Company profile - Brighter Actiste feature image - 16092019 - JPG

Q220 results

Brighter 29 September 2020 Update
Download PDF

Brighter

Q220 results

Financial update

Pharma & biotech

29 September 2020

Price

SEK3.39

Market cap

SEK737m

US$0.10/SEK

Net cash (SEKm) at 30 June 2020 + warrant exercise + offering

48.2

Shares in issue

217.3m

Free float

99.5%

Code

BRIG

Primary exchange

Nasdaq First North

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

13.2

(20.0)

(47.0)

Rel (local)

8.7

(29.2)

(54.7)

52-week high/low

SEK6.49

SEK2.29

Business description

Brighter is a Swedish healthtech company addressing common welfare challenges of modern society through a group of innovation companies. Its lead solution, Actiste, currently being commercialised, is aimed at helping people with diabetes adhere to care guidelines and achieve treatment goals by simplifying the everyday treatment and introducing a new layer of data-driven support.

Next events

Actiste commercial launch

2020

Analysts

Maxim Jacobs

+1 646 653 7027

Wiktoria O’Hare

+1 646 653 7028

Brighter is a research client of Edison Investment Research Limited

Brighter recently announced Q220 results. Not surprisingly, the COVID-19 pandemic has caused some commercialisation delays, especially with the registration of Actiste in the United Arab Emirates (UAE). However, as of May the service is commercially available in Sweden and the company is harvesting user insights that will help it improve the experience over time. Additionally, the company announced a partnership with the provincial government of West Java (population of c 50 million) in Indonesia for a pilot.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/18

1.1

(48.8)

(0.74)

0.0

N/A

N/A

12/19

3.3

(88.7)

(1.06)

0.0

N/A

N/A

12/20e

15.8

(180.0)

(0.87)

0.0

N/A

N/A

12/21e

93.0

(119.3)

(0.54)

0.0

N/A

N/A

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

Market approval status

The completion of registration in the UAE for Actiste has taken longer than originally anticipated partly due to delays related to coronavirus, as the regulatory authorities are working remotely and timelines going forward are uncertain. Registration is also under way in Malaysia, Singapore, Thailand, Indonesia and Saudi Arabia, and about to start in Kuwait, Oman and Bahrain.

Pilot project in Indonesia

In July, Brighter initiated a partnership with the West Java provincial government in Indonesia. West Java is the largest province in the country, with a population of around 50 million. As part of the collaboration, the company will deliver 100 Actiste subscriptions and support healthcare staff training in usage of the service.

A service that fits well with tele-medicine

The Actiste device is delivered as part of a subscription-based service that includes different levels of data sharing, continuous replenishment of everyday supplies delivered directly to the home and digital services designed to facilitate, improve and streamline the treatment. With many physicians’ offices closed and diabetics being especially high risk for coronavirus, this service seems especially attractive as more healthcare is done remotely.

Valuation: SEK1,252m or SEK5.76 per basic share

We have lowered our valuation from SEK1,282m or SEK6.44 per share, to SEK1,252m or SEK5.76 per share, mainly due to lower net cash, lower near-term sales estimates and higher expenses though these were partially offset by rolling forward our NPVs. The company has SEK23.5m in cash on hand at the end of Q220 and raised an additional SEK42.7m in September. We project Brighter will need to raise an additional SEK110m by the end of this year and SEK175m in 2021 (previously SEK100m and SEK140m, respectively).

Mid-year update

Market approval registration for Actiste is currently under way in the UAE, Malaysia, Singapore, Thailand, Indonesia and Saudi Arabia, and about to start in Kuwait, Oman and Bahrain. The primary commercial focus will be on the UAE and Indonesia, as well as Sweden where Actiste was commercially launched in May 2020. Upon market introduction, the company will conduct user experience pilot tests to optimise local adoption. Following the initial introductions, the company plans to extend its commercial efforts to the rest of the Gulf Cooperation Council (GCC) area and South-East Asia (Singapore, Thailand and Malaysia). Brighter is launching initially in the GCC as this area has an especially high level of unmet need in diabetes. The region has some of the highest rates of the disease in the world, ranging from 10.1% to 16.3% of the population on an age-adjusted basis and affecting millions of people.1 The disease is also typically more poorly controlled in this region than in other countries and an estimated 40–70% of worldwide disease-related foot amputations occur in GCC countries.1 This positions Actiste as an attractive solution to potentially increasing compliance and improving patient engagement with healthcare in these countries.

  IDF Diabetes Atlas, 9th Edition.

Exhibit 1: Adults aged 20–79 with diabetes in 2019 in target markets

Country

Age-adjusted prevalence
(%)

Prevalence of diabetes in adults aged 20–79 (‘000s)

GCC

UAE

16.3

1,223.4

Saudi Arabia

15.8

4,275.2

Kuwait

12.2

681.1

Oman

10.1

291.8

Qatar

15.6

347.0

Bahrain

15.6

202.7

South-East Asia

Indonesia

6.3

10,681.4

Thailand

7.0

4,284.9

Singapore

5.5

640.4

Malaysia

16.7

3,652.6

Europe

Sweden

4.8

521.2

South-East Asia is also an attractive market for Actiste with a large number of people with diabetes. In July, Brighter initiated a partnership with the West Java provincial government in Indonesia. West Java is the largest province in the country with a population of around 50 million. As part of the collaboration, the company will deliver 100 Actiste subscriptions and support healthcare staff training in usage of the service. This will provide the company valuable local feedback on the product and allow it to optimise the service for the region.

Valuation

We have lowered our valuation from SEK1,282m or SEK6.44 per share, to SEK1,252m or SEK5.76 per share, mainly due to lower net cash, lower near-term sales estimates and higher expenses though these were partially offset by rolling forward our NPVs.

Exhibit 2: Brighter valuation table

Program

Market

Prob. of success

Launch year

Upper tier launch pricing
($ per month)

Lower tier launch pricing
($ per month)

Peak revenue ($m)

Valuation (SEKm)

Actiste

Nordic region

30%

2020

131.3

71.6

5.5

25.4

Gulf Cooperation Council countries

30%

2020

112.5

61.4

45.7

178.3

South East Asia

30%

2020

93.8

51.1

54.7

254.0

EU

25%

2020

133.9

73.0

243.1

680.0

US

20%

2021

143.1

78.0

193.1

473.6

Unallocated costs

(407.7)

Total

1,203.6

Net cash (at 30 June 2020 + warrant exercise + offering) (SEKm)

48.2

Total firm value (SEKm)

1,251.8

Total shares (m)

217.3

Value per basic share (SEK)

5.76

Source: Edison Investment Research

Financials

The company reported sales of SEK2.1m in Q220, up from SEK1.7m in Q120 with the vast majority of sales coming from the Camanio segment. The companywide Q220 operating loss was SEK46.3m for the quarter, compared to a loss of SEK19.5m in Q219 as operating expenses increased in part due to the acquisitions of Pink Nectarine Health and Camanio in late 2019/early 2020. Following these results, we have lowered our 2020 revenue estimates to SEK15.8m from SEK24.5m and our 2021 revenue estimates to SEK93.0m from SEK133.8m as commercialisation has been progressing slower than anticipated. We have also increased our operating expense estimate by approximately SEK23m for both years due to a higher run rate. Our long-term sales estimates, however, have remained the same. As a reminder, the company's commercial strategy is to focus initially on the GCC, Sweden and South-East Asia, before pursuing sales in the potentially larger and more lucrative US and EU markets.

The company had SEK23.5m in cash on hand at the end of Q220. In September, Brighter raised an additional SEK21.7m through a warrant exercise (leading to the issuance of 10.9m shares) and an additional SEK21.0m through a directed share issue (leading to the issuance of 7.4m shares). At the end of the quarter, the company reported SEK7.3m in short-term debt and SEK10.7m in long-term debt. We project Brighter will need to raise an additional SEK110m by the end of this year and SEK175m in 2021 (previously SEK100m and SEK140m, respectively). The company management has stated that there is an equity based financing contract in place for funding routine operations for at least the next 12 months.

Exhibit 3: Financial summary

SEK'000s

2018

2019

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,052

3,284

15,768

93,039

Cost of Sales

0

(1,246)

(3,993)

(18,608)

Gross Profit

1,052

2,039

11,775

74,431

General and Administrative Expenses

(13,014)

(23,418)

(71,701)

(72,418)

Other Operating Expenses

(32,201)

(52,365)

(86,520)

(87,386)

EBITDA

 

 

(44,163)

(73,744)

(146,446)

(85,372)

Operating Profit (before amort. and except.)

 

 

(44,326)

(78,857)

(173,032)

(111,958)

Intangible Amortisation

0

0

0

0

Other

0

0

0

0

Exceptionals

0

0

0

0

Operating Profit

(44,326)

(78,857)

(173,032)

(111,958)

Net Interest

(4,476)

(9,875)

(6,929)

(7,345)

Other

(4,278)

(953)

0

0

Profit Before Tax (norm)

 

 

(48,802)

(88,732)

(179,961)

(119,303)

Profit Before Tax (FRS 3)

 

 

(53,080)

(89,685)

(179,961)

(119,303)

Tax

0

0

0

0

Deferred tax

(0)

(0)

(0)

(0)

Profit After Tax (norm)

(48,802)

(88,732)

(179,961)

(119,303)

Profit After Tax (FRS 3)

(53,080)

(89,685)

(179,961)

(119,303)

Average Number of Shares Outstanding (m)

71.7

84.7

206.9

221.7

EPS - normalised (ore)

 

 

(74.00)

(105.85)

(86.97)

(53.82)

EPS - FRS 3 (SEK)

 

 

(0.74)

(1.06)

(0.87)

(0.54)

Dividend per share (ore)

0.00

0.00

0.00

0.00

BALANCE SHEET

Fixed Assets

 

 

112,430

186,740

290,215

366,908

Intangible Assets

102,930

158,677

244,409

320,760

Tangible Assets

8,537

16,470

34,199

34,541

Other

964

11,593

11,607

11,607

Current Assets

 

 

58,186

68,925

148,179

138,953

Stocks

7,070

6,831

17,222

17,222

Debtors

40,358

44,396

82,364

82,364

Cash

9,031

9,340

37,411

28,185

Other

1,727

8,358

11,182

11,182

Current Liabilities

 

 

(63,698)

(46,308)

(37,412)

(61,733)

Creditors

(11,805)

(35,666)

(30,097)

(54,418)

Short term borrowings

(51,893)

(10,642)

(7,315)

(7,315)

Long Term Liabilities

 

 

0

(1,581)

(120,810)

(295,823)

Long term borrowings

0

(1,390)

(120,683)

(295,683)

Other long term liabilities

0

(191)

(127)

(140)

Net Assets

 

 

106,918

207,776

280,173

148,306

CASH FLOW

Operating Cash Flow

 

 

(68,249)

(93,902)

(190,895)

(94,969)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(29,986)

(40,125)

(88,760)

(89,256)

Acquisitions/disposals

0

0

0

0

Financing

34,655

150,532

244,018

0

Conversion of convertible debt instruments

43,065

0

0

0

Dividends

0

(494)

0

0

Other

(14,406)

(18,685)

(35,965)

0

Net Cash Flow

(34,921)

(2,673)

(71,601)

(184,225)

Opening net debt/(cash)

 

 

(1,580)

42,862

2,692

90,587

HP finance leases initiated

0

0

0

0

Exchange rate movements

0

0

0

0

Other

(9,521)

42,844

(16,294)

0

Closing net debt/(cash)

 

 

42,862

2,692

90,587

274,813

Source: Edison Investment Research, company accounts

General disclaimer and copyright

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

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

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

Share this with friends and colleagues