Promising dendritic cell data in AML

Medigene 4 January 2019 Update
Download PDF

Medigene

Promising dendritic cell data in AML

Data update

Pharma & biotech

4 January 2019

Price

€7.68

Market cap

€189m

€/$1.14

Net cash (€m) at 30 September 2018 (including time deposits)

76.3

Shares in issue

24.6m

Free float

80.3

Code

MDG1

Primary exchange

Xetra

Secondary exchange

Frankfurt

Share price performance

%

1m

3m

12m

Abs

(20.9)

(37.1)

(40.7)

Rel (local)

(13.0)

(25.8)

(26.2)

52-week high/low

€18.8

€7.3

Business description

Medigene is a German biotech company with complementary technology platforms in cancer immunotherapy. Its dendritic cell vaccines and T-cell receptors (TCRs) are both in Phase I/II clinical studies.

Next events

FY18 results

Spring 2019

MDG1011 initial clinical data

2019

DC vaccine full clinical data

End 2019

Analyst

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Medigene is a research client of Edison Investment Research Limited

Medigene has reported top-line interim data from its Phase I/II clinical trial testing its dendritic cell (DC) vaccine in acute myeloid leukaemia (AML) patients (n=20) who were in complete remission. After a 12-month treatment period, overall survival was 89% (n=18/20) and progression-free survival was 60% (n=12/20). These early data are comparable to those of patients treated with allogeneic stem cell transplants. However, relapses are common in AML and long-term data are needed to determine the sustainability of the responses. We have increased our probability of success for the DC vaccine trial to 30% from 25% previously, in addition to rolling forward our model and updating for FX. We now value Medigene at €470m (€19.16/share) vs €457m (€18.59/share) previously.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/16

9.7

(13.4)

(0.66)

0.0

N/A

N/A

12/17

11.4

(12.4)

(0.60)

0.0

N/A

N/A

12/18e

10.4

(16.3)

(0.70)

0.0

N/A

N/A

12/19e

11.0

(17.1)

(0.70)

0.0

N/A

N/A

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

Interim DC data highlight potential

20 patients were treated with Medigene’s autologous (made from the patient’s own cells) DC vaccine. While early, the data from Medigene’s TCR vaccine after the 12-month treatment period are promising. Patients had AML that was positive for the Wilms Tumour-1 (WT-1) antigen in addition to with/without PRAME positivity and were treated monthly (with a higher frequency in the first six weeks) with the DC vaccine that expressed these antigens. To be enrolled in the trial, patients had to have morphologic complete remission (CR) or complete remission with incomplete hematologic recovery (CRi) after initial therapy. While the majority of patients who are diagnosed with AML will go into CR/CRi following initial therapy, most patients will relapse within six months without further treatment. Stem cell transplant remains the gold standard for AML patients in remission. However, many patients are ineligible and are left with less effective maintenance chemotherapy treatment. No treatment related serious adverse events (AEs) were recorded.

MDG1011 TCR trial: Initial data in 2019

Screening patients is ongoing in Medigene’s first TCR trial and it has manufactured the first MDG1011 TCR therapy. Although strict enrolment criteria (eg PRAME+ and HLA-A*02:01+) mean that only 10–20% of potential patients are eligible for treatment, we continue to forecast initial Phase I data in 2019.

Valuation: €470m (€19.16/share)

We value Medigene at €470m (€19.16/share) vs €457m (€18.59/share) previously. We have increased our probability of success for the DC vaccine trial to 30% from 25% previously, in addition to rolling forward our model and updating for FX. Our valuation is based on an rNPV of its TCR, DC and legacy assets in addition to deal metrics for the bluebird bio partnership and legacy asset, Veregen. For more detail on our valuation, please see our outlook note, TCR enters the clinic.

Exhibit 1: Financial summary

€'000s

2016

2017

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

9,749

11,375

10,409

11,018

of which: Veregen revenues (royalties/milestones/supply)

3,048

2,790

1,433

1,582

R&D partnering (SynCore/Falk Pharma/grants)

3,155

0

0

0

Non-cash income (Eligard)

2,493

3,699

3,699

3,699

Bluebird bio partnership

1,053

4,886

5,278

5,738

Cost of sales

(1,402)

(1,621)

(553)

(613)

Gross profit

8,347

9,754

9,856

10,405

Selling, general & administrative spending

(10,025)

(8,266)

(7,186)

(7,395)

R&D expenditure

(11,538)

(14,877)

(20,084)

(21,691)

Other operating spending

0

0

0

0

Operating profit

(8,974)

(13,389)

(17,414)

(18,680)

Goodwill & intangible amortisation

(525)

(524)

(523)

(522)

Exceptionals

4,242

0

0

0

Share-based payment

0

0

0

0

EBITDA

 

 

(12,371)

(12,122)

(16,666)

(17,933)

Operating Profit (before amort. and except.)

 

 

(12,691)

(12,865)

(16,891)

(18,158)

Net interest

(1,009)

(1,434)

(691)

(478)

Other (forex gains/losses; associate profit/loss)

263

1,884

1,278

1,546

Profit Before Tax (norm)

 

 

(13,437)

(12,415)

(16,304)

(17,090)

Profit before tax (reported)

 

 

(9,720)

(12,939)

(16,827)

(17,612)

Tax

228

(634)

(101)

(101)

Profit/(loss) from discontinued operations

0

0

0

0

Profit after tax (norm)

(13,209)

(13,049)

(16,405)

(17,191)

Profit after tax (reported)

(9,492)

(13,573)

(16,928)

(17,713)

Average number of shares outstanding (m)

20.0

21.6

23.4

24.6

EPS - normalised (c)

 

 

(66.20)

(60.42)

(70.03)

(70.01)

EPS - Reported (€)

 

 

(0.48)

(0.63)

(0.72)

(0.72)

Dividend per share (c)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed assets

 

 

47,742

48,595

47,460

47,357

Intangible assets & goodwill

35,767

36,292

35,769

35,247

Tangible assets

3,323

4,329

4,717

5,136

Other non-current assets

8,652

7,974

6,974

6,974

Current assets

 

 

63,973

63,342

78,717

58,829

Stocks

7,866

7,724

7,724

7,724

Debtors

1,175

1,699

680

680

Cash

52,630

51,724*

68,119*

48,230*

Other

2,302

2,195

2,195

2,195

Current liabilities

 

 

(11,966)

(9,808)

(8,699)

(8,699)

Trade accounts payable

(973)

(725)

(798)

(798)

Short-term borrowings

0

0

0

0

Deferred income

(3,575)

(3,575)

(3,495)

(3,495)

Other

(7,418)

(5,508)

(4,406)

(4,406)

Long-term liabilities

 

 

(21,157)

(15,962)

(20,379)

(17,042)

Pension provisions

(408)

(405)

(405)

(405)

Long-term borrowings

0

0

0

0

Other liabilities (Deferred taxes; Trianta milestones)

(2,395)

(3,672)

(3,672)

(3,672)

Deferred revenues (Eligard non-cash income & bluebird bio)

(18,354)

(11,885)

(16,302)

(12,965)

Net assets

 

 

78,592

86,167

97,099

80,446

CASH FLOW

Operating cash flow

 

 

(3,611)

(20,729)

(15,987)

(19,465)

Net interest

(45)

(45)

109

322

Tax

(102)

(75)

(101)

(101)

Capex

(1,677)

(1,533)

(613)

(644)

Expenditure on intangibles

0

0

0

0

Acquisitions/disposals

10,537

480

1,242

0

Equity financing

(77)

19,329

30,078

0

Other

846

1,667

1,667

0

Net cash flow

5,871

(906)

16,395

(19,888)

Opening net debt/(cash)

 

 

(46,759)

(52,630)

(51,724)

(68,119)

HP finance leases initiated

0

0

0

0

Other (foreign exchanges differences)

0

0

0

0

Closing net debt/(cash)

 

 

(52,630)

(51,724)

(68,119)

(48,230)

Source: Company accounts, Edison Investment Research. Note: *Cash consists of cash in addition to both long- and short-term time deposits.

General disclaimer and copyright

This report has been commissioned by Medigene and prepared and issued by Edison, in consideration of a fee payable by Medigene. 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 Edison analyst 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

295 Madison Avenue, 18th Floor

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

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 Medigene and prepared and issued by Edison, in consideration of a fee payable by Medigene. 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 Edison analyst 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

295 Madison Avenue, 18th Floor

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues