Positive data in high-risk patients

Paion 27 January 2017 Update (1-4pgs)
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Paion

Positive data in high-risk patients

Headline trial results

Pharma & biotech

27 March 2017

Price

€2.19

Market cap

€127m

US$1.10/€

Net cash (€m) at 31 December 2016

30.1

Shares in issue

58.2m

Free float

75%

Code

PA8

Primary exchange

Frankfurt

Secondary exchange

Xetra

Share price performance

%

1m

3m

12m

Abs

(9.0)

(11.5)

(0.1)

Rel (local)

(10.9)

(16.0)

(18.4)

52-week high/low

€2.96

€1.66

Business description

Paion is an emerging specialty pharma company developing anaesthesia products. Lead product remimazolam is undergoing US Phase III trials and is partnered with Cosmo (US), Yichang (China), Hana Pharma (South Korea), Pendopharm (Canada) and R-Pharm (CIS, Turkey, MENA).

Next events

Fully recruit bronchoscopy Phase III

Q217

Bronchoscopy Phase III results

Q317

Pre NDA meeting with FDA

Q417

Analysts

Dennis Hulme

+61 (0)2 9258 1161

Lala Gregorek

+44 (0)20 3681 2527

Paion is a research client of Edison Investment Research Limited

Paion has taken an important step towards its goal of US approval for its ultra-fast-acting sedative, remimazolam with the announcement of positive top line results from a safety study in high risk colonoscopy patients. It is approaching another important milestone, with the confirmatory Phase III in bronchoscopy patients expected to complete recruitment soon; top line results are likely about two months later. Paion is on track to file for approval in both the US (in procedural sedation via partner Cosmo Pharmaceuticals) and Japan (for general anaesthesia) by mid-2018.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/15

0.1

(34.0)

(55.7)

0.0

N/A

N/A

12/16

4.3

(24.3)

(36.4)

0.0

N/A

N/A

12/17e

5.9

(16.4)

(23.2)

0.0

N/A

N/A

12/18e

3.1

(13.3)

(19.2)

0.0

N/A

N/A

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

Safety confirmed in high-risk colonoscopy patients

Paion reported positive headline data from a safety study in high-risk colonoscopy patients (American Society of Anesthesiologists (ASA) class III or IV patients with severe systemic disease who are mostly treated in a hospital environment). The primary objective of the trial was to assess the safely of remimazolam compared to placebo with midazolam rescue. Paion reported that remimazolam demonstrated good respiratory and cardiovascular stability compared to placebo with midazolam rescue; no adverse events of concern were observed in either group. While commercial use of remimazolam is likely to be targeted at lower-risk ASA I/II patients, this trial is an important part of the development programme agreed with the FDA because it confirms that remimazolam can be used safely in high-risk patients.

Efficiency gains similar to colonoscopy Phase III

Secondary outcome measures that compared remimazolam to placebo and to an open label arm treated with midazolam according to the US label confirmed time savings with the use of remimazolam. Induction of and recovery from sedation was faster with remimazolam than midazolam (median induction time 5.0 vs 19.0 minutes, and time to full recovery 3.0 vs 7.0 minutes for the two groups, respectively. Recovery times to full alertness were similar to the results reported last year from the comparable groups in the Phase III trial in low-risk colonoscopy patients (4.0 and 19.0 minutes, respectively); recovery to full alertness took longer in all groups in the phase III (7.2 and 15.7 minutes, respectively) – the use of lower doses may have led to faster recovery in the high-risk patients.

Valuation: Unchanged at €214m

Our valuation is unchanged at €214m (€3.68/share). Paion has sufficient cash to fund operations beyond end 2018, which would allow it to complete filings in the US (via partner Cosmo) and Japan. However, it would need ~€20-25m of additional funds should it choose to restart development of remimazolam in Europe (funds could potentially come from Cosmo milestones and a licence deal in Japan).

Exhibit 1: Financial summary

€'000s

2014

2015

2016

2017e

2018e

Year end 31 December

PROFIT & LOSS

Revenue

 

 

3,456

61

4,262

5,874

3,100

Cost of sales

(4)

0

0

0

0

Gross profit

3,452

61

4,262

5,874

3,100

R&D expenditure

(11,799)

(29,385)

(23,408)

(19,000)

(13,000)

General, administrative & selling

(3,702)

(5,729)

(5,129)

(3,800)

(3,914)

Other

411

965

(807)

51

51

Operating profit

(11,639)

(34,088)

(25,082)

(16,875)

(13,763)

Depreciation and amortisation

(93)

0

(759)

(500)

(400)

Share-based payments

0

0

0

0

0

Exceptionals

0

0

0

0

0

EBITDA

 

 

(11,546)

(34,088)

(24,323)

(16,375)

(13,363)

Operating profit (before GW and except)

 

(11,546)

(34,088)

(24,323)

(16,375)

(13,363)

Net interest

(66)

42

21

20

20

Profit before tax (norm)

 

 

(11,612)

(34,046)

(24,302)

(16,355)

(13,343)

Profit before tax (reported)

 

 

(11,704)

(34,046)

(25,061)

(16,855)

(13,743)

Tax

2,468

5,834

4,944

3,135

2,145

Profit after tax (norm)

(9,143)

(28,212)

(19,359)

(13,220)

(11,198)

Profit after tax (reported)

(9,236)

(28,212)

(20,118)

(13,720)

(11,598)

Average number of shares outstanding (m)

39.9

50.7

53.2

57.0

58.2

EPS - normalised (c)

 

 

(22.9)

(55.7)

(36.4)

(23.2)

(19.2)

EPS - reported (c)

 

 

(23.2)

(55.7)

(37.8)

(24.1)

(19.9)

Dividend per share (c)

 

 

0.0

0.0

0.0

0.0

0.0

Gross margin (%)

NA

NA

NA

NA

NA

EBITDA margin (%)

NA

NA

NA

NA

NA

Operating margin (before GW and except.) (%)

NA

NA

NA

NA

NA

BALANCE SHEET

Fixed assets

 

 

3,516

3,417

2,855

2,355

1,955

Intangible assets

3,440

3,362

2,688

2,313

2,013

Tangible assets

76

56

167

42

-58

Refund from assumption of dev costs

0

0

0

0

0

Other

0

0

0

0

0

Current assets

 

 

63,032

40,051

35,128

20,925

9,727

Stocks

0

0

0

0

0

Debtors

467

0

0

25

25

Cash

58,912

32,680

30,111

15,883

4,685

Other

3,653

7,371

5,017

5,017

5,017

Current liabilities

 

 

(3,924)

(7,901)

(13,040)

(7,266)

(7,266)

Trade payables

(3,338)

(7,332)

(6,353)

(6,353)

(6,353)

Short-term borrowings

0

0

0

0

0

Provisions

(306)

(224)

(555)

(555)

(555)

Finance lease liabilities

0

0

0

0

0

Other current liabilities

(254)

(305)

(359)

(359)

(359)

Current deferred income

(26)

(39)

(5,774)

0

0

Long-term liabilities

 

 

(17)

(6)

0

0

0

Long-term borrowings

0

0

0

0

0

Provisions

0

0

0

0

0

Long-term deferred income

(17)

(6)

0

0

0

Deferred taxes

0

0

0

0

0

Other long-term liabilities

0

0

0

0

0

Net assets

 

 

62,607

35,562

24,943

16,014

4,416

CASH FLOW

Operating cash flow

 

 

(12,044)

(28,212)

(17,135)

(22,174)

(13,363)

Net interest

(66)

43

19

20

20

Tax

0

2,575

5,529

3,135

2,145

Capex

0

0

7

0

0

Purchase of intangibles

(26)

(33)

0

0

0

Acquisitions/disposals

0

0

(199)

0

0

Equity Financing

57,618

22

9,212

4,790

0

Dividends

0

0

0

0

0

Other

0

0

0

0

0

Net cash flow

45,482

(25,605)

(2,567)

(14,229)

(11,198)

Opening net debt/(cash)

 

 

(13,292)

(58,912)

(32,680)

(30,111)

(15,883)

Effect of exchange rate changes

(72)

(66)

(2)

0

0

Other

210

-560

0

0

0

Closing net debt/(cash)

 

 

(58,912)

(32,680)

(30,111)

(15,883)

(4,685)

Source: Edison Investment Research, Paion accounts

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 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 Paion 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 8249 8342

Level 12, Office 1205

95 Pitt Street, 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 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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 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 Paion 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 8249 8342

Level 12, Office 1205

95 Pitt Street, 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 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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