BioPorto Diagnostics |
Record setting NGAL sales |
Earnings update |
Healthcare equipment |
20 August 2020 |
Share price performance
Business description
Next events
Analyst
BioPorto Diagnostics is a research client of Edison Investment Research Limited |
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BioPorto reported a major increase in Q220 sales for the NGAL research use only (RUO) test, to DKK5.0m, up from DKK3.8m in Q219. This is the single highest quarter for NGAL RUO sales, and uptake in the US has been especially strong, up 95% y-o-y. Sales for the company’s other products were down (DKK1.7m, from DKK4.0m in Q219) reflecting the company’s shift in focus to NGAL. Although RUO NGAL sales remain relatively small, they represent the beachhead for the eventual launch of the FDA-cleared NGAL Test, which we expect to have first commercial sales in 2021.
Year end |
Revenue (DKKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
26.0 |
(42.5) |
(0.24) |
0.0 |
N/A |
N/A |
12/19 |
26.6 |
(71.1) |
(0.39) |
0.0 |
N/A |
N/A |
12/20e |
26.5 |
(69.9) |
(0.34) |
0.0 |
N/A |
N/A |
12/21e |
102.3 |
(16.1) |
(0.08) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Paediatric NGAL study started
The company announced in late June 2020 that it had initiated the pivotal clinical study for the paediatric NGAL test for the risk assessment of acute kidney injury (AKI) in critically ill children. We are pleased to see that enrolment has started, following earlier delays due to COVID-19. The trial should be quick, and the company is targeting a submission of an application to the FDA by the end of 2020.
COVID-19 test moving forward
After the paediatric submission, the company’s next highest priority is its COVID-19 diagnostic test development. The company announced that it will be developing two tests for COVID-19: an antigen test to identify active disease (which was previously announced) and a serology test to assess exposure. Both tests will be designed around the company’s rapid, point-of-care testing platform, gRAD. The company is in the final stages of antibody selection for the antigen test and expects to test the product against live virus soon, as well as have initial discussions with the FDA.
More cash sought before year end
BioPorto recently completed a rights offering that raised a net DKK37.9m (25.0m shares), and it reported that it ended the period with DKK30.3m cash. The company however noted with Q2 earnings that it intends to seek additional capital in 2020 to support the 2021 launch of the NGAL test. The company has guided to an EBIT loss of DKK73m for 2020, which is roughly consistent with our estimates.
Valuation: Unchanged at DKK896m or DKK4.48/share
Our valuation remains unchanged at DKK896m or DKK4.48 per basic share, because the impact of rolling forward our NPVs is offset by lower net cash and an increase to operational costs. We forecast that the company will need at least DKK20m in additional capital to reach profitability.
NGAL RUO sales almost double
BioPorto reported sales of DKK5.0m from the RUO NGAL test for Q220. This is a 30% increase over Q219 (DKK3.8m), but the Q219 figure also included DKK1.2m in NGAL licensing fees. On the basis of end-user sales, Q220 is up 90%. Sales grew both in the US (DKK1.4m, 95% increase) and in RoW (DKK3.6m, 85% increase). Conversely, sales of the company’s other research products continue to decline and totalled DKK1.7m for the quarter, down from DKK4.0 in Q219. This is a strategic move on the part of the company as it shifts its resources towards promoting the NGAL test. We forecast relatively flat RUO sales going forward. Overall, company revenue was down in Q220: DKK6.7 compared to DKK7.8 for Q219. Across research products, we forecast approximately DKK27m in revenue for 2020, which is slightly lower than company guidance of DKK30m. We continue to be encouraged by growth in this product and see it as an indication of increased interest in NGAL as a biomarker for acute kidney injury. We expect this interest to translate into sales of the FDA-cleared test following its launch in 2021.
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Exhibit 1: BioPorto NGAL product sales |
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Source: BioPorto reports. Note: Does not include licensing revenue. |
Research programmes moving forward
BioPorto’s main operational focus continues to be advancement of the NGAL test towards marketing clearance in the US. To this end, it recently initiated the pivotal clinical study of the product in paediatric patients in June 2020. We are pleased to see the trial start to enrol patients because it was previously delayed on account of the COVID-19 pandemic. The company expects the trial to be completed in H220 with enough time for it to submit a De Novo application to the FDA by the end of 2020. The FDA will have a statutory review time of 150 days following submission, so we expect a clearance decision on the product in H121. The goal is then to use the paediatric test as a predicate device for submission of a 510(k) application for the adult test, but the timelines for this submission are contingent on the results of the review of the paediatric test and other communications from the FDA. We currently forecast submission of an application for the adult test later in 2021.
In addition to the NGAL programme, BioPorto has recently started a collaboration with the University of Southern Denmark (SDU) to co-develop tests to detect COVID-19. The company recently announced that it would be developing two such tests: the previously announced antigen test to detect active infections, as well as a serological test to detect antibodies generated by a previous exposure. However, the antigen test remains BioPorto’s main focus. It provided an update on the programme and noted that it has finalised the selection of the antibodies that will be used in the antigen test, and once this selection is complete it can move forward on testing it with live virus and patient samples. The company stated that pilot study of the antigen test could begin in the US as early as Q320. Both the antigen test and the serological test will employ the company’s gRAD device, a modular implementation of a traditional point-of-care, lateral flow test (ie a dipstick). The goal is to provide a semi-quantitative test similar to a pregnancy test (ie without the need for complex instrumentation) that can be used at the bedside or doctor’s office and provide COVID-19 testing results in minutes.
Finally, BioPorto announced that it is developing a gRAD implementation of the NGAL test called NGALds (for dipstick). The company has noted that it will be submitting it for CE marking by the end of 2020 and plans to start selling the product in select countries in Europe in 2021 (although we do not expect revenue from the product to be significant before any clinical studies). Like the COVID-19 tests in development, this would allow testing for kidney injury at the point of care and could provide results very quickly. We can envision how this product could be particularly useful in settings outside the hospital, which include doctors’ offices or in triage settings such as an ambulance.
Valuation
Our valuation remains unchanged at DKK896m or DKK4.48 per basic share. We have rolled forward our NPVs, but this effect was offset by lower net cash and an increase in unallocated costs (DKK210m from DKK188m). The increase in unallocated costs is driven by increases to our near-term operational spending to reflect current trends. We have increased our expected reported PBT loss for 2020 to DKK74m from DKK66m. Additionally, we have adjusted the valuation for the research products based on Q220 results, which has increased the valuation of the NGAL RUO test (DKK8.4m from DKK5.7m) and decreased the value of other research products (DKK2.3m from DKK3.0m).
BioPorto ended the quarter with DKK30.3m in net cash following the completion of its rights offering, which raised DKK37.9m (net) from 25.0m shares. We model that this should be sufficient to finance operations through the end of 2020, but the company noted that it intends to raise additional capital during the year to support operations beyond that point. We currently forecast that it will need a minimum of DKK20m (which we include as illustrative debt in 2020) to reach profitability in 2022 driven by commercial NGAL sales, and after which we do not expect it to need additional capital. This number may increase if the company experiences any delays in the FDA clearance of the NGAL test for either paediatrics or adults.
Exhibit 2: Valuation of BioPorto
Programme |
Market |
Probability of success |
Peak revenue ($m) |
Valuation (DKKm) |
The NGAL Test |
ICU |
50% |
180.8 |
671.9 |
ED |
30% |
167.1 |
295.5 |
|
Post-surgery |
30% |
54.1 |
84.8 |
|
Research |
100% |
4.0 |
8.4 |
|
Paediatrics |
50% |
15.9 |
12.8 |
|
Other products |
Research |
100% |
1.3 |
2.3 |
Unallocated costs |
(209.8) |
|||
Total |
865.9 |
|||
Net cash and equivalents (Q220) (DKKm) |
30.3 |
|||
Total firm value (DKKm) |
896.2 |
|||
Total shares (m) |
199.9 |
|||
Value per share (DKK) |
4.48 |
|||
Dilutive warrants (m) |
14.1 |
|||
Total diluted shares (m) |
214.0 |
|||
Value per diluted share (DKK) |
4.42 |
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Source: BioPorto reports, Edison Investment Research
Exhibit 3: Financial summary
DKK'000s |
2018 |
2019 |
2020e |
2021e |
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Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
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INCOME STATEMENT |
||||||
Revenue |
|
|
26,016 |
26,622 |
26,529 |
102,266 |
Cost of Sales |
(8,181) |
(9,293) |
(11,260) |
(16,368) |
||
Gross Profit |
17,835 |
17,329 |
15,268 |
85,897 |
||
Sales |
(20,935) |
(39,268) |
(30,527) |
(45,274) |
||
R&D |
(18,676) |
(24,556) |
(31,047) |
(33,560) |
||
Administrative |
(20,005) |
(27,804) |
(27,537) |
(27,812) |
||
EBITDA |
|
|
(42,103) |
(68,333) |
(65,514) |
(14,221) |
Operating Profit (before amort. and except.) |
|
|
(42,646) |
(71,190) |
(69,316) |
(16,223) |
Amortisation of acquired intangibles |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Share-based payments |
865 |
(3,109) |
(4,526) |
(4,526) |
||
Reported operating profit |
(41,781) |
(74,299) |
(73,842) |
(20,749) |
||
Net Interest |
164 |
52 |
(620) |
100 |
||
Joint ventures & associates (post tax) |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(42,482) |
(71,138) |
(69,936) |
(16,123) |
Profit Before Tax (reported) |
|
|
(41,617) |
(74,247) |
(74,462) |
(20,649) |
Reported tax |
3,569 |
4,605 |
4,618 |
1,281 |
||
Profit After Tax (norm) |
(38,124) |
(66,726) |
(65,598) |
(15,123) |
||
Profit After Tax (reported) |
(38,048) |
(69,642) |
(69,844) |
(19,368) |
||
Minority interests |
0 |
0 |
0 |
0 |
||
Discontinued operations |
0 |
0 |
0 |
0 |
||
Net income (normalised) |
(38,124) |
(66,726) |
(65,598) |
(15,123) |
||
Net income (reported) |
(38,048) |
(69,642) |
(69,844) |
(19,368) |
||
Average Number of Shares Outstanding (m) |
157 |
170 |
192 |
201 |
||
EPS - normalised (DKK) |
|
|
(0.24) |
(0.39) |
(0.34) |
(0.08) |
EPS - diluted normalised (DKK) |
|
|
(0.24) |
(0.39) |
(0.34) |
(0.08) |
EPS - basic reported (DKK) |
|
|
(0.24) |
(0.41) |
(0.36) |
(0.10) |
Dividend (DKK) |
0.00 |
0.00 |
0.00 |
0.00 |
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BALANCE SHEET |
||||||
Fixed Assets |
|
|
3,563 |
8,218 |
15,590 |
14,258 |
Intangible Assets |
1,374 |
4,799 |
12,332 |
11,000 |
||
Tangible Assets |
1,437 |
1,710 |
1,446 |
1,446 |
||
Investments & other |
752 |
1,709 |
1,812 |
1,812 |
||
Current Assets |
|
|
62,638 |
34,464 |
36,533 |
29,453 |
Stocks |
3,631 |
4,155 |
3,702 |
5,381 |
||
Debtors |
8,036 |
5,695 |
3,271 |
12,608 |
||
Cash & cash equivalents |
46,709 |
18,122 |
20,037 |
1,940 |
||
Other |
4,262 |
6,492 |
9,523 |
9,523 |
||
Current Liabilities |
|
|
(9,217) |
(14,858) |
(42,985) |
(49,415) |
Creditors |
(4,451) |
(3,237) |
(3,783) |
(10,213) |
||
Tax and social security |
(141) |
(2,306) |
(3,409) |
(3,409) |
||
Short term borrowings |
0 |
0 |
(20,000) |
(20,000) |
||
Other |
(4,625) |
(9,315) |
(15,793) |
(15,793) |
||
Long Term Liabilities |
|
|
(787) |
(2,502) |
(10,977) |
(10,977) |
Long term borrowings |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
(787) |
(2,502) |
(10,977) |
(10,977) |
||
Net Assets |
|
|
56,197 |
25,322 |
(1,839) |
(16,681) |
Minority interests |
0 |
0 |
0 |
0 |
||
Shareholders' equity |
|
|
56,197 |
25,322 |
(1,839) |
(16,681) |
CASH FLOW |
||||||
Op Cash Flow before WC and tax |
(42,103) |
(68,333) |
(65,514) |
(14,221) |
||
Working capital |
(631) |
4,453 |
10,112 |
(4,587) |
||
Exceptional & other |
(74) |
159 |
961 |
100 |
||
Tax |
4,799 |
3,557 |
1,817 |
1,281 |
||
Net operating cash flow |
|
|
(38,009) |
(60,164) |
(52,624) |
(17,427) |
Capex |
(1,483) |
(1,106) |
(670) |
(670) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Net interest |
0 |
0 |
0 |
0 |
||
Equity financing |
39,319 |
35,983 |
37,921 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
(198) |
(3,332) |
(2,709) |
0 |
||
Net Cash Flow |
(371) |
(28,619) |
(18,082) |
(18,097) |
||
Opening net debt/(cash) |
|
|
(47,080) |
(46,709) |
(18,122) |
(57) |
FX |
0 |
0 |
0 |
0 |
||
Other non-cash movements |
0 |
32 |
17 |
0 |
||
Closing net debt/(cash) |
|
|
(46,709) |
(18,122) |
(57) |
18,040 |
Source: BioPorto reports, Edison Investment Research
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