Contact details

12 Hartomst. (RMPE building)
P.O.Box 45219
Jerusalem 91450
Israel
+97225864657
http://intecpharma.com/

Revenue by geography

N/A

Management team

CEO and Vice Chairman: Jeffrey A Meckler

CFO: Nir Sassi

Mr Meckler has been the CEO of Intec since July 2017. Prior to serving as the CEO, he served as the vice chairman of the board of directors from April 2017. Prior to Intec, Mr Meckler spent over 17 years at Pfizer in leadership roles and most recently served as the CEO of Cocrystal Pharma.

Mr Nir Sassi has been the CFO of Intec since August 2016. Prior to serving as the CFO, he served as the VP of finance commencing in March 2010. Prior to Intec, Mr Sassi served as a senior manager at PricewaterhouseCoopers Israel from 2002 until 2010.

Chairman: John W Kozarich

COO: Nadav Navon

Dr Kozarich has nearly 40 years of experience in the biopharmaceutical industry and academia. Dr Kozarich currently serves as chairman of Ligand Pharmaceuticals, and chairman and president of ActivX Biosciences. Prior to his role as chairman, Dr Kozarich was vice president at Merck.

Dr Nadav Navon has been with Intec since March 2006 and has served as the COO since July 2017. Before that he served as the executive vice president of research & development and operations from March 2015 and as the vice president of research & development and operations from May 2013.

Management team

CEO and Vice Chairman: Jeffrey A Meckler

Mr Meckler has been the CEO of Intec since July 2017. Prior to serving as the CEO, he served as the vice chairman of the board of directors from April 2017. Prior to Intec, Mr Meckler spent over 17 years at Pfizer in leadership roles and most recently served as the CEO of Cocrystal Pharma.

CFO: Nir Sassi

Mr Nir Sassi has been the CFO of Intec since August 2016. Prior to serving as the CFO, he served as the VP of finance commencing in March 2010. Prior to Intec, Mr Sassi served as a senior manager at PricewaterhouseCoopers Israel from 2002 until 2010.

Chairman: John W Kozarich

Dr Kozarich has nearly 40 years of experience in the biopharmaceutical industry and academia. Dr Kozarich currently serves as chairman of Ligand Pharmaceuticals, and chairman and president of ActivX Biosciences. Prior to his role as chairman, Dr Kozarich was vice president at Merck.

COO: Nadav Navon

Dr Nadav Navon has been with Intec since March 2006 and has served as the COO since July 2017. Before that he served as the executive vice president of research & development and operations from March 2015 and as the vice president of research & development and operations from May 2013.

Principal shareholders

(%)

Acuta Capital Partners LLC

10.45

venBio Select Advisor LLC

8.42

Adage Capital Partners Gp LLC

6.62

EcoR1 Capital LLC

5.75

Cormorant Asset Management LLC

3.11

Companies named in this report

AbbVie (ABBV), Acorda Therapeutics (ACOR), Bristol-Myers Squibb (BMY), Dainippon Sumitomo (TYO:4506), Depomed (DEPO), GlaxoSmithKline (GLK), Impax Laboratories (IPXL), Merck (MRK), Novartis (NVS), Orion (HEL:ORNBV), Sanofi (SNY)

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. 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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

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EDISON INVESTMENT RESEARCH DISCLAIMER

Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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Tel Aviv +44 (0)20 3734 1007
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Israel

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney+61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach,46766

Israel

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. 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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

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Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 2018. “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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney+61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach,46766

Israel

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney+61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach,46766

Israel

Research: Consumer

Evolva — Capital restructuring

On 2 October, Evolva announced equity financing plans with the aim of raising CHF80m (gross) proceeds in two separate transactions in October and November 2017. The funds will be used to continue investing in R&D, and in commercialisation of the products. The company has not ruled out further debt financing in the coming months to meet its contractual obligations to its partner, Cargill. The new equity financing plans should have raised enough cash (CHF86m) to allow the company to reach break-even, expected around FY21. Our fair value is CHF0.65 per share (previously CHF0.69) and we believe this remains an attractive investment.

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