Rapid progress with COVID-19 programme

Redhill Biopharma 24 July 2020 Update
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RedHill Biopharma

Rapid progress with COVID-19 programme

Focus on COVID-19 programme

Pharma & biotech

24 July 2020

Price

US$6.56

Market cap

US$235m

Net cash ($m) at 1 April 2020

62.5

Shares in issue

358.9m

Free float

90%

Code

RDHL

Primary exchange

Nasdaq

Share price performance

%

1m

3m

12m

Abs

0.9

(13.8)

(10.0)

Rel (local)

(2.3)

(25.5)

(16.4)

52-week high/low

US$8.60

US$3.51

Business description

Speciality pharma company RedHill Biopharma focuses on gastrointestinal diseases and promotes several GI products in the US. The commercial portfolio includes Movantik (opioid-induced constipation), Talicia (H. pylori eradication) and Aemcolo (travellers’ diarrhoea). The most advanced R&D assets are RHB-204 for NTM, RHB-104 for Crohn’s disease and Bekinda for gastroenteritis and IBS-D.

Next events

Initiation of pivotal Phase III study with RHB-204 for NTM infections

Q320

Initiation of the Phase IIa study with COVID-19 patients in the US; update on the European COVID-19 study

Q320

Updates on the promotion of the commercial portfolio drugs

2020

Analyst

Jonas Peciulis

+44 (0)20 3077 5728

RedHill Biopharma is a research client of Edison Investment Research Limited

RedHill’s global Phase II/III programme with opaganib against COVID-19 is progressing rapidly. An ongoing Phase IIa study in the US should complete patient recruitment in August, while in July the international Phase II/III study should start enrolment in several other countries. If these studies are successful, RedHill could file for emergency use as soon as Q420. Extensive preclinical studies describe opaganib’s rather unique mechanism of action. It not only has an anti-viral effect, but can also reduce inflammation in the lungs. This makes it an attractive option in severe COVID-19 cases, where an overactive immune response can worsen the outcomes. We maintain our last published valuation ($593m or $16.5/ADS), but can see potential to expand our R&D model depending on the progress of COVID-19 trials.

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/18

8.4

(38.8)

(0.17)

0.0

N/A

N/A

12/19

6.3

(42.1)

(0.14)

0.0

N/A

N/A

12/20e

93.0

(9.7)

(0.03)

0.0

N/A

N/A

12/21e

137.0

3.2

0.01

0.0

N/A

N/A

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

First results from compassion use programme

Treatment of five severe COVID-19 patients with opaganib led to better clinical outcomes compared to matched case controls at the same hospital. All patients in the opaganib group were discharged from hospital without requiring mechanical ventilation whereas 33% of the matched case control group required mechanical ventilation. Median time to weaning from high-flow nasal cannula was reduced to 10 days in the opaganib-treated group, compared to 15 days in the matched case control group. An improvement in inflammatory markers was also observed.

Potentially large market size, but still developing

Globally more than 10.5 million people have been afflicted by COVID-19 just this year, which has resulted in around 510,000 deaths so far. While 81% of patients have mild disease with no need for hospitalisation, 14% have a severe form and 5% become critically ill with organ failure (Berlin et al, 2020). However, the market for COVID-19 treatment is still developing, therefore market size calculations are very preliminary. Ultimately, the potential for a therapeutic drug will depend on the future patient numbers and the competitive landscape, including any available therapies, but also preventative measure like vaccines.

Valuation: $593m or $16.5 per ADS

We do not yet include RedHill’s COVID-19 programme in our valuation, but there is potential to expand our R&D model depending on its further progress. We keep opaganib for cholangiocarcinoma in our R&D model. Ahead of the upcoming quarterly report, due shortly, we maintain our last published valuation of $593m or $16.5 per ADS. In addition to an update on the COVID-19 programme, other focus areas in the Q220 report include updates on the three marketed GI drugs in the US and the rest of the R&D pipeline.

Opaganib’s unique mechanism of action for COVID-19

RedHill has identified its anti-cancer/anti-inflammatory candidate opaganib (Yeliva, formerly ABC294640) as a potential treatment for COVID-19. The company was able to make rapid progress with this programme because opaganib is already being investigated in Phase II clinical trials. It has also completed a Phase I study, as well as safety and pharmacokinetics studies in healthy volunteers and had been given to over 130 subjects.

Mechanism of action

Opaganib is a sphingosine kinase-2 (SK2) inhibitor. Sphingomyelin is not only a building block for cellular membranes but also acts as a precursor for lipid messengers for the potent bioactive lipid ceramide and the pro-inflammatory lipid sphingosine 1-phosphate (S1P) that have profound cellular effects. During one of the downstream processes, sphingosine kinases (there are two isoforms SK1 and SK2) promote rapid production of S1P from sphingosine. S1P in turn promotes cancer growth, proliferation and inflammation processes. Opaganib is a specific SK2 inhibitor that decreases S1P synthesis. This approach has been demonstrated to have an effect on a broad range of fundamental biological processes and has potential in oncology, inflammatory diseases and as an anti-viral agent.

Prior pre-clinical studies with opaganib support the potential role of SK2 in the replication-transcription complex of positive-strand single-stranded RNA viruses, which includes coronavirus, and its inhibition may potentially stop viral replication. In vivo studies have demonstrated that opaganib decreased fatality rates from influenza-virus infection (Exhibit 1A and 1B). In vivo studies with bacterial-induced lung injury models (Pseudomonas aeruginosa in mice) also showed that the damage is ameliorated (Exhibit 1C).

Exhibit 1: Selected preclinical data demonstrating opaganib

It is the combination of the anti-inflammatory and anti-viral effects that makes this drug a unique potential treatment for SARS-CoV-2 infections. Theoretically, it should not only treat the cause of the disease, the virus, but also alleviate the inflammation, which triggers severe acute respiratory syndrome (SARS). SARS is a known severe, life threatening condition, but it also increases the risk of pulmonary fibrosis. There is growing concern that pulmonary fibrosis could be a long-term negative consequence for many individuals affected by COVID-19, even for those who avoided the most severe form of the disease with the need for admission to intensive care units. It is fair to say that we are still in an acute phase of the COVID-19 pandemic. At this point, it is impossible to predict what the longer-term public health consequences will be, but if COVID-19 infection is proven to increase the risk of pulmonary fibrosis in the wider affected population, we believe this will be a major public health issue in addition to the acute phase, as the patients who are recovering currently may start experiencing disabling complications years later. In this scenario, drugs with a mechanism of action like opaganib’s could be of major interest.

First clinical insights

Opaganib has been given to a total of 131 subjects to date (cancer patients and healthy volunteers in the previous Phase I and Phase II studies and participants in expanded access programmes). Currently opaganib is being investigated in a Phase I/IIa study for cholangiocarcinoma and in another Phase II study in prostate cancer.

In early April, RedHill announced compassionate use programmes in Israel, but it is also working with other countries. Later that month, the company reported findings from the first evaluable patients, who were hospitalised in Israel at one of the tertiary academic hospitals (the preprint article was made available in June).

Before the treatment with opaganib, all patients had severe disease requiring oxygen support via high-flow nasal cannula. The investigators reported findings from five evaluable patients treated with opaganib versus matched case controls:

All patients in the opaganib group were discharged from hospital without having required mechanical ventilation; 33% of patients in the control group required mechanical ventilation (a trend with a p value of 0.13).

The median time to weaning from nasal cannula was to be lower on average at 10 days in the opaganib group, compared to 15 days in the control group (p=0.2).

Improvement in lymphocyte counts was significantly faster in opaganib-treated patients as compared to patients in the control group (p=0.001). Low lymphocyte counts are associated with a more severe COVID-19 disease and with a more rapid deterioration.

Improvement in C-reactive protein (an inflammatory biomarker) levels was to be faster in the opaganib group compared to the control group (p=0.08).

One patient, who received hydroxychloroquine and azithromycin (macrolide class antibiotic) on top of opaganib, developed diarrhoea after two doses of opaganib and the treating physicians decided to discontinue all his medications. This patient was not included in the results analysis. We believe, it is difficult to say whether this was a side effect of opaganib, as both hydroxychloroquine and azithromycin (macrolide class antibiotic) can cause diarrhoea. No other side effects that were deemed opaganib-related were reported.

Comparability of results between treatment and control groups

As a control group, the investigators selected similar group of patients (n=18, same sex, same severity and similar age group), who met the inclusion and exclusion criteria at the same hospital. The descriptive baseline characteristics of both groups of patients were largely similar, but the key difference, in our view, was the fact that a third of control patients received methylprednisolone and no opaganib group patients received it.

In mid-June, the preliminary results from a separate study conducted in the UK to test a range of potential treatments for COVID-19 patients were published (the RECOVERY study – Randomised Evaluation of COVid-19 thERapY). This study was unrelated to RedHill and opaganib. The key new finding was that for patients on ventilators, low-dose dexamethasone treatment was shown to reduce mortality by about one-third, and for patients requiring oxygen therapy mortality was cut by about one-fifth. In total 2,104 patients were randomised to receive dexamethasone. Because of this large sample size, the fact that synthetic corticosteroids are a very well-established class of drugs, easily available and cheap, the use of dexamethasone for severe COVID-19 patients immediately became widespread in the UK.

Both methylprednisolone and dexamethasone are synthetic corticosteroids, and while there are some pharmacokinetic and pharmacodynamic differences, these drugs can be interchangeable in certain cases if the correct dosing is chosen (eg, in chronic obstructive pulmonary disease exacerbation). The authors of the of RedHill’s opaganib article were not aware of the benefit of corticosteroids, as the article was submitted for publication before the UK study results were published. We believe it is possible that the use of methylprednisolone in the control arm increased the hurdle for opaganib. If corticosteroids had not been administered to patients in the control arm, the benefit of opaganib might have been even more pronounced.

Next steps: Clinical studies in the US and Europe

In our view, the first compassion use results are interesting, but the patient sample is small and a controlled trial is still needed for regulatory approval. RedHill filed for an IND with the FDA, which was approved in May. This will be a randomized, double-blind, placebo-controlled Phase IIa study with the goal of enrolling up to 40 COVID-19 patients with severe-to-critical infection requiring hospitalisation and high-flow supplemental oxygenation. Patients randomized at a 1:1 ratio will receive either opaganib or placebo in combination with standard-of-care. The primary endpoint is to evaluate the reduction in total oxygen requirement over the course of treatment (up to 14 days). Secondary endpoints include time to 50% reduction in oxygen requirements, the proportion of patients without fever at day 14 and the proportion with negative nasal swabs at day 14. By mid-July more than 25% of patients were enrolled in the study and RedHill expects to complete enrolment in August.

In July, RedHill plans to initiate a Phase II/III multi-centre, randomized, double-blind, parallel-arm, placebo-controlled study with opaganib and aims to enrol 270 severe COVID-19 patients in up to 40 clinical sites across the UK, Italy, Russia, Mexico and Brazil. The patients will be randomized at a 1:1 ratio. The primary endpoint will be the proportion of patients requiring intubation and mechanical ventilation by day 14.

If these studies are successful, RedHill plans to submit opaganib for emergency use approval as early as Q420.

Upamostat (RHB-107): Second potential asset against COVID-19

RedHill also has another potential asset against COVID-19, RHB-107 (upamostat). RHB-107 is an inhibitor of the S1 family of trypsin-like serine proteases with potential for use in the treatment of cancer, inflammatory lung diseases and irritable bowel syndrome. Inhibition of serine proteases, including trypsins, may inhibit viral attachment and replication, and alleviate lung damage in viral pneumonia. Based on its possible mechanism of action, RHB-107 was selected for in vitro testing by the US National Institute of Allergy and Infectious Diseases (NIAID).

Exhibit 2: Financial summary

$'000s

 

2018

2019

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

8,360

6,291

93,006

136,969

Cost of Sales

(2,837)

(2,259)

(33,652)

(49,013)

Gross Profit

5,523

4,032

59,354

87,956

Research and development

(24,862)

(17,419)

(11,200)

(11,200)

EBITDA

 

 

(39,241)

(41,988)

(9,513)

3,377

Operating Profit (before amort. and except.)

 

 

(39,331)

(42,985)

(9,651)

3,208

Intangible Amortisation

0

(216)

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

(39,331)

(43,201)

(9,651)

3,208

Net Interest

511

897

0

0

Profit Before Tax (norm)

 

 

(38,820)

(42,088)

(9,651)

3,208

Profit Before Tax (reported)

 

 

(38,820)

(42,304)

(9,651)

3,208

Tax

0

0

0

(802)

Profit After Tax (norm)

(38,820)

(42,088)

(9,651)

2,406

Profit After Tax (reported)

(38,820)

(42,304)

(9,651)

2,406

Average Number of Shares Outstanding (m)

231.2

296.9

355.9

359.2

EPS - normalised ($)

 

 

(0.17)

(0.14)

(0.03)

0.01

EPS - normalised fully diluted ($)

 

 

(0.17)

(0.14)

(0.03)

0.01

EPS - (reported) ($)

 

 

(0.17)

(0.14)

(0.03)

0.01

Dividend per share ($)

0.0

0.0

0.0

0.0

Gross Margin (%)

66.1

64.1

63.8

64.2

EBITDA Margin (%)

N/A

N/A

N/A

2.5

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

2.3

BALANCE SHEET

Fixed Assets

 

 

5,623

20,885

73,450

88,484

Intangible Assets

5,320

16,927

69,462

84,497

Tangible Assets

163

228

258

257

Investments

140

3,730

3,730

3,730

Current Assets

 

 

56,788

53,214

78,725

69,124

Stocks

769

1,882

1,882

1,882

Debtors

2,834

3,460

3,460

3,460

Cash

29,005

29,023

54,534

44,933

Other*

24,180

18,849

18,849

18,849

Current Liabilities

 

 

(10,381)

(10,616)

(10,616)

(10,616)

Creditors

(10,381)

(10,616)

(10,616)

(10,616)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

 

(844)

(3,481)

(82,981)

(82,981)

Long term borrowings

0

0

(80,000)

(80,000)

Other long-term liabilities

(844)

(3,481)

(2,981)

(2,981)

Net Assets

 

 

51,186

60,002

58,577

64,011

CASH FLOW

Operating Cash Flow

 

 

(34,462)

(40,749)

(6,486)

6,404

Net Interest

0

0

0

0

Tax

0

0

0

(802)

Capex

(23)

(168)

(168)

(168)

Acquisitions/disposals

0

0

0

0

Financing

42,263

36,305

4,700

0

Other**

4,772

4,630

(52,535)

(15,035)

Dividends

0

0

0

0

Net Cash Flow

12,550

18

(54,489)

(9,601)

Opening net debt/(cash)

 

 

(16,455)

(29,005)

(29,023)

25,466

HP finance leases initiated

0

0

0

0

Other

0

0

0

0

Closing net debt/(cash)***

 

 

(29,005)

(29,023)

25,466

35,067

Source: RedHill Biopharma accounts, Edison Investment Research. Note: *Bank deposits and financial assets at fair value. **Mainly Movantik acquisition payments to AstraZeneca. ***Net cash does not include bank deposits and financial assets.


General disclaimer and copyright

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

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

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

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

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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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