Remimazolam set for commercialisation in 2019

Paion 14 August 2017 Update
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Paion

Remimazolam set for commercialisation in 2019

H117 update

Pharma & biotech

14 August 2017

Price

€2.71

Market cap

€165m

US$1.10/€

Net cash (€m) at 30 June 2017

27.1

Shares in issue

61.1m

Free float

75%

Code

PA8

Primary exchange

Frankfurt (Xetra)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.9)

10.8

27.0

Rel (local)

(5.7)

17.2

13.5

52-week high/low

€3.3

€2.1

Business description

Paion is an emerging specialty pharma company developing anaesthesia products. Lead product remimazolam is undergoing US Phase III trials and is partnered with Cosmo (US), Yichang (China), Hana Pharma (South Korea), Pendopharm (Canada) and R-Pharm (CIS, Turkey, MENA).

Next events

Complete abuse potential studies

H118

Japan PMDA filing

mid 2018

FDA filing

H218

Analysts

Dennis Hulme

+61 (0)2 9258 1161

Susie Jana

+44 (0)20 3681 2527

Paion is a research client of Edison Investment Research Limited

Paion is well positioned to commercialise Remimazolam in 2019 for procedural sedation (via partner Cosmo Pharmaceuticals in the US) and general anaesthesia (Japan); successful Phase III studies confirmed an excellent safety profile and shorter procedure times than midazolam. Paion is conducting additional Phase I studies to further assess abuse potential of remimazolam, which will guide its scheduling under the Controlled Substances Act in the US. Cosmo has advised that it expects to file for US approval in H218 vs prior guidance of a mid-2018 filing. The recent €8m capital raise has extended the funding runway for current activities to at least H219. We adjust our valuation to €245m (vs €240m) or €4.02/share.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/15

0.1

(34.0)

(55.7)

0.0

N/A

N/A

12/16

4.3

(24.3)

(36.4)

0.0

N/A

N/A

12/17e

5.9

(16.4)

(21.2)

0.0

N/A

N/A

12/18e

3.5

(12.9)

(17.7)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding, exceptionals and share-based payments.

Abuse studies ongoing, US filing expected H218

Paion is undertaking additional Phase I studies to assess whether remimazolam can be abused intranasally and whether it could be used as a knock-out cocktail in combination with alcohol. Paion expects that the FDA will classify remimazolam as a lower-abuse-potential schedule IV drug under the Controlled Substance Act, the same classification as midazolam. Paion has clarified the expected timeline for a potential US filing by partner Cosmo, with filing expected in H218 vs prior guidance of mid-2018. Encouragingly, Canadian regulators have advised partner Pharmascience that the current data package is adequate for filing in that country, without any further data from the current abuse potential trials.

Japan filing likely mid-2018, GA Phase I underway

Paion is preparing for a potential mid-2018 filing for remimazolam for general anaesthesia (GA) in Japan, and is in ongoing discussions as it seeks to partner in the Japanese market. It has initiated a Phase I trial to collect data to aid the design of an EU Phase III study for GA in general surgery patients. Paion expects the Phase III programme to cost €20-25m – the recent €8m capital raise will contribute to this funding requirement and will enable it to accelerate Phase III preparations. The Phase III could start in 2018, subject to securing the additional funding.

Valuation: Adjusted to €245m or €4.02 per share

Our valuation is increased to €245m (from €240m) due to the €8m capital raise in July, partly offset by a modest reduction in forecast sales of remimazolam in 2019 due to an anticipated launch date later in the course of the year. The increased share count sees valuation per share decline to €4.02/share (vs €4.13/share). H117 results confirmed that Paion is trimming expenditure in line with guidance; end-H117 cash of €27.1m combined with the €8m capital raise extends Paion’s cash reach into H219 (without considering potential milestone payments).

Exhibit 1: Financial summary

€'000s

2014

2015

2016

2017e

2018e

Year end 31 December

PROFIT & LOSS

Revenue

 

 

3,456

61

4,262

5,874

3,500

Cost of sales

(4)

0

0

0

0

Gross profit

3,452

61

4,262

5,874

3,500

R&D expenditure

(11,799)

(29,385)

(23,408)

(19,000)

(13,000)

General, administrative & selling

(3,702)

(5,729)

(5,129)

(3,800)

(3,914)

Other

411

965

(807)

51

51

Operating profit

(11,639)

(34,088)

(25,082)

(16,875)

(13,363)

Depreciation and amortisation

(93)

0

(759)

(500)

(400)

Share-based payments

0

0

0

0

0

Exceptionals

0

0

0

0

0

EBITDA

 

 

(11,546)

(34,088)

(24,323)

(16,375)

(12,963)

Operating profit (before GW and except)

 

(11,546)

(34,088)

(24,323)

(16,375)

(12,963)

Net interest

(66)

42

21

20

20

Profit before tax (norm)

 

 

(11,612)

(34,046)

(24,302)

(16,355)

(12,943)

Profit before tax (reported)

 

 

(11,704)

(34,046)

(25,061)

(16,855)

(13,343)

Tax

2,468

5,834

4,944

3,990

2,145

Profit after tax (norm)

(9,143)

(28,212)

(19,359)

(12,365)

(10,798)

Profit after tax (reported)

(9,236)

(28,212)

(20,118)

(12,865)

(11,198)

Average number of shares outstanding (m)

39.9

50.7

53.2

58.4

61.1

EPS - normalised (c)

 

 

(22.9)

(55.7)

(36.4)

(21.2)

(17.7)

EPS - reported (c)

 

 

(23.2)

(55.7)

(37.8)

(22.0)

(18.3)

Dividend per share (c)

 

 

0.0

0.0

0.0

0.0

0.0

Gross margin (%)

NA

NA

NA

NA

NA

EBITDA margin (%)

NA

NA

NA

NA

NA

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

NA

NA

NA

NA

NA

BALANCE SHEET

Fixed assets

 

 

3,516

3,417

2,855

2,355

1,955

Intangible assets

3,440

3,362

2,688

2,313

2,013

Tangible assets

76

56

167

42

-58

Refund from assumption of dev costs

0

0

0

0

0

Other

0

0

0

0

0

Current assets

 

 

63,032

40,051

35,128

29,187

18,389

Stocks

0

0

0

0

0

Debtors

467

0

0

25

25

Cash

58,912

32,680

30,111

24,145

13,347

Other

3,653

7,371

5,017

5,017

5,017

Current liabilities

 

 

(3,924)

(7,901)

(13,040)

(7,266)

(7,266)

Trade payables

(3,338)

(7,332)

(6,353)

(6,353)

(6,353)

Short-term borrowings

0

0

0

0

0

Provisions

(306)

(224)

(555)

(555)

(555)

Finance lease liabilities

0

0

0

0

0

Other current liabilities

(254)

(305)

(359)

(359)

(359)

Current deferred income

(26)

(39)

(5,774)

0

0

Long-term liabilities

 

 

(17)

(6)

0

0

0

Long-term borrowings

0

0

0

0

0

Provisions

0

0

0

0

0

Long-term deferred income

(17)

(6)

0

0

0

Deferred taxes

0

0

0

0

0

Other long-term liabilities

0

0

0

0

0

Net assets

 

 

62,607

35,562

24,943

24,276

13,078

CASH FLOW

Operating cash flow

 

 

(12,044)

(28,212)

(17,135)

(22,174)

(12,963)

Net interest

(66)

43

19

20

20

Tax

0

2,575

5,529

3,990

2,145

Capex

0

0

7

0

0

Purchase of intangibles

(26)

(33)

0

0

0

Acquisitions/disposals

0

0

(199)

0

0

Equity Financing

57,618

22

9,212

12,198

0

Dividends

0

0

0

0

0

Other

0

0

0

0

0

Net cash flow

45,482

(25,605)

(2,567)

(5,966)

(10,798)

Opening net debt/(cash)

 

 

(13,292)

(58,912)

(32,680)

(30,111)

(24,145)

Effect of exchange rate changes

(72)

(66)

(2)

0

0

Other

210

-560

0

0

0

Closing net debt/(cash)

 

 

(58,912)

(32,680)

(30,111)

(24,145)

(13,347)

Source: Edison Investment Research, Paion accounts

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Paion and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “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.

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US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

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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

295 Madison Avenue, 18th Floor

New York, NY10017

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Paion and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

New York, NY10017

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

New York, NY10017

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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