Progress in heart failure and controlled release

Quantum Genomics 13 June 2019 Update
Download PDF

Quantum Genomics

Progress in heart failure and controlled release

Development update

Pharma & biotech

13 June 2019

Price

€4.70

Market cap

€78m

Net cash (€m) at 31 December 2018

14.8

Shares in issue

16.6m

Free float

75%

Code

ALQGC

Primary exchange

Euronext Paris

Secondary exchange

OTCQX

Share price performance

%

1m

3m

12m

Abs

(5.1)

(11.2)

125.4

Rel (local)

(5.7)

(12.6)

131.8

52-week high/low

€7.25

€1.70

Business description

Quantum Genomics is a biopharmaceutical company developing firibastat, a brain aminopeptidase A inhibitor for the treatment of hypertension and heart failure. Its mechanism is implicated in the 25% of patients resistant to treatment. The Phase IIb study in hypertension was very positive and a Phase IIb in heart failure was recently initiated.

Next events

Start of Phase III in hypertension

H219

Analysts

Maxim Jacobs

+1 646 653 7027

Nathaniel Calloway

+1 646 653 7036

Quantum Genomics is a research client of Edison Investment Research Limited

Quantum Genomics recently announced that it has enrolled the first patient in the 294-patient Phase IIb QUORUM study of firibastat in heart failure. Separately, following a successful pharmacokinetic study, it has have selected a controlled release version of firibastat that will allow for once-a-day dosing (though the QUORUM study will still use the twice-a-day formulation). Successfully developing a once daily formulation should make the program more attractive to partners. As a reminder, the company is currently in discussions with a number of potential partners for the firibastat programme following the strong NEW-HOPE data.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/17

0.0

(10.3)

(0.93)

0.0

N/A

N/A

12/18

0.0

(13.6)

(0.94)

0.0

N/A

N/A

12/19e

0.0

(17.6)

(0.88)

0.0

N/A

N/A

12/20e

0.0

(23.1)

(1.12)

0.0

N/A

N/A

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

QUORUM study in heart failure initiated

The QUORUM study will enrol 294 subjects from 40 centres in the US and Europe within 72 hours of suffering acute myocardial infarction (AMI), commonly referred to as a heart attack. The primary endpoint will be the change from baseline in the left ventricular ejection fraction (LVEF) after a three-month treatment. Patient recruitment has now initiated, with results in H220.

Controlled-release formulation successful

Quantum has developed a controlled-release formulation of firibastat that would allow it to be administered once a day (currently twice a day). In a 12-subject pharmacokinetic study, the once daily controlled release formulation had similar drug exposure levels to the twice daily version. Besides being more convenient for patients, the once daily formulation is more attractive to partners.

Phase III hypertension study coming in H219

The company is preparing to follow up the positive NEW-HOPE data of firibastat in patients with hypertension with a Phase III trial, which is expected to begin in H219. As a reminder, in the 256-patient NEW-HOPE trial, patients saw a statistically significant reduction from baseline (p<0.0001) in systolic automated office blood pressure (AOBP) of 9.7mmHg.

Valuation: €860m or €51.76 per share

We have slightly adjusted our valuation of Quantum Genomics. While our total valuation of the company of €860m has not changed, our per-share valuation has declined from €52.43 per share to €51.76 per share, due to an increase in total shares outstanding. Quantum had €14.8m in cash at end 2018 and has utilized an additional €2.6m of its equity line since then (as of the most recent disclosure from 30 April 2019).

Progressing on schedule

Quantum Genomics announced that it has enrolled the first patient in its Phase IIb trial in heart failure. The QUORUM study will assess the safety and efficacy of Quantum’s drug firibastat compared to ramipril, an angiotensin-converting enzyme (ACE) inhibitor, in 294 subjects enrolled within 72 hours of suffering AMI, who were treated with primary percutaneous coronary intervention and have reduced LVEF. There will be three arms in this randomized, double-blind, active-controlled study with patients receiving either 100mg of firibastat twice a day, 500mg of firibastat twice a day or 5mg of ramipril twice a day. The primary endpoint will be the change from baseline in LVEF after a three-month treatment. Secondary endpoints will include cardiac events, functional status and change in heart failure biomarkers. The subjects will be recruited from 40 centres in the US and Europe, and trial results are expected in H220.

The company is also preparing to follow up the positive NEW-HOPE data of firibastat in patients with hypertension with a Phase III trial, which is expected to begin in H219. As a reminder, the NEW-HOPE trial completed enrolment faster than expected, enrolling 256 patients (254 included in the intent-to-treat analysis) in just 10 months. NEW-HOPE focused enrolment on hypertensive overweight (BMI 25–45kg/m2) patients (65% of patients were obese), with a primary endpoint of change from baseline in systolic AOBP at week eight. Patients saw a statistically significant reduction from baseline (p<0.0001) in AOBP of 9.7mmHg.

The results are in the vicinity of many of the standards of care (see Exhibit 1), but with a differentiated mechanism, which could be especially helpful in treating those currently not well controlled. Needless to say, there are a number of potential partners interested in this programme and discussions with them are ongoing, according to the company.

Exhibit 1: Competitor efficacy table

Drug

Class

Company (originator)

Peak sales (all indications)

Duration

Reduction in systolic blood pressure (mmHg)

Firibastat

BAPAI

Quantum Genomics

N/A

8 weeks

9.7

Diovan (valsartan)

ARB

Novartis

$6.0bn (2010)

8 weeks

5.6–9

Vasotec (enalapril)

ACE inhibitor

Merck

$2.5bn (1996)

4 weeks

10–14

Norvasc (amlodipine)

Calcium channel blocker

Pfizer

$4.9bn (2006)

8 weeks

12.1–16

Source: Quantum Genomics, FDA, company filings, Liu et al, (2010) Tolerability and effectiveness of (S)-amlodipine compared with racemic amlodipine in hypertension; Current therapeutic research, clinical and experimental 71, 1-29; Ruilope et al. (2010) Blood-pressure reduction with LCZ696, a novel dual-acting inhibitor of the angiotensin II receptor and neprilysin, Lancet; 375: 1255-66.


Valuation

We have slightly adjusted our valuation of Quantum Genomics. While our total valuation of the company of €860m has not changed, our per-share valuation has declined from €52.43 per share to €51.76 per share, due to an increase in total shares outstanding.

Exhibit 2: Quantum Genomics valuation

Product

Main indication

Local

Status

Prob. of success

Launch year

Peak sales ($m)

Patent protection

rNPV

Firibastat (QGC001)

Hypertension

US

Phase Il

50%

2023

$1,110

2031

€441.40

Firibastat (QGC001)

Hypertension

Europe

Phase Il

50%

2023

$959

2031

€374.49

Firibastat (QGC001)

Development costs

 

 

 

 

(€140.35)

Firibastat (QGC001)

Heart failure

US

Phase IIb

20%

2023

$574

2031

€112.71

Firibastat (QGC001)

Heart failure

Europe

Phase IIb

20%

2023

$687

2031

€133.73

Firibastat (QGC001)

Development costs

(€76.53)

Total

 

 

 

 

 

 

 

€845.44

Net cash (31 December 2018) (€m)

€14.78

Total firm value (€m)

€860.22

Total shares (30 April 2019) (m)

16.62

Value per basic share (€m)

€51.76

Source: Edison Investment Research

Financials

Quantum ended 2018 with €14.8m in cash and investments. In March 2018, it announced an equity line of credit with Kepler Cheuvreux, and has approximately €6.5m of the original €24m line remaining after drawing down an additional €2.6m after the end of the year (as of 30 April). The company has stated that it believes the equity line will fund its clinical trials through to the end of 2019, although we expect it to raise €10m in additional capital (either through a partnership or equity raise) by the end of the year (but far more if through a partnership).

Exhibit 3: Financial summary

€000s

2017

2018

2019e

2020e

Year end 31 December

PCG

PCG

PCG

PCG

PROFIT & LOSS

Revenue

 

 

0

0

0

0

Cost of Sales

0

0

0

0

Gross Profit

0

0

0

0

EBITDA

 

 

(10,292)

(13,598)

(16,792)

(20,879)

Operating Profit (before amort. and except.)

(10,292)

(13,598)

(16,792)

(20,879)

Intangible Amortisation

0

0

0

0

Other

0

0

0

0

Exceptionals

0

0

0

0

Operating Profit

(10,292)

(13,598)

(16,792)

(20,879)

Net Interest

0

0

(801)

(2,201)

Other

(239)

150

0

0

Profit Before Tax (norm)

 

 

(10,292)

(13,598)

(17,593)

(23,080)

Profit Before Tax (FRS 3)

 

 

(10,531)

(13,448)

(17,593)

(23,080)

Tax

1,150

1,458

2,287

3,000

Deferred tax

0

0

0

0

Profit After Tax (norm)

(9,142)

(12,140)

(15,306)

(20,080)

Profit After Tax (FRS 3)

(9,381)

(11,990)

(15,306)

(20,080)

Average Number of Shares Outstanding (m)

9.9

12.8

17.3

18.0

EPS - normalised (c)

 

 

(93.45)

(93.94)

(88.49)

(111.62)

EPS - FRS 3 (€)

 

 

(0.95)

(0.94)

(0.88)

(1.12)

Dividend per share (c)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

439

626

636

644

Intangible Assets

91

0

0

0

Tangible Assets

52

24

34

42

Other

296

602

602

602

Current Assets

 

 

13,478

17,855

15,139

12,551

Stocks

189

422

422

422

Debtors

2,197

2,636

2,636

2,636

Cash

11,089

14,797

12,081

9,494

Other

3

0

0

0

Current Liabilities

 

 

(4,572)

(5,764)

(5,764)

(5,764)

Creditors

(4,571)

(5,762)

(5,762)

(5,762)

Short term borrowings

(1)

(2)

(2)

(2)

Long Term Liabilities

 

 

(474)

(849)

(10,849)

(28,349)

Long term borrowings

(19)

(12)

(10,012)

(27,512)

Other long term liabilities

(454)

(837)

(837)

(837)

Net Assets

 

 

8,871

11,868

(838)

(20,918)

CASH FLOW

Operating Cash Flow

 

 

(7,977)

(10,901)

(15,300)

(20,071)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

32

(16)

(16)

(16)

Acquisitions/disposals

0

0

0

0

Financing

7,733

15,071

2,600

0

Dividends

0

0

0

0

Other

104

(446)

0

0

Net Cash Flow

(108)

3,708

(12,716)

(20,087)

Opening net debt/(cash)

 

 

(11,179)

(11,069)

(14,783)

(2,067)

HP finance leases initiated

0

0

0

0

Exchange rate movements

0

0

0

0

Other

(2)

6

0

0

Closing net debt/(cash)

 

 

(11,069)

(14,783)

(2,067)

18,021

Source: Quantum Genomics accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Quantum Genomics and prepared and issued by Edison, in consideration of a fee payable by Quantum Genomics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Quantum Genomics and prepared and issued by Edison, in consideration of a fee payable by Quantum Genomics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues