Q319 results highlight successful year to date

Medigene 14 November 2019 Update
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Medigene

Q319 results highlight successful year to date

Q319 results

Pharma & biotech

14 November 2019

Price

€5.58

Market cap

€137m

$1.11/€

Net cash (€m) at 30 June 2019 (including time deposits)

60.5

Shares in issue

24.6m

Free float

80.6%

Code

MDG1

Primary exchange

Frankfurt (Xetra)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.7)

(11.9)

(45.5)

Rel (local)

(11.8)

(21.8)

(52.7)

52-week high/low

€10.60

€5.55

Business description

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

Next events

DC vaccine full clinical data

Early 2020

FY19 results

Spring 2020

MDG1011 initial clinical data

Q420

Analyst

Dr Daniel Wilkinson

+44 (0)20 3077 5734

MedigeneMedigene is a research client of Edison Investment Research Limited

Enrolment of patients in Medigene’s MDG1011 Phase I/II trial continues, albeit at a slower rate than initially expected, with initial data from the first three dose cohorts expected in Q420. Following promising interim data earlier in the year, the company forecasts that top-line dendritic cell (DC) vaccine data will be presented in Q120. In expanding the clinical pipeline, Medigene has announced that MDG1021 (HA-1 targeting TCR) will start its clinical programme in H120. Partnerships continue to progress well with bluebird bio announcing that the MAGE-A4 product will enter the clinic in 2020. In addition, partner Cyotvant has announced that the first TCR (CVT-TCR-01) product candidate will focus on patients with either NY-ESO-1 expressing synovial sarcoma, MM or solid tumours, while a DC vaccine (CVT-DC-01) will be tested in patients with WT-1/PRAME expressing AML. We value Medigene at €465m (€18.94/share).

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/17

8.9

(15.1)

(0.72)

0.0

N/A

N/A

12/18

7.8

(16.5)

(0.70)

0.0

N/A

N/A

12/19e

10.7

(25.9)

(1.05)

0.0

N/A

N/A

12/20e

9.7

(24.7)

(1.01)

0.0

N/A

N/A

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

Financials: Guidance on track for FY19

Revenues from immunotherapies for the nine months to 30 September 2019 grew 32% y-o-y to €6.2m (9M18: €4.7m) as a result of the progression of the bluebird partnership and the new Roivant/Cytovant partnership. As forecast, R&D expenses increased in 9M19 by 24% to €16.5m (9M18: €13.3m) due to the advancing pipeline, in particular the clinical development of MDG1011. Underlying administrative costs decreased 2% y-o-y to €5.8m (9M18: €5.9m). In addition, the company incurred a non-cash €4.7m impairment loss on the Veregen disposal. Medigene confirmed its revenue (€10–11m), R&D expenditure (€24–29m) and EBITDA (loss of €23–28m) guidance for the year. We continue to forecast an FY19 net loss of €26.4m and a cash runway into 2021.

Measures in place to speed MDG1011 enrolment

Enrolment of patients in the Phase I/II trial testing MDG1011 in patients with either multiple myeloma (MM), acute myeloid leukaemia (AML) or myelodysplastic syndromes (MDS) has been slow to date. This has been primarily due to strict inclusion criteria (eg PRAME+ and HLA-A*02:01+). To accelerate enrolment, new treatment centres have been added, AML enrolment criteria have been broadened and earlier leukapheresis of patients is being done.

Valuation: €465m (€18.94/share)

We value Medigene at €465m (€18.94/share) vs €458m (€18.65/share) previously. We have rolled forward our model and updated for FX rates and net cash. Our model includes MDG1011, the AML DC vaccine, deal metrics for bluebird bio, the Roivant/Cytovant collaboration and Imlygic royalties. For a full overview of our valuation, please see our June outlook note, New assets, new partnerships.

Exhibit 1: Financial summary

€000s

2016

2017

2018

2019e

2020e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

9,749

8,882

7,754

10,725

9,739

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

3,048

2,790

1,596

987

0

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

3,155

0

0

0

0

Non-cash income (Eligard)

2,493

1,206

178

0

0

Bluebird bio partnership

1,053

4,886

5,980

5,738

5,739

Cytovant partnership

0

0

4,000

4,000

Cost of sales

(1,402)

(1,621)

(849)

(275)

0

Gross profit

8,347

7,261

6,905

10,450

9,739

Selling, general & administrative spending

(10,025)

(8,266)

(7,613)

(11,451)

(7,333)

R&D expenditure

(11,538)

(14,877)

(17,117)

(27,387)

(29,578)

Other operating spending

0

0

0

0

0

Operating profit

(8,974)

(15,882)

(17,825)

(28,388)

(27,173)

Goodwill & intangible amortisation

(525)

(524)

(523)

(522)

(521)

Exceptionals

4,242

0

0

0

0

Share-based payment

0

0

0

0

0

EBITDA

 

 

(12,371)

(14,615)

(16,253)

(27,641)

(26,426)

Operating Profit (before amort. and except.)

 

 

(12,691)

(15,358)

(17,302)

(27,866)

(26,652)

Net interest

(1,009)

(435)

74

467

74

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

263

672

747

1,546

1,849

Profit Before Tax (norm)

 

 

(13,437)

(15,121)

(16,481)

(25,853)

(24,728)

Profit before tax (reported)

 

 

(9,720)

(15,645)

(17,004)

(26,375)

(25,249)

Tax

228

(344)

(45)

(45)

(45)

Profit/(loss) from discontinued operations

0

0

0

0

0

Profit after tax (norm)

(13,209)

(15,465)

(16,526)

(25,898)

(24,773)

Profit after tax (reported)

(9,492)

(15,989)

(17,049)

(26,420)

(25,294)

Average number of shares outstanding (m)

20.0

21.5

23.7

24.6

24.6

EPS - normalised (c)

 

 

(66.20)

(71.93)

(69.82)

(105.46)

(100.88)

EPS - Reported (€)

 

 

(0.48)

(0.74)

(0.72)

(1.08)

(1.03)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed assets

 

 

47,742

48,595

67,394

82,206

82,572

Intangible assets & goodwill

35,767

36,292

36,225

42,903

42,382

Tangible assets

3,323

4,329

4,261

5,097

5,984

Other non-current assets

8,652

7,974

26,908

34,206

34,206

Current assets

 

 

63,973

63,342

62,196

45,629

16,242

Stocks

7,866

7,724

7,298

0

0

Debtors

1,175

1,699

787

787

787

Cash

52,630

51,724

51,408

42,139

12,752

Other

2,302

2,195

2,703

2,703

2,703

Current liabilities

 

 

(11,966)

(8,124)

(8,821)

(8,821)

(8,821)

Trade accounts payable

(973)

(725)

(1,358)

(1,358)

(1,358)

Short-term borrowings

0

0

0

0

0

Deferred income

(3,575)

(3,575)

(3,474)

(3,474)

(3,474)

Other

(7,418)

(3,824)

(3,989)

(3,989)

(3,989)

Long-term liabilities

 

 

(21,157)

(10,315)

(13,344)

(10,007)

(6,669)

Pension provisions

(408)

(405)

(414)

(414)

(414)

Long-term borrowings

0

0

0

0

0

Other liabilities (Deferred taxes; Trianta milestones)

(2,395)

(4,548)

(4,246)

(4,246)

(4,246)

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

(18,354)

(5,362)

(8,684)

(5,347)

(2,009)

Net assets

 

 

78,592

93,498

107,425

109,007

83,325

CASH FLOW

Operating cash flow

 

 

(3,611)

(20,729)

(10,013)

(9,430)

(29,102)

Net interest

(45)

(45)

(26)

1,267

874

Tax

(102)

(75)

(103)

(45)

(45)

Capex

(1,677)

(1,533)

(1,010)

(1,061)

(1,114)

Expenditure on intangibles

0

0

0

0

0

Acquisitions/disposals

10,537

480

537

0

0

Equity financing

(77)

19,329

29,923

0

0

Other

846

1,667

(19,624)

0

0

Net cash flow

5,871

(906)

(316)

(9,269)

(29,387)

Opening net debt/(cash)

 

 

(46,759)

(52,630)

(51,724)

(51,408)

(42,139)

HP finance leases initiated

0

0

0

0

0

Other (foreign exchanges differences)

0

0

0

(0)

0

Closing net debt/(cash)

 

 

(52,630)

(51,724)

(51,408)

(42,139)

(12,752)

Source: Medigene, Edison Investment Research


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 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 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

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 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 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 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

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

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