RESTORE trial completed, data this quarter

Bionomics 17 July 2018 Update
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Bionomics

RESTORE trial completed, data this quarter

Clinical update

Pharma & biotech

 

17 July 2018

Price

A$0.52

Market cap

A$251m

A$1.25/US$

Net cash (A$m) at 31 March 2018

12.9

Shares in issue

482.8m

Free float

84%

Code

BNO

Primary exchange

ASX

Secondary exchange

OTCQX

Share price performance

%

1m

3m

12m

Abs

(4.6)

(18.3)

13.2

Rel (local)

(6.5)

(23.3)

3.9

52-week high/low

A$0.6

A$0.4

Business description

Bionomics is a clinical-stage pharmaceutical company with two small molecule discovery platforms: ionX for ion channel targets and MultiCore chemistry for rapid candidate identification. The company is testing BNC210 in Phase IIb for post-traumatic stress disorder and Phase IIa for agitation. It also has a programme licensed to Merck in Phase I for royalties and US$506m in upfronts and milestones.

Next events

PTSD Phase II results

Late Q318

Merck collaboration Phase I complete

H218

Agitation Phase I results

Q119

Analysts

Nathaniel Calloway

+1 646 653 7036

Maxim Jacobs

+1 646 653 7027

Bionomics is a research client of Edison Investment Research Limited

Bionomics announced on 9 July 2018 that it had completed treatment in its 193-patient Phase II clinical study of BNC210 for post-traumatic stress disorder (PTSD). The RESTORE clinical study completed the treatment phase on time and the company stated that it intends to provide topline data by the end of calendar Q318.

Year end

Revenue (A$m)

PBT* (A$m)

EPS* (A$)

DPS (A$)

P/E (x)

Yield (%)

06/16

8.1

(16.7)

(0.04)

0.00

N/A

N/A

06/17

18.6

(4.4)

(0.01)

0.00

N/A

N/A

06/18e

5.0

(19.6)

(0.03)

0.00

N/A

N/A

06/19e

17.6

(16.1)

(0.03)

0.00

N/A

N/A

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

PTSD Phase II complete

The RESTORE trial enrolled 193 patients at 25 clinical sites in the US and Australia. Patients were evaluated using the Clinician-Administered PTSD Scale for DSM-5 (CAPS-5) as the primary endpoint. CAPS-5 is the approvable endpoint for PTSD, so results from the study should be highly predictive. The study is also examining anxiety and depression endpoints, which could provide insight into other avenues of treatment for the drug.

Novel mechanism brings new potential

Part of the potential of BNC210 is that it has a novel anxiolytic mechanism that has previously been unexplored for the treatment of PTSD. BNC210 is a negative allosteric modulator of the α7 nicotinic acetylcholine receptor, a protein that has been implicated in the stress response, but has previously not been targeted in the clinic. In earlier exploratory studies the compound suppressed activation of regions of the brain associated with anxiety and reduced the intensity of panic.

Agitation results expected in calendar Q119

BNC210 is also being tested for the treatment of agitation in geriatric patients in a hospital setting. Agitation is a common neuropsychiatric symptom typically associated with dementia. It is estimated that 13-24% of dementia patients suffer from agitation, but there are currently no approved medications for this condition. The double-blind, placebo controlled Phase IIa study will enrol 40 patients across Australia. The company reaffirmed the timing of results from the study and stated that it expects results to be available in calendar Q119.

Valuation: A$491m or A$1.02

Our valuation has been adjusted to A$491 from A$492m, with no impact on value per share at A$1.02. We previously modelled the first milestone from the Merck collaboration in FY18, and it has now been moved to FY19. We expect to update our valuation with the release of results from the Phase II study in calendar Q318. We expect the company to require an additional A$35m in capital to complete its development plan, although we expect this to be met through licensing activity.

Phase II PTSD study treatment complete

193 patients with PTSD have been enrolled and treated as part of the RESTORE Phase II clinical study. Overall, the execution of the trial has been precisely as planned, meeting all its timing and enrolment targets, which is encouraging and suggests interest in the study on the part of the 25 clinical sites that enrolled patients. Three doses of BNC210 (150mg, 300mg, 600mg) were compared against placebo over 12 weeks of twice-daily treatment. The primary endpoint of the study is improvement in CAPS-5. CAPS-5 is a battery of 30 questions designed to determine whether the patient meets the criteria for PTSD as defined under the DSM-5 ranked on a scale of zero to four for severity. Improvement in CAPS-5 is the FDA-approvable endpoint for PTSD. The trial will also measure the impact of the drug on anxiety using the Hamilton Anxiety Rating Scale (HAM-A), and on depression using the Montgomery-Asberg Depression Rating Scale (MADRS) as secondary endpoints. Depression and anxiety are significant comorbidities with PTSD, and these secondary endpoints may provide additional support for this indication, but we expect them to also provide insight into future indications where the drug may find traction.

There is a high unmet medical need for PTSD patients. It is both common, affecting 6.8% of people over the course of their lifetime, and difficult to treat, given the limited effectiveness of available medications. Paroxetine and sertraline, both SSRIs, are the only drugs currently approved for the disorder in the US, which have a modest effect in a number of patients but carry the associated side effects of SSRIs. There is significant off-label treatment of this disorder in an attempt to fill the gaps in treatment. Although they are effective in other anxiety centric disorders, benzodiazepines are contraindicated in PTSD, likely due to the interference of their sedating and memory impairing effects. Therefore, there is significant potential for a non-sedating anxiolytic drug in this indication.

Valuation

Our valuation has been adjusted slightly lower to A$491 from A$492m, although this has no impact on value per share at A$1.02. This adjustment was made because we have moved the milestone associated with the Merck collaboration programme to FY19, because the company has not made any announcements regarding the programme before July 2018. We are encouraged that the clinical programme is progressing on schedule and we expect to update our valuation with the release of results from the PTSD study in calendar year Q318. We may potentially include other indications based on the secondary endpoints provided. We also expect to update our valuation with the release of data from the agitation study in calendar Q119.

Exhibit 1: Valuation of Bionomics

Programme

Market

Prob. of success

Launch year

Peak sales (A$m)

Margin/ Royalty

rNPV (A$m)

BNC210

PTSD

30%

2022

916.3

54%

349.7

BNC210

Agitation

20%

2023

259.0

52%

47.6

BNC101

CRC

10%

2025

1103.3

55%

80.2

Merck collaboration milestones

Alzheimer's associated cognitive dysfunction

10%

2025

1821.0

5%

16.1

CRO business

6.6

4%

1.3

Unallocated costs

-16.7

Total

 

 

 

 

 

$478.2

Net cash and equivalents (Q318) (A$m)

$12.9

Total firm value (A$m)

$491.1

Total shares (m)

482.8

Value per share (A$)

$1.02

Dilutive warrants and options (m)

52.34

Total diluted shares (m)

535.1

Value per diluted share (A$)

0.97

Source: Edison Investment research, Bionomics reports

Financials

The only adjustment in our forecasts is moving the A$12.5m Merck milestone to FY19. We do not consider this a material delay in the programme and it has not affected the company’s financing schedule. We believe Bionomics has sufficient capital to provide a runway into FY20. It ended Q318 with A$32.3m in cash and A$19.4m in debt. We forecast a financing shortfall of $35m if the company intends to continue development of its assets internally (which we record as illustrative debt in FY20), but we expect this financing need to be met through the licensing of its assets.

Exhibit 2: Financial summary

A$'000

2015

2016

2017

2018e

2019e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

6,827

8,143

18,606

5,000

17,600

Cost of Sales

0

0

0

0

0

Gross Profit

6,827

8,143

18,606

5,000

17,600

EBITDA

 

 

(15,665)

(15,449)

(3,214)

(18,505)

(14,640)

Normalised operating profit

 

 

(16,176)

(16,071)

(3,671)

(18,961)

(15,096)

Amortisation of acquired intangibles

(1,203)

(1,316)

(1,286)

(1,286)

(1,286)

Exceptionals

532

1,131

0

0

0

Share-based payments

(515)

(400)

(504)

(504)

(504)

Reported operating profit

(17,362)

(16,656)

(5,461)

(20,751)

(16,886)

Net Interest

85

(668)

(766)

(677)

(965)

Joint ventures & associates (post tax)

0

0

0

0

0

Exceptionals

0

0

0

0

0

Profit Before Tax (norm)

 

 

(16,091)

(16,738)

(4,437)

(19,638)

(16,062)

Profit Before Tax (reported)

 

 

(17,277)

(17,324)

(6,227)

(21,428)

(17,851)

Reported tax

328

732

(523)

2,184

754

Profit After Tax (norm)

(15,786)

(16,031)

(4,810)

(17,637)

(15,383)

Profit After Tax (reported)

(16,949)

(16,592)

(6,750)

(19,244)

(17,097)

Minority interests

0

0

0

0

0

Other comprehensive income

3,313

968

(114)

0

0

Net income (normalised)

(12,473)

(15,063)

(4,924)

(17,637)

(15,383)

Net income (reported)

(13,637)

(15,624)

(6,864)

(19,244)

(17,097)

Basic average number of shares outstanding (m)

418

457

481

505

531

EPS - basic normalised (c)

 

 

(3.78)

(3.51)

(1.00)

(3.49)

(2.90)

EPS - diluted normalised (c)

 

 

(3.78)

(3.48)

(0.98)

(3.41)

(2.84)

EPS - basic reported (c)

 

 

(4.06)

(3.63)

(1.40)

(3.81)

(3.22)

Dividend (c)

0.00

0.00

0.00

0.00

0.00

BALANCE SHEET

Fixed Assets

 

 

31,251

31,723

29,597

28,096

26,676

Intangible Assets

27,416

28,504

26,595

25,229

23,943

Tangible Assets

3,451

2,835

2,618

2,484

2,350

Investments & other

384

384

384

384

384

Current Assets

 

 

37,881

58,086

54,478

37,849

22,192

Stocks

410

439

426

426

426

Debtors

9,069

11,003

9,893

8,731

11,879

Cash & cash equivalents

26,558

45,450

42,874

27,406

8,601

Other

1,844

1,194

1,286

1,286

1,286

Current Liabilities

 

 

(13,706)

(11,386)

(13,889)

(6,885)

(8,431)

Creditors

(6,466)

(5,855)

(3,673)

(5,231)

(6,777)

Tax and social security

0

0

0

0

0

Short term borrowings

(5,460)

(2,732)

(8,496)

0

0

Other

(1,780)

(2,799)

(1,720)

(1,654)

(1,654)

Long Term Liabilities

 

 

(23,460)

(34,260)

(29,733)

(37,089)

(35,060)

Long term borrowings

(9,317)

(18,437)

(10,014)

(19,365)

(19,365)

Other long term liabilities

(14,143)

(15,824)

(19,719)

(17,724)

(15,695)

Net Assets

 

 

31,966

44,163

40,454

21,972

5,378

Minority interests

0

0

0

0

0

Shareholders' equity

 

 

31,966

44,163

40,454

21,972

5,378

CASH FLOW

Op Cash Flow before WC and tax

(15,665)

(15,449)

(3,214)

(18,505)

(14,640)

Working capital

17,290

(327)

51

2,435

(937)

Exceptional & other

3,310

417

1,723

(1,393)

(3,864)

Tax

0

0

0

0

0

Net operating cash flow

 

 

4,936

(15,360)

(1,440)

(17,463)

(19,441)

Capex

(846)

(197)

(248)

(323)

(323)

Acquisitions/disposals

(391)

69

0

0

0

Net interest

941

1,232

1,201

1,204

958

Equity financing

269

28,222

144

283

0

Dividends

0

0

0

0

0

Other

0

0

0

0

0

Net Cash Flow

4,908

13,967

(342)

(16,298)

(18,806)

Opening net debt/(cash)

 

 

(6,856)

(11,781)

(24,281)

(24,364)

(8,042)

FX

17

(9)

(10)

(24)

0

Other non-cash movements

0

(1,457)

435

0

0

Closing net debt/(cash)

 

 

(11,781)

(24,281)

(24,364)

(8,042)

10,764

Source: Edison Investment research, Bionomics reports

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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Bionomics 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 2018. “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

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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

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, 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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Bionomics 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 2018. “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

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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