Remimazolam: Three major approvals

Paion 24 August 2020 Update
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Paion

Remimazolam: Three major approvals

H120 update

Pharma & biotech

24 August 2020

Price

€2.67

Market cap

€177m

US$1.10/€

Cash (€m) at 30 June 2020

12.4

Shares in issue (8 July 2020)

66.2m

Free float

92%

Code

PA8

Primary exchange

Frankfurt

Secondary exchange

Xetra

Share price performance

%

1m

3m

12m

Abs

(0.4)

31.5

15.1

Rel (local)

2.8

14.0

6.4

52-week high/low

€3.16

€1.40

Business description

Paion owns the fast-onset and short-recovery anaesthesia product remimazolam. This is approved in Japan for GA and in the US and China for PS. ByFavo is licensed in the US to Acacia. It is filed in the EU and South Korea. A European GA filing is expected in H121. The European sales strategy needs to be confirmed.

Next events

GA Phase III top-line data

H220

Q3 FY20 report

11 Nov 2020

Analysts

Dr John Savin

+44 (0)20 3077 5700

Dr Susie Jana

+44 (0)20 3077 5700

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*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

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

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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

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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 (nor will such persons be able to purchase shares in the placing).

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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

1185 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 Paion and prepared and issued by Edison, in consideration of a fee payable by Paion. 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 Edison analyst 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

1185 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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