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Progressing towards key inflection points

BerGenBio 16 December 2020 Update
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BerGenBio

Progressing towards key inflection points

ASH data

Pharma & biotech

16 December 2020

Price

NOK36.0

Market cap

NOK3,141m

NOK9.57/US$

Net cash (NOKm) at 30 September 2020

777.9

Shares in issue

87.3m

Free float

61%

Code

BGBIO

Primary exchange

Oslo

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

21.6

4.2

89.9

Rel (local)

15.9

(3.7)

96.7

52-week high/low

NOK46.1

NOK11.7

Business description

BerGenBio is a clinical stage biopharmaceutical company developing innovative drugs for aggressive diseases, including immune-evasive, drug-resistant and metastatic cancers. It focuses on AXL inhibitors bemcentinib (small molecule) and tilvestamab (mAb).

Next events

NSCLC data bemcentinib plus Keytruda at WCLC

28–29 Jan 2021

ACCORD-2 data in COVID-19

H121

Bemcentinib plus LDAC Phase III registrational study in relapsed AML

2021

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Dr Jonas Peciulis

+44 (0)20 3077 5728

Dr John Priestner

+44 (0)20 3077 5700

BerGenBio is a research client of Edison Investment Research Limited

BerGenBio has presented two positive datasets for its lead asset bemcentinib in acute myeloid leukaemia (AML) and myelodysplastic syndromes (MDS) at ASH 2020. Following these data, we anticipate a registrational Phase III study of bemcentinib plus low-dose cytarabine (LDAC) in relapsed elderly AML patients to start in 2021. We still forecast the NDA submission for this indication in 2023 (FDA fast-track has been granted). Bemcentinib is an oral, first-in-class, highly selective AXL tyrosine kinase inhibitor in Phase II development for a range of cancers and could be the first selective AXL inhibitor to market. Data from the Phase II study in second-line NSCLC in combination with Keytruda are expected at WCLC (for details see our initiation report, Bemcentinib leading the AXL charge). We value BerGenBio at NOK59.1 per share.

Year end

Revenue (NOKm)

PBT*
(NOKm)

EPS*
(NOK)

DPS
(NOK)

P/E
(x)

Yield
(%)

12/18

2.3

(191.7)

(3.60)

0.0

N/A

N/A

12/19

8.9

(199.3)

(3.43)

0.0

N/A

N/A

12/20e

0.0

(249.1)

(3.09)

0.0

N/A

N/A

12/21e

0.0

(300.9)

(3.45)

0.0

N/A

N/A

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

Registrational Phase III AML study in sight

Interim Phase II (n=11) data presented at ASH 2020 for bemcentinib in combination with LDAC showed promising efficacy in elderly relapsed AML patients (cohort B2/B5) unfit for intensive chemotherapy. The combination achieved an overall response rate (ORR) of 45% with 36% of patients achieving durable complete remission (CR/CRi) and a disease control rate (DCR) of 73%. This is a significant improvement on LDAC monotherapy and could lead to a shift in the treatment paradigm for this growing unmet need. Notably, the AXL status of patients was not reported and these high response rates could negate the need for selecting patients with high AXL expression. The combination was safe and well tolerated.

BERGAMO monotherapy study hits primary endpoint

In August, the investigator-initiated Phase II BERGAMO study of bemcentinib monotherapy in AML and high-risk MDS patients (n=46) met its primary endpoint of ORR. This trial recruited patients who had failed (r/r) first-line treatment with HMAs, which represents an unmet need. Data presented at ASH 2020 highlight meaningful clinical efficacy in the MDS population (n=22) with 18% of patients achieving CR/CRi (four patients) and a DCR of 36%. The mDOR was already longer than the current mOS for this patient population. AXL status again proved to be predictive of responders. This population is less frail and has a higher likelihood of achieving an immune response and meaningful clinical benefit, so these results warrant further development and additional translational analyses are ongoing.

Valuation: NOK5.16bn or NOK59.1 per share

We continue to value BerGenBio at NOK5.16bn or NOK59.1 per share based on a risk-adjusted NPV analysis. Our forecasts remain unchanged. The key drivers are bemcentinib in second-line NSCLC (peak sales $1.2bn, NOK40.7/share) and AML (peak sales $588m, NOK13.3/share) plus COVID-19 opportunity (NOK5.9/share).

Exhibit 1: Financial summary

NOK'000s

2018

2019

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Operating revenues

2,335

8,900

0

0

Licensing revenues

2,335

8,900

0

0

Other revenues

0

0

0

0

Total operating expenses

(196,874)

(213,274)

(260,665)

(305,224)

Other operating expenses (R&D)

(133,699)

(141,630)

(164,325)

(205,406)

EBITDA (reported)

(194,335)

(203,589)

(259,720)

(304,844)

Depreciation and amortisation

 

 

(204)

(785)

(945)

(379)

Operating income (reported)

 

 

(194,539)

(204,374)

(260,665)

(305,224)

Operating margin %

n/a

n/a

n/a

n/a

Finance income/(expense) excl lease expense

4,858

11,530

22,015

7,344

Exceptionals and adjustments

0

0

0

0

Profit before tax (reported)

(191,746)

(199,278)

(249,052)

(300,930)

Income tax expense

0

0

0

0

Net income (reported)

 

 

(191,746)

(199,278)

(249,052)

(300,930)

Average Number of Shares Outstanding (m)

53.3

58.0

80.6

87.3

EPS - normalised (NOK)

 

 

(3.6)

(3.4)

(3.1)

(3.5)

Dividend per share (NOK)

0.0

0.0

0.0

0.0

BALANCE SHEET

Property, plant and equipment

 

 

581

974

429

450

Intangible assets

0

0

0

0

Total non-current assets

581

974

429

450

Cash and equivalents

 

 

360,414

253,586

716,292

418,494

Other current assets

17,831

15,818

16,825

16,321

Total current assets

378,245

269,404

733,117

434,815

Total non-current liabilities

 

 

0

0

0

0

Trade and other payables

 

 

23,939

26,746

38,814

40,863

Other current liabilities

12,875

21,803

22,393

22,993

Provisions

4,732

2,074

2,074

2,074

Total current liabilities

41,546

50,623

63,281

65,930

Equity attributable to company

337,280

219,754

670,264

369,334

CASH FLOW

Operating profit/(loss)

 

 

(191,746)

(199,278)

(249,052)

(300,930)

Depreciation and amortisation

204

785

945

379

Share based payments

1,678

3,842

0

0

Other adjustments

0

0

0

0

Movements in working capital

1,446

13,164

12,244

3,745

Interest paid/received

5,847

11,151

13,251

3,242

Income taxes paid

0

0

0

0

Cash from operations (CFO)

(186,706)

(184,145)

(235,863)

(296,805)

Capex

(228)

0

-400

-400

Acquisitions & disposals net

 

 

0

0

0

0

Other investing activities

0

0

0

0

Cash used in investing activities (CFIA)

(228)

0

(400)

(400)

Net proceeds from issue of shares

176,998

77,910

699,562

0

Movements in debt

0

0

0

0

Other financing activities

0

(593)

(593)

(593)

Cash from financing activities (CFF)

176,998

77,317

698,969

(593)

Cash and equivalents at beginning of period

370,350

360,414

253,586

716,292

Increase/(decrease) in cash and equivalents

(9,936)

(106,828)

462,706

(297,798)

Cash and equivalents at end of period

360,414

253,586

716,292

418,494

Net (debt)/cash

 

 

360,414

253,586

716,292

418,494

Source: BerGenBio accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by BerGenBio and prepared and issued by Edison, in consideration of a fee payable by BerGenBio. 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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

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

1185 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 BerGenBio and prepared and issued by Edison, in consideration of a fee payable by BerGenBio. 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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

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

1185 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

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