Paion |
Remimazolam: Three major approvals |
H120 update |
Pharma & biotech |
24 August 2020 |
Share price performance
Business description
Next events
Analysts
Paion is a research client of Edison Investment Research Limited |
Remimazolam is approved in the US and China for procedural sedation (PS) and was launched in late July in Japan by partner Mundipharma for general anaesthesia (GA). In the US, launch by Acacia is expected by Q4. In China, partner Yichang Humanwell launched for PS in August with GA trials ongoing. H120 results reported revenues of €3m from the Japanese approval and the Asian Hana Pharma deal; a €15m milestone was paid in H2 after US approval. Paion indicates that it has cash until H221. Our valuation is updated for tax, loans and cash and remains at €283m.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
2.77 |
(12.45) |
(15.9) |
0.0 |
N/A |
N/A |
12/19 |
8.00 |
(9.35) |
(10.8) |
0.0 |
N/A |
N/A |
12/20e |
20.30 |
2.42 |
5.9 |
0.0 |
45.2 |
N/A |
12/21e |
4.21 |
(20.88) |
(31.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding exceptional items.
Remimazolam in launch phase in multiple countries
The FDA has approved ByFavo for PS; it is now directly licensed in the US to Acacia. Paion has received a €15m milestone. Acacia states that the US colonoscopy market is 25m procedures. Launch is expected by Edison in Q420, after classification by the Drug Enforcement Agency. We expect a price of about $25 per 20mg vial with significant royalties of 20–25% royalty from H221. In Japan (Anerem) is approved for GA; partner Mundipharma instigated launch in July with Paion receiving royalties of 16–18%. In China, Ruima is approved for PS and was launched in August; a GA trial is ongoing. Remimazolam is undergoing a European Medicines Agency review for PS with the outcome likely in H121. The European GA Phase III closed with 424 patients enrolled (of 500 planned), allowing an H220 analysis with a likely abbreviated EMA application in Q421. There was ICU use with five COVID-19 patients in Italy but no more are planned; Belgium has allowed compassionate use if other sedatives are scarce.
Interim results and outlook
Paion notes that it does not expect royalties to exceed €1m in 2020. It has €12.4m in cash (30 June), expected milestones of €20m in 2020 and EIB loan facilities of €20m, plus growing royalties. The UK tax credit is now guided at €1.5m, reflected in Exhibit 1. Paion guides FY20 expectations towards core costs of €17–21m giving a net result of €0.5–4m with funding until at least H221 (excluding the potential EIB loan). The €5m Yorkville loan from 2019 has converted into shares giving 66.23m total in issue; Paion does not plan to draw further tranches. Sales from 2021 will depend on the launch success and reimbursement rates of ByFavo in the US and the European strategy. Any product acquisition and salesforce will require funding.
Valuation: €283m after tax, debt and cash updates
Paion aims to become profitable within five years and hopes to in license other products to give enough revenue to sustain a direct European salesforce. Without any product acquisitions, remimazolam will be out licensed; this remains our current valuation assumption. The indicative value remains at €283m.
Exhibit 1: Financial summary
€'000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 December |
||||||
PROFIT & LOSS |
||||||
Revenue |
|
|
2,766 |
8,000 |
20,295 |
4,207 |
Cost of sales |
0 |
0 |
(120) |
(1,284) |
||
Gross profit |
2,766 |
8,000 |
20,175 |
2,924 |
||
Operating profit |
(12,711) |
(9,346) |
2,210 |
(21,096) |
||
Depreciation and amortisation |
(256) |
(120) |
(214) |
(214) |
||
Share-based payments |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(12,455) |
(9,226) |
2,424 |
(20,882) |
Operating profit (before amort. and except.) |
|
|
(12,455) |
(9,226) |
2,424 |
(20,882) |
Net Interest |
6 |
(122) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(12,449) |
(9,348) |
2,424 |
(20,882) |
Profit before tax (reported) |
|
|
(12,449) |
(9,448) |
2,230 |
(21,076) |
Tax |
2,510 |
2,432 |
1,500 |
0 |
||
Profit after tax (norm) |
(9,939) |
(6,916) |
3,924 |
(20,882) |
||
Profit after tax (reported) |
(9,939) |
(7,016) |
3,730 |
(21,076) |
||
Average number of shares outstanding (m) |
62.5 |
63.9 |
66.0 |
67.0 |
||
EPS - normalised (c) |
|
|
(15.9) |
(10.8) |
5.9 |
(31.2) |
EPS - reported (c) |
|
|
(15.9) |
(11.0) |
5.7 |
(31.5) |
Dividend per share (c) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
Gross margin (%) |
N/A |
N/A |
N/A |
N/A |
||
EBITDA margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
2,286 |
2,262 |
2,068 |
1,874 |
Intangible assets |
2,212 |
2,137 |
1,943 |
1,749 |
||
Tangible assets |
74 |
46 |
46 |
46 |
||
Refund from assumption of dev costs |
0 |
0 |
0 |
0 |
||
Other |
0 |
79 |
79 |
79 |
||
Current assets |
|
|
22,037 |
22,650 |
23,048 |
12,165 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
1,500 |
500 |
0 |
464 |
||
Cash |
17,227 |
18,787 |
22,252 |
10,905 |
||
Other |
3,311 |
3,363 |
796 |
796 |
||
Current liabilities |
|
|
(3,501) |
(10,179) |
(3,800) |
(3,800) |
Trade payables |
(2,218) |
(4,843) |
(2,843) |
(2,843) |
||
Short-term borrowings |
0 |
(4,354) |
0 |
0 |
||
Provisions |
(630) |
(956) |
(956) |
(956) |
||
Other current liabilities |
(654) |
(26) |
0 |
0 |
||
Long-term liabilities |
|
|
0 |
0 |
0 |
(10,000) |
Long-term borrowings |
0 |
0 |
0 |
(10,000) |
||
Provisions |
0 |
0 |
0 |
0 |
||
Long-term deferred income |
0 |
0 |
0 |
0 |
||
Deferred taxes |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
20,822 |
14,733 |
21,316 |
240 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(16,547) |
(5,274) |
944 |
(21,326) |
Net interest |
5 |
(8) |
0 |
0 |
||
Tax |
3,729 |
2,435 |
2,567 |
0 |
||
Capex |
0 |
(15) |
(20) |
(20) |
||
Purchase of intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
(13) |
1 |
0 |
0 |
||
Equity Financing |
5,214 |
0 |
4,354 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
4,421 |
(4,380) |
10,000 |
||
Net cash flow |
(7,612) |
1,560 |
3,465 |
(11,346) |
||
Opening net debt/(cash) |
|
|
(24,839) |
(17,227) |
(14,433) |
(22,252) |
Effect of exchange rate changes |
(0) |
0 |
0 |
0 |
||
Other |
0 |
-4,354 |
4,354 |
-10,000 |
||
Closing net debt/(cash) |
|
|
(17,227) |
(14,433) |
(22,252) |
(905) |
Source: Company data, Edison Investment Research
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