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Research: Healthcare
Pixium has announced that given longer than expected regulatory approvals for the PRIMAvera European pivotal study due to COVID-19 and delayed clinical centre openings, it now expects to complete recruitment by year-end 2022 (versus its prior guidance of year-end 2021) and plans to report top-line, 12-month data around the end of 2023. We have pushed back our timelines for European and US launches of Prima by one year, to H125 and H226, respectively, hence our valuation has declined.
Pixium Vision |
PRIMAvera recruitment timing pushed out |
Clinical study guidance update |
Healthcare equipment |
15 December 2021 |
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Pixium Vision is a research client of Edison Investment Research Limited |
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Pixium has announced that given longer than expected regulatory approvals for the PRIMAvera European pivotal study due to COVID-19 and delayed clinical centre openings, it now expects to complete recruitment by year-end 2022 (versus its prior guidance of year-end 2021) and plans to report top-line, 12-month data around the end of 2023. We have pushed back our timelines for European and US launches of Prima by one year, to H125 and H226, respectively, hence our valuation has declined.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
1.8 |
(9.8) |
(0.44) |
0.0 |
N/A |
N/A |
12/20 |
2.1 |
(8.7) |
(0.26) |
0.0 |
N/A |
N/A |
12/21e |
2.6 |
(10.8) |
(0.22) |
0.0 |
N/A |
N/A |
12/22e |
1.6 |
(11.0) |
(0.19) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Management confident in new PRIMAvera timelines
PRIMAvera is a registration-enabling study designed to assess the Prima wireless bionic vision system (BVS) in 38 patients with severe geographic atrophy due to age-related macular degeneration (GA-AMD). The study began in Q420 and the first implantation occurred in France in March 2021. Implantations in H121 were slower than the company expected due to COVID-19 and related restrictions on elective procedures, as well as the associated delays for gaining additional competent authority approvals and clinical site inclusions. Fortunately, the pace of recruitment has picked up in recent months as new sites have opened. Study sites now include seven locations in France and six in Germany. The company announced the first implantation at Moorfields Eye hospital in London, UK, and expects to add additional sites in Spain, the Netherlands and Italy in H122.
Revising commercialisation timelines
Assuming no significant new COVID-19 restrictions affect the European study sites, we are confident that Pixium can meet its revised timelines, given the number of sites that have joined the PRIMAvera study in H221 and the future expected study location additions. We now anticipate primary 12-month data in late 2023 or early 2024, leading to CE Mark submission in H124 and European approval in H125 (vs H124 previously). We continue to anticipate that a separate study will be needed for US approval, and we model that the US launch will occur in H226 (vs H225 previously).
Valuation: Revised to reflect new launch timing
After adjusting for forex and our new timing assumptions, we obtain a pipeline rNPV of €115.1m (vs €134.2m previously). After adding €8.5m in Q321e net cash, we obtain an equity value of €123.6m (€2.11 per basic share). The company believes its current funds can maintain operations through Q422. We increased our projected total financing need by €15m given the additional time it would take to reach commercialisation. We now expect Pixium will raise €44.4m by year-end 2025 and have modelled a €12.5m raise in 2022 (all modelled as illustrative debt).
Financials
Given our new launch timing estimates, our financial forecasts for Prima sales have been revised, and are shown below.
Exhibit 1: Financial forecast for Prima in GA-AMD
2025e |
2026e |
2027e |
2028e |
2029e |
|
Europe |
|||||
EU patients with Dry AMD with GA (000) |
1,595 |
1,617 |
1,640 |
1,663 |
1,686 |
Percentage with 20/400 or worse visual acuity |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
Percentage meeting all Prima eligibility criteria |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
GA-AMD patients meeting all Prima eligibility criteria (000) |
71.8 |
72.8 |
73.8 |
74.8 |
75.9 |
Prima unit sales in EU |
561 |
1,326 |
2,685 |
4,049 |
5,148 |
Average revenue per treatment (€) |
81,099 |
82,725 |
84,341 |
85,997 |
87,688 |
Total EU revenue (€000) for PRIMA-AMD |
45,496 |
109,696 |
226,489 |
348,234 |
451,404 |
United States |
|||||
US patients with Dry AMD with GA (000) |
1,341 |
1,367 |
1,395 |
1,423 |
1,451 |
Percentage with 20/400 or worse visual acuity |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
Percentage meeting all Prima eligibility criteria |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
GA-AMD patients meeting all Prima eligibility criteria (000) |
60.3 |
61.5 |
62.8 |
64.0 |
65.3 |
Prima unit sales in US |
- |
215 |
889 |
2,010 |
3,343 |
Average revenue per treatment ($) |
N/A |
112,000 |
113,558 |
115,784 |
118,048 |
Total US revenue ($000) for PRIMA-AMD |
- |
24,080 |
100,985 |
232,744 |
394,680 |
Assumed $/€ rate |
1.13 |
1.13 |
1.13 |
1.13 |
1.13 |
Worldwide total revenue (€000) |
45,496 |
131,006 |
315,857 |
554,202 |
800,678 |
Source: Edison Investment Research
Pixium had an H121 net cash position of €0.65m (€10.13m in gross cash and €9.48m gross debt), excluding €1.1m in lease liabilities. The company raised €8m (€7.376m net) through a capital increase in July 2021, resulting in the issuance of 8.097m shares and 4.0486m warrants, as well as converting c €1.1m of its European Select Growth Opportunities Fund (ESGO) convertible financing debt into equity. Pixium reported a 30 September 2021 gross cash position of €16.9m. Given the reduction in ESGO debt since H121 described above, we estimate Q321 gross debt of c €8.4m and hence we estimate Q321 net cash of €8.5m.
As PRIMAvera timelines have been extended, we have pushed back some of our R&D expense forecasts, leading to lower R&D spending in FY22 than previously expected (€7.2m vs €10.4m). We have also pushed back our anticipated start time of a separate US Prima pivotal study from FY22 into FY23. Our FY23 R&D cost estimates are slightly lowered (to €9.4m from €9.8m previously) as cost reductions from the timing change of the US pivotal study offset the effects of continued PRIMAvera activity through FY23. Our estimated 2021 net operating cash burn rate of €11.7m is unchanged, but we now expect a 2022 operating cash burn rate of €8.0m (vs €11.2m previously).
However, given the additional time it will take for Prima to reach commercialisation, we have also increased our projected total financing need by €15m. We now expect Pixium will raise €44.4m (modelled as illustrative debt) by year-end 2025 (up from €29.4m by year-end 2023), to complete the PRIMAvera study and all EU-related regulatory and preparatory commercial activities to bring Prima to commercial launch.
Valuation
Our valuation for Pixium Vision uses an rNPV approach, employing a 12.5% cost of capital, based on the Prima opportunity in GA-AMD. We continue to apply a 25% probability of success estimate for Prima in Europe and a 20% probability in the US market.
Exhibit 2: Pixium Vision rNPV assumptions
Product contribution |
Indication |
Status |
NPV |
Probability of success |
rNPV |
rNPV/ |
Launch year |
Peak sales (€m) in 2030 |
|
Prima (net of R&D and SG&A costs) in EU market |
Age-related macular degeneration with geographic atrophy |
Pivotal study |
540.6 |
25.00% |
121.8 |
2.08 |
H125 |
474 |
|
Prima (net of R&D and SG&A costs) in US market |
Age-related macular degeneration with geographic atrophy |
Human feasibility trials |
394.9 |
20.00% |
81.0 |
1.39 |
H226 |
477 |
|
Net capex, NWC & taxes (global) |
(354.3) |
(87.7) |
(1.50) |
||||||
Total |
581.2 |
115.1 |
1.97 |
||||||
Net cash (Q321e) |
8.5 |
8.5 |
0.15 |
||||||
Total equity value |
589.7 |
123.6 |
2.11 |
||||||
Basic shares outstanding (000) |
58,490 |
||||||||
Source: Edison Investment Research
After adjusting for forex and our new timing assumptions, we obtain a pipeline rNPV of €115.1m (vs €134.2m previously). After adding €8.5m in estimated Q321 net cash, we obtain an equity value of €123.6m, or €2.11 per basic share (vs €2.45 previously). Assuming full exercise of the July 2021 warrants, our fully diluted equity valuation would be €2.06 per share (versus €2.37 previously).
Below we provide a sensitivity analysis demonstrating how our per basic share valuation would be affected by using different Prima pricing and probability of success assumptions (for Europe).
Exhibit 3: Pixium Vision per-share equity value (€) analysis based on European net Prima pricing versus probability of success in Europe
70,000 |
75,000 |
80,000 |
85,000 |
90,000 |
|
15.0% |
1.01 |
1.11 |
1.20 |
1.30 |
1.39 |
20.0% |
1.40 |
1.53 |
1.66 |
1.78 |
1.91 |
25.0% |
1.80 |
1.96 |
2.11 |
2.27 |
2.43 |
30.0% |
2.20 |
2.39 |
2.57 |
2.76 |
2.95 |
35.0% |
2.60 |
2.82 |
3.04 |
3.26 |
3.48 |
Source: Edison Investment Research. Note: Left-hand column represents European probability of success and top row represents European net Prima pricing at launch (€).
Exhibit 4: Financial summary
€’000s |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
1,598 |
1,782 |
2,092 |
2,601 |
1,600 |
800 |
Cost of Sales |
(41) |
0 |
0 |
0 |
0 |
0 |
||
General & Administrative |
(2,019) |
(3,572) |
(4,017) |
(4,785) |
(4,000) |
(5,000) |
||
Research & Development |
(5,297) |
(6,563) |
(5,711) |
(7,092) |
(7,200) |
(9,400) |
||
EBITDA |
|
|
(5,758) |
(8,352) |
(7,636) |
(9,276) |
(9,600) |
(13,600) |
Depreciation |
(677) |
(448) |
(366) |
(443) |
(447) |
(338) |
||
Amortization |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit (before exceptionals) |
|
(6,435) |
(8,801) |
(8,003) |
(9,719) |
(13,247) |
(10,047) |
|
Exceptionals |
(5,859) |
(69) |
(448) |
(624) |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(12,294) |
(8,870) |
(8,450) |
(10,343) |
(10,047) |
(13,938) |
||
Net Interest |
(1,277) |
(1,006) |
(700) |
(1,043) |
(990) |
(1,996) |
||
Profit Before Tax (norm) |
|
|
(7,712) |
(9,806) |
(8,703) |
(10,762) |
(11,037) |
(15,935) |
Profit Before Tax (FRS 3) |
|
|
(13,571) |
(9,876) |
(9,150) |
(11,386) |
(11,037) |
(15,935) |
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax and minority interests (norm) |
(7,712) |
(9,806) |
(8,703) |
(10,762) |
(14,252) |
(11,037) |
||
Profit After Tax and minority interests (FRS 3) |
(13,571) |
(9,876) |
(9,150) |
(11,386) |
(14,252) |
(16,593) |
||
Average Number of Shares Outstanding (m) |
18.5 |
22.3 |
34.0 |
48.1 |
58.5 |
58.5 |
||
EPS - normalised (€) |
|
|
(0.42) |
(0.44) |
(0.26) |
(0.22) |
(0.19) |
(0.27) |
EPS - normalised and fully diluted (€) |
|
|
(0.42) |
(0.44) |
(0.26) |
(0.22) |
(0.19) |
(0.27) |
EPS - (IFRS) (€) |
|
|
(0.73) |
(0.44) |
(0.27) |
(0.24) |
(0.19) |
(0.27) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
3,666 |
4,507 |
3,411 |
2,898 |
2,495 |
2,176 |
Intangible Assets |
2,623 |
2,361 |
1,727 |
1,534 |
1,534 |
1,534 |
||
Tangible Assets |
1,042 |
2,145 |
1,684 |
1,364 |
961 |
643 |
||
Current Assets |
|
|
17,756 |
9,107 |
12,721 |
15,260 |
19,751 |
13,155 |
Short-term investments |
0 |
0 |
0 |
0 |
0 |
0 |
||
Cash |
15,629 |
6,792 |
10,566 |
11,929 |
16,420 |
9,911 |
||
Other |
2,126 |
2,316 |
2,155 |
3,332 |
3,332 |
3,244 |
||
Current Liabilities |
|
|
(2,044) |
(2,880) |
(3,795) |
(4,946) |
(7,246) |
(4,061) |
Creditors |
(2,044) |
(2,880) |
(3,260) |
(2,553) |
(4,853) |
(1,668) |
||
Short term borrowings |
0 |
0 |
(536) |
(2,394) |
(2,394) |
(2,394) |
||
Long Term Liabilities |
|
|
(8,023) |
(7,033) |
(7,851) |
(7,008) |
(19,508) |
(31,382) |
Long term borrowings |
(7,870) |
(5,787) |
(6,695) |
(5,989) |
(18,489) |
(30,363) |
||
Other long-term liabilities |
(153) |
(1,246) |
(1,157) |
(1,019) |
(1,019) |
(1,019) |
||
Net Assets |
|
|
11,355 |
3,700 |
4,485 |
6,204 |
(4,509) |
(20,112) |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
(6,174) |
(7,282) |
(6,206) |
(10,627) |
(6,975) |
(16,366) |
Net Interest |
(1,277) |
(1,006) |
(700) |
(1,043) |
(990) |
(1,996) |
||
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Operating Cash Flow |
(7,450) |
(8,288) |
(6,906) |
(11,670) |
(7,965) |
(18,363) |
||
Capex |
(31) |
(34) |
(82) |
(57) |
(44) |
(20) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Financing |
14,068 |
2,034 |
9,055 |
14,324 |
0 |
0 |
||
Net Cash Flow |
6,587 |
(6,288) |
2,068 |
2,597 |
(8,009) |
(18,383) |
||
Opening net debt/(cash) |
|
|
(1,401) |
(7,760) |
(1,004) |
(3,336) |
(3,546) |
4,463 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
(228) |
(468) |
264 |
(2,387) |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(7,760) |
(1,004) |
(3,336) |
(3,546) |
4,463 |
22,846 |
Lease debt |
N/A |
1,346 |
1,258 |
1,141 |
1,141 |
1,141 |
||
Closing net debt/(cash) inclusive of IFRS 16 lease debt |
(7,760) |
342 |
(2,078) |
(2,405) |
8,819 |
27,860 |
||
Source: Company reports, Edison Investment Research
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