Progressing a broad clinical strategy

Celyad 30 May 2018 Update
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Celyad

Progressing a broad clinical strategy

Placing announcement

Pharma & biotech

30 May 2018

Price

€25.92

Market cap

€309m

$1.18/€

Cash (€m) at 31 December 2017

34

Shares in issue (at 23 May 2018)

11.94m

Free float (Edison estimate)

67%

Code

CYAD

Primary exchange

Euronext Brussels

Secondary exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

(13.5)

(20.2)

(32.4)

Rel (local)

(10.0)

(15.3)

(30.0)

52-week high/low

€54.1

€22.9

Business description

Celyad is developing an innovative natural killer receptor (NKR) CAR T-cell immune-oncology platform. Celyad has a leading position in CAR for AML and solid tumours and is exploring the use of NKR CAR with chemotherapy. It holds a key granted patent in allogeneic CAR technology.

Next events

Q218 update

Q318

ASCO reports

1–5 June

Analysts

Dr John Savin MBA

+44 (0)20 3077 5735

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Celyad is a research client of Edison Investment Research Limited

The placing has given Celyad a cash boost of €46.1m gross adding to the €34m on 31 December 2017. Celyad is designing a set of sophisticated clinical trials to expand understanding of its novel NKR CAR T-cell therapy. The THINK study, focused on AML and colorectal cancers, showed a near complete response (CR) in AML in Q417 plus two other AML responses and two colorectal stable disease cases. The highest THINK dose range should complete in H218. The SHRINK study, NKR CAR T-cells plus chemotherapy in metastatic colorectal cancer (mCRC), has dosed its first patient. The indicative value has been adjusted to €1040m, €85 per share.

Year
end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/16

8.52

(20.00)

(2.09)

0.0

N/A

N/A

12/17

3.54

(26.80)

(2.79)

0.0

N/A

N/A

12/18e

0.00

(27.25)

(2.43)

0.0

N/A

N/A

12/19e

0.00

(28.50)

(2.38)

0.0

N/A

N/A

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

2017 accounts with increased 2018 cash

Celyad recognised €26.27m of one-off items in the 2017 accounts. There were non-cash write-offs and government loans on the C-Cure heart project (net €1.93m) and the buy-back of some of NKR technology royalty obligations potentially due to Dartmouth College and Celdara (€24.34m, of which €13.28m was cash). This reduced non-current liabilities by about €14m. There was a payment of €3.5m from Novartis for a non-exclusive licence to the allogeneic patent. Management state that the May placing proceeds, €46.1m gross, could fund Celyad through H2 2020.

Clinical validity and revised programme

In 2017, Celyad found an acute myeloid leukaemia (AML) patient given three doses of 1x109 NKR CAR T-cells had a near CR with markedly reduced blast counts and, importantly, a strong recovery in normal blood cell levels that enabled a stem cell transplant. The case report is published. Celyad is completing the higher 3x109 cell doses in the THINK study with preferential recruitment of AML and colorectal patients. Celyad is also evaluating combination therapies in the mCRC SHRINK trial with CYAD-01 in combination with FOLFOX chemotherapy. The LINK study, is testing direct tumour injection to avoid the need for cell migration to the cancer site. A trial in allogeneic NKR CAR therapy could start if there is THINK efficacy seen.

Valuation: Revised and diluted to €84 per share

The valuation (fully revised 30 October 2017) is focused on AML at 25% probability and colorectal at 20%. The C-Cure €10m nominal value has now been removed. Cash flows have been adjusted in line with the 2017 annual report. This gives an adjusted indicative value of €1,040m (formerly €1,047m) given the weaker Euro US$ rate. The number of shares and ADRs in issue has increased from 9.9m to 11.94m so the indicative value per share is now €85 (formerly €103). Value progression depends on CYAD-01 patient responses plus further deals and progression of the allogenic CAR opportunity, now a fashionable area.

Exhibit 1: Financial summary

€000s

2016

2017

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

8,523

3,540

0

0

Cost of Sales

(53)

(515)

(500)

(500)

Gross Profit

8,470

3,025

(500)

(500)

EBITDA

 

 

(21,246)

(22,317)

(26,500)

(27,750)

Operating Profit (before amort. and except).

 

 

(22,006)

(23,283)

(27,500)

(28,750)

Intangible Amortisation

(756)

(748)

(750)

(750)

Other income and charges

0

(26,273)

0

0

Share-based payments

(2,847)

(2,569)

(2,600)

(2,600)

Operating Profit

(25,609)

(52,873)

(30,850)

(32,100)

Net Interest

1,997

(3,521)

250

250

Profit Before Tax (norm)

 

 

(20,009)

(26,804)

(27,250)

(28,500)

Profit Before Tax (FRS 3)

 

 

(23,612)

(56,394)

(30,600)

(31,850)

Tax

6

1

0

0

Profit After Tax (norm)

(20,003)

(26,803)

(27,250)

(28,500)

Profit After Tax (FRS 3)

(23,606)

(56,393)

(30,600)

(31,850)

Average Number of Shares Outstanding (m)

9.3

9.6

11.2

12.0

EPS - normalised (c)

 

 

(209)

(279)

(243)

(238)

EPS - (IFRS) (c)

 

 

(253)

(586)

(273)

(267)

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

 

 

53,440

41,232

40,492

39,752

Intangible Assets

49,566

36,508

35,768

35,028

Tangible Assets

3,563

3,290

3,290

3,290

Investments

311

1,434

1,434

1,434

Current Assets

 

 

85,366

36,393

50,659

22,149

Stocks

0

0

0

0

Debtors

1,359

233

233

233

Cash (cash plus deposits)

82,587

33,905

48,171

19,661

Other

1,420

2,255

2,255

2,255

Current Liabilities

 

 

(11,275)

(7,944)

(7,944)

(7,944)

Creditors

(9,960)

(7,509)

(7,509)

(7,509)

Deferred revenue

0

0

0

0

Walloon loans and bank loan

(1,315)

(435)

(435)

(435)

Long Term Liabilities

 

 

(36,646)

(22,146)

(22,146)

(22,146)

Loans (non-current) Bank and Walloon

(7,866)

(1,870)

(1,870)

(1,870)

Other long term liabilities

(28,780)

(20,276)

(20,276)

(20,276)

Net Assets

 

 

90,885

47,535

61,061

31,811

CASH FLOW

Operating Cash Flow

 

 

(26,695)

(46,027)

(26,514)

(27,471)

Net Interest

1,997

(3,521)

264

(29)

Tax

0

0

0

0

Capex

(1,782)

(858)

(1,010)

(1,010)

Acquisitions/disposals

(1,561)

0

0

0

Financing

0

625

46,140

0

Dividends

0

0

0

0

Other

3,109

1,099

(4,614)

0

Net Cash Flow

(24,932)

(48,682)

14,266

(28,510)

Opening net debt/(cash)

 

 

(96,131)

(73,406)

(31,600)

(45,866)

HP finance leases initiated

0

0

0

0

Loan and finance movements

2,207

6,876

(0)

0

Closing net debt/(cash)

 

 

(73,406)

(31,600)

(45,866)

(17,356)

Source: Edison Investment Research estimates, Celyad reports and announcements

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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

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

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