InMed Pharmaceuticals |
Phase II enrolment to begin in second half |
Financial update |
Pharma & biotech |
22 February 2021 |
Share price performance
Business description
Next events
Analysts
InMed Pharmaceuticals is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||
Following the safety and tolerability data from the two Phase I trials in healthy volunteers, INM-755 is moving forward into a Phase II (755-201-EB) trial in up to 20 epidermolysis bullosa (EB) patients with an anticipated treatment duration of 28 days. Regulatory applications are expected to be filed in several countries in Q2 CY21 with enrolment to begin in the second half of the calendar year. Also, the formulation for INM-088 has been finalized with IND-enabling toxicology studies expected to begin in CY21 and filings for human clinical trials to begin in H1 CY22.
Year end |
Revenue (US$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/19 |
0.0 |
(9.2) |
(1.77) |
0.00 |
N/A |
N/A |
06/20 |
0.0 |
(9.0) |
(1.73) |
0.00 |
N/A |
N/A |
06/21e |
0.0 |
(9.1) |
(1.33) |
0.00 |
N/A |
N/A |
06/22e |
0.0 |
(10.5) |
(1.24) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortization of acquired intangibles, exceptional items and share-based payments.
INM-755 safe and well tolerated
InMed previously announced top-line results from both the 755-101-HV and 755-102-HV Phase I trials. Trial 755-101-HV was conducted in 22 healthy adult volunteers with intact skin, while 755-102-HV was conducted in eight healthy volunteers with small wounds. Both trials indicated that INM-755 was safe and well tolerated. There were no systemic or serious adverse effects, nor were there any adverse event-related withdrawals.
INM-088 moving forward
A formulation of INM-088 for glaucoma has been finalized and has demonstrated the ability to deliver sustained levels of cannabinol (CBN) to the eye in an animal model through a stable and comfortable eyedrop formulation. The delivery technology was licensed (covering global commercial rights to all cannabinoids and analogs) from EyeCRO, a contract research organization. Scale-up of manufacturing for the final formulation is in process. IND-enabling studies are expected to begin in 2021 with filings for human clinical trials expected in H1 CY22.
BayMedica collaboration initiating
In November, InMed announced a research collaboration with BayMedica, which specializes in rare natural cannabinoids and analogs. As part of the agreement, BayMedica will receive access to aspects of InMed’s IntegraSyn biosynthesis platform, while InMed will explore the therapeutic potential of some of BayMedica’s cannabinoid analogs in neuroprotection.
Valuation: US$236m or US$29.27 per basic share
We have adjusted our valuation from US$233m or US$33.34 per basic share to US$236m or US$29.27 per basic share. The total valuation rose due to higher net cash following a financing, while the per-share value decreased due to a higher number of shares outstanding.
Clinical update
Following the safety and tolerability data from the Phase I program, INM-755 will be moving forward into a Phase II (755-201-EB) trial in up to 20 EB patients with an anticipated treatment duration of 28 days. Regulatory applications are expected to be filed in several countries in Q2 CY21 with enrollment to begin in the second half of the calendar year.
InMed Pharmaceuticals recently announced the results of both its Phase I trials, 755-101-HV and 755-102-HV. Trial 755-101-HV studied the systemic and local safety, tolerability and pharmacokinetics (PK) of two dosage strengths of INM-755 cream in 22 healthy adult volunteers. Importantly, there were no systemic or serious side effects. There was a slightly higher incidence and intensity of redness, swelling, scaling and burning in the treatment group, but none of these was serious and no subjects dropped out of the trial because of them nor were these side effects dose dependent. Systemic exposure of the drug was very low and no systemic adverse effects were caused by exposure to INM-755, which is important in a topical therapy, especially a cannabinoid.
Similar results were seen in trial 755-102-HV, which studied the impact of INM-755 in eight healthy volunteers with small wounds. The small blister wounds were created at the clinical site to largely mimic the types of wounds typically seen in EB simplex patients. The study compared two dosage strengths of INM-755 cream versus vehicle alone as well as no treatment (in other words, four treatment conditions). Erythema and scaling were seen across all treatment groups, including those receiving vehicle or no treatment. There were a few mild cases of stinging/burning but these were only seen in the vehicle and low-concentration cream treated wounds and not the high-concentration treated or untreated wounds. As with 755-101-HV, no systemic adverse events were reported. Importantly, the INM-755 creams did not introduce any delay in wound healing.
For INM-088 for glaucoma, the company is moving forward with a final formulation, one that has demonstrated the ability to deliver sustained levels of CBN to the eye in an animal model through a stable and comfortable eyedrop formulation. InMed licensed the delivery technology in December 2020 from EyeCRO, a contract research organization, for milestones, low single-digit royalties and a nominal amount of equity. Scale-up of manufacturing for the final formulation is in process. IND-enabling studies are expected to begin in 2021 with filings for human clinical trials expected in H1 CY22. Preclinical data so far have indicated a neuroprotective effect in ocular disease and INM-088 may also have the potential to reduce intraocular pressure (IOP) through improvement in the aqueous humor outflow. Importantly, some of the safety studies for INM-755 can be used for INM-088 for glaucoma as both products have the same active ingredient (CBN).
Biosynthesis platform
InMed recently announced a research collaboration with BayMedica, which specializes in the design and manufacture of rare natural cannabinoids and analogs through biosynthesis and pharmaceutical chemistry. As part of the reciprocal agreement, BayMedica will receive access to one or more of InMed’s high-efficiency enzyme gene sequences to assess their ability to improve on the manufacturing process for cannabinoids in BayMedica’s library. In return, BayMedica will provide InMed with access to BayMedica’s library of proprietary cannabinoid analogs (as these are novel, they have the potential to be protected by composition of matter patents unlike naturally occurring cannabinoids). InMed will conduct preclinical research on numerous therapeutic compounds to explore their potential in selected disease models related to neuroprotection. Following the initial research phase, the companies may license each other’s technology if desired.
Valuation
We have adjusted our valuation from US$233m or US$33.34 per basic share to US$236m or US$29.27 per basic share. The total valuation rose due to higher net cash following a February 2021 financing (US$4.5m gross, or US$4.0m net), while the per-share value decreased due to a higher number of shares outstanding. Note that we have completely converted our model into US dollars as the company is now reporting in that currency and is using US GAAP.
Exhibit 1: InMed valuation
Program |
Stage |
Probability of success |
Launch year |
Peak sales (US$m) |
rNPV |
||||
Biosynthesis (manufacturing) |
Development |
23% |
2022 |
1,243 |
$198 |
||||
INM-755 |
Phase I |
10% |
2026 |
313 |
$24 |
||||
Total |
$221.8 |
||||||||
Pro-forma net cash and equivalents (as of 31 December plus offering) (US$m) |
$14.1 |
||||||||
Total firm value (US$m) |
$235.91 |
||||||||
Total basic shares (as of 31 December 2020 + offering, m) |
8.06 |
||||||||
Value per basic share (US$) |
$29.27 |
||||||||
Options and warrants (as of 31 December 2020 + offering, m) |
3.4 |
||||||||
Total diluted shares (as of 31 December 2020 + offering, m) |
11.4 |
||||||||
Value per diluted share (US$) |
$20.63 |
||||||||
Source: Edison Investment Research
Financials
InMed reported a net loss of US$2.2m in Q221 (the period ending 31 December 2020), down from US$2.5m in the same period in the prior year due to lower R&D expenses. R&D expenses were US$0.9m in the quarter compared to US$1.6m a year ago thanks to lower spending on the biosynthesis program as well as the completion of the Phase I program during the period. G&A was US$1.0m, up slightly from US$0.9m in Q220. We have converted our financial model to US dollars and US GAAP as the company is now reporting in both. Prior periods have been adjusted as well. Our R&D estimates for FY21 and FY22 are now US$4.3m and US$5.0m, respectively (as compared to C$5.9m and C$6.8m previously). SG&A estimates are now US$4.3m and US$4.5m for FY21 and FY22, respectively, compared to C$4.9m and C$5.1m previously.
InMed had US$10.1m in cash and marketable securities at 31 December and subsequently (February 2021) raised approximately US$4m in net proceeds from a private placement, priced at US$4.25 per unit, with a unit including a common share and 0.66 of a warrant (the warrants have an exercise price of US$4.85 per share, are exercisable six months after issuance and have a term of five and a half years).
Based on the cash level following the offering, we believe InMed has funding through much of FY22. We forecast the company will raise US$10m in additional capital in FY22, which we model as illustrative long-term debt.
Exhibit 2: Financial summary
US$'000s |
2019 |
2020 |
2021e |
2022e |
||
Year end 30 June |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
0 |
0 |
0 |
||
Research and development |
(5,126) |
(5,811) |
(4,337) |
(4,987) |
||
Selling, general & administrative |
(4,297) |
(3,227) |
(4,325) |
(4,498) |
||
EBITDA |
|
|
(9,423) |
(9,038) |
(8,661) |
(9,485) |
Operating Profit (before amort. and except.) |
|
|
(9,542) |
(9,151) |
(8,800) |
(9,623) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Exceptionals/Other |
(34) |
82 |
104 |
108 |
||
Operating Profit |
(9,576) |
(9,069) |
(8,696) |
(9,515) |
||
Net Interest and financial expense |
328 |
130 |
(347) |
(854) |
||
Other (change in fair value of warrants) |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(9,215) |
(9,021) |
(9,147) |
(10,477) |
Profit Before Tax (IFRS) |
|
|
(9,248) |
(8,939) |
(9,043) |
(10,369) |
Tax |
0 |
0 |
0 |
0 |
||
Deferred tax |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(9,215) |
(9,021) |
(9,147) |
(10,477) |
||
Profit After Tax (IFRS) |
(9,248) |
(8,939) |
(9,043) |
(10,369) |
||
Average Number of Shares Outstanding (m) |
5.2 |
5.2 |
6.9 |
8.5 |
||
EPS - normalised (US$) |
|
|
(1.77) |
(1.73) |
(1.33) |
(1.24) |
EPS - GAAP (US$) |
|
|
(1.78) |
(1.71) |
(1.31) |
(1.22) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
N/A |
N/A |
N/A |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
1,264 |
1,490 |
1,466 |
1,374 |
Intangible Assets |
1,221 |
1,087 |
1,110 |
1,110 |
||
Tangible Assets |
43 |
403 |
342 |
250 |
||
Other |
0 |
0 |
15 |
15 |
||
Current Assets |
|
|
14,173 |
6,312 |
9,275 |
9,388 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
65 |
45 |
155 |
155 |
||
Cash |
13,784 |
5,848 |
9,091 |
9,205 |
||
Other |
324 |
419 |
28 |
28 |
||
Current Liabilities |
|
|
(1,194) |
(1,676) |
(2,154) |
(2,154) |
Creditors |
(1,194) |
(1,676) |
(2,154) |
(2,154) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
0 |
(248) |
(2,003) |
(12,003) |
Long term borrowings |
0 |
0 |
0 |
(10,000) |
||
Other long term liabilities |
0 |
(248) |
(2,003) |
(2,003) |
||
Net Assets |
|
|
14,243 |
5,878 |
6,584 |
(3,394) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(6,624) |
(7,375) |
(8,106) |
(9,840) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(27) |
(43) |
(42) |
(46) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
205 |
(31) |
10,893 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
1 |
0 |
0 |
||
Net Cash Flow |
(6,446) |
(7,448) |
2,745 |
(9,887) |
||
Opening net debt/(cash) |
|
|
(20,179) |
(13,784) |
(5,848) |
(9,091) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
(17) |
416 |
(495) |
0 |
||
Other |
69 |
(905) |
993 |
0 |
||
Closing net debt/(cash) |
|
|
(13,784) |
(5,848) |
(9,091) |
795 |
Source: company reports, Edison Investment Research
|
|
