Seeing STARS

Newron Pharmaceuticals 26 March 2020 Update
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Newron Pharmaceuticals

Seeing STARS

STARS update, FY19 results

Pharma & biotech

26 March 2020

Price

CHF4.50

Market cap

CHF80m

€0.89/CHF; $1.01/CHF; $1.12/€

Cash and investments (€m) at 31 Dec 2019

39.2

Shares in issue

17.8m

Free float

99.6%

Code

NWRN

Primary exchange

SIX

Secondary exchange

XETRA

Share price performance

%

1m

3m

12m

Abs

(24.7)

(29.1)

(43.0)

Rel (local)

(12.3)

(15.5)

(41.0)

52-week high/low

CHF9.40

CHF3.90

Business description

Newron Pharmaceuticals is a CNS-focused company. Xadago for Parkinson’s disease is sold in Europe, Japan and the US. Sarizotan for symptomatic treatment of Rett syndrome may report top-line data by mid-2020. Evenamide, a novel schizophrenia therapy, may start Phase III trials from 2021.

Next events

STARS Phase III top-line data

Q220

Evenamide safety work outcome

Q3/Q420

Analysts

Dr John Savin MBA

+44 (0)20 3077 5700

Dr Susie Jana

+44 (0)20 3077 5700

Newron Pharmaceuticals is a research client of Edison Investment Research Limited

The statistical analysis plan for the pivotal STARS trial of sarizotan for symptomatic treatment of Rett syndrome should be FDA approved soon. This will allow data analysis, meaning that top-line data could be out by mid-2020. In FY19, Xadago (Parkinson’s disease) generated royalties of €4.7m plus a €2.3m Japanese milestone. A trial in dyskinesia is planned to expand the indication. Evenamide, a novel schizophrenia therapy, may start Phase III from Q420. Newron has cash (€39.2m) and loan facilities (€22.5m) to last through 2021. Our indicative value has been adjusted to CHF340m (CHF19.10/share), formerly CHF466m, taking into account sales, revised trial durations and start windows and debt.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/18

4.03

(15.01)

(0.84)

0.0

N/A

N/A

12/19

7.04

(20.16)

(1.13)

0.0

N/A

N/A

12/20e

5.56

(17.05)

(0.96)

0.0

N/A

N/A

12/21e

6.63

(29.44)

(1.65)

0.0

N/A

N/A

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

STARS top-line data by mid-2020

The pivotal Phase II/III Sarizotan Treatment of Apnoeas in Rett Syndrome (STARS) trial completed in late 2019. Once the Newron statistical analysis plan is approved by the FDA, the data can be unblinded and analysed. This will enable the announcement of top-line results by mid-2020. If successful, this should enable a priority review regulatory filing and 2021 launch as sarizotan has Rare Paediatric Disease designation.

Xadago sales: Milestones and territory additions

Newron reported an increase to €2.5m in H2 in Xadago (safinamide) royalties after €2.2m in H119, an encouraging 23% increase. A milestone of €2.3m on Japanese approval was reported in December making €7.0m revenue for the year. In the shorter term, we forecast modest sales development. Our long-term forecast of global peak sales of €394m is unaltered, but we feel that sales progression depends on a successful levodopa induced dyskinesia (LID) trial, perhaps completing in 2023. Newron will fund (to €10m) and run the LID study, if licensee Zambon agrees, and gain a slightly improved royalty on all Xadago sales if this succeeds. Newron indicates modest additional sales (6%+) will give a payback.

Valuation: Adjusted for sales, debt and cash flows

The net loss in FY19 was due to increased net R&D expenses of €17.4m. R&D should be lower in 2020 then rise with trial starts in 2021. Newron has strong cash reserves of €39.2m year-end cash plus a €22.5m loan facility, giving cash through 2021. Sarizotan sales may start in 2021 and will probably be direct so very profitable but incurring sales costs. We have updated our valuation to include cash plus debt, underlying core costs and revised timelines. This now indicates about CHF340m (CHF19.1/share), formerly CHF466m. This will be revised once sarizotan top-line data are available.

Xadago growing steadily

Xadago is licensed, outside Japan and Asia, to Zambon, a private Italian company. Zambon is strong in Europe with 20% of its sales in the home Italian market. It launched Xadago in Europe during H115 with Newron getting double-digit royalties on sales. Our royalty rate forecasts are around 12–13%. Total product royalties rose in H2 to €2.6m vs €2.1m in H119: €4.7m in total. The Italian price cap has been removed, which may help revenues given Zambon’s local sales strength in Italy.

In the US, Zambon sublicensed Xadago to WorldMeds Pharma, a private US distributor, in Q116; FDA approval was gained in Q117. Under the sublicence, Newron shares 50% of Zambon’s US royalties.1 Given the importance of the US market, this might be a drag on royalty growth. Newron does not disclose sales by region so detailed forecasting is not feasible.

  Edison outlook note 13 October 2017. We assume about 6% effective US royalty rate to Newron.

In 2011, Newron entered into an exclusive licensing agreement with Meiji to develop, manufacture and commercialise the drug in Japan and Asia. Under an agreement between Eisai and Meiji in March 2017, Eisai has the exclusive rights to market safinamide in Japan, as well as to develop and market safinamide in Asia. The approval of Xadago in Japan in late 2019 gave rise to a milestone that added €2.3m to H2 revenues.

Indication

Xadago is indicated for the treatment of adult patients with idiopathic Parkinson’s disease (PD) as add-on therapy to a stable dose of levodopa (L-DPOA) alone or in combination with other PD medicinal products in mid- to late-stage fluctuating patients. It is a monoamine oxidase type B (MOA B) inhibitor. MOA is the enzyme that breaks down dopamine, so reducing its activity gives more consistent brain dopamine levels.

One of the issues with oral dosing of dopamine (given as the prodrug L-DPOA) is inconsistent blood levels, which lead to ‘off’ periods when Parkinson symptoms return. MOA B inhibitors are used as one of several possible therapeutics to limit off time. Other treatments to deal with this include direct continuous delivery of L-DPOA gel to the small intestine via an external pump, but this is very expensive. Deep brain stimulation is also used.

A noted complication of L-DPOA treatment, the main Parkinson’s therapy, is dyskinesia – uncontrolled tremors that can occur both when treatment is working (‘on’) and in off periods. Dyskinesia is a very complex condition and opinion is still uncertain about why and how to treat it. It develops progressively in many patients after several years of L-DPOA therapy.

In the MOA B class, the leader is Azilect (rasagiline, Teva), approved by the FDA in 2006 and EMA in 2005. Rasagiline is an irreversible MOA B inhibitor, which means it destroys the enzyme activity after it binds. Other MOA B drugs like Xadago and Zelapar (selegiline) are reversible. Rasagiline started to become generic in 2016. Rasagiline has a wide label for use alone or in combination with other Parkinson’s disease medications. Azilect had peak sales in 2014 of $519m (Evaluate Pharma) but generics are now under $50m in Europe and the US combined. Due to a late approval, it is a branded product in Japan (Takeda) accounting for about half of global sales. Selegiline seems never to have gained a significant market share with very low sales.

Label extension

Newron expects to start a pivotal label extension study to support Xadago use in L-DPOA induced dyskinesia (LID). This trial has been expected for some years and may start in H220, as indicated by management in conference call questions. The design is stated (5 March presentation) to be a six-month double-blind, placebo-controlled study. This will take about two years to recruit, run and analyse. It could announce data by early 2023, implying a 2023 filing. It could, with a fast review as an additional indication, start sales in the H223 to H124 period. Our previous valuation assumed that this indication would launch in 2021. Currently, starting the study depends upon a final agreement with Zambon.

Newron will fund the study up to a capped investment of €10m and now run the trial with Zambon and its sublicensee selling the product. In return, Newron will receive a €4m milestone on approval and a marginally enhanced royalty rate on all Xadago sales. Management has indicated in a conference call that the deal is viable if overall sales rise by 6% or more.

Sarizotan: A breakthrough opportunity

Newron in licensed sarizotan from Merck in 2011; sarizotan is a serotonin (5-HT1A) agonist. It has been developed as a pharmacotherapy for Rett syndrome, an orphan indication. As an orphan drug, it will have seven and a half years’ US exclusively, that is to 2028/29, and 12 years’ orphan drug exclusivity in the EU, to around 2033. It will gain an orphan paediatric voucher (PRV) giving priority FDA review to a subsequent product.2 These vouchers can be sold; a recent transaction was by Bavarian Nordic in December 2019 for US$95m (€88m, see later discussion of value).

  Under this program, a drug company that receives an approval for a drug or biologic for a rare paediatric disease may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product. It sets a limit of six rather than 10 months for a review. The value is therefore determined by the anticipated market and the potential to launch ahead of competitors.

Rett syndrome is an X-linked genetic disease.3 Males die soon after birth. Females have a longer life expectancy but experience progressive and irreversible deterioration from six months old and especially in their teenage years. Sarizotan is a symptomatic treatment to prevent short duration breathing cessation (apnoea). As this leads to low oxygen levels affecting patient morbidity and perhaps accelerating disease progression, alleviating apnoea could be very beneficial. Pricing is hard to assess without data on the impact on disease progression and improvements in care, but we assume $75,000 per year in long-term chronic use. Newron estimates that the prevalence is 16,000 US cases and 20,000 in Europe. This could therefore develop into a substantial market.

  See Edison outlook note of 14 March 2019 for more background on the disease.

There are limited potential competitor products in development, and none address the underlying genetic defects, so if any or all of these show efficacy, they might be combined.

Exhibit 1: Rett syndrome products in development

Company

Product

Phase

Notes

Anavex

ANAVEX 2-73

Phase II/III

This is a Sigma-1 receptor agonist aiming to restore neuronal functions in neurodegenerative processes. It is in a small, 69-patient paediatric Phase IIb/III study in Australia (NCT04304482). In the US, it is in a 29-patient study {Phase II, NCT03758924). This indicates testing for some years.

Acadia Pharmaceuticals

Trofinetide

Phase III

Acadia has an exclusive licence to trofinetide in North America from Neuren Pharmaceuticals. Trofinetide is a synthetic peptide derived from Insulin-like growth factor 1 and designed to reduce inflammation and support neural function. It is in a 184-patient US Phase III (NCT04181723) due to end October 2021 with an open-label extension study (NCT04279314) due to end in October 2022.

Source: clinical trials.gov, company websites

Newron’s pivotal STARS trial (NCT02790034) with 129 patients completed recruitment in Q419. The endpoint is ‘reduction in respiratory abnormality in patients with Rett syndrome measured over 24 weeks’. This will be assessed as the percentage reduction in the number of apnoea episodes per hour while awake. This is measured using an ambulatory home monitoring system.

Type A meeting concluded, results in Q2

In December, the FDA asked Newron to request a Type A emergency meeting. This was held in early 2020. In a statement on 11 March, Newron commented that it and the FDA had agreed on the Statistical Analysis Plan (SAP), the primary and key secondary efficacy measures, and the statistical analyses to be performed for efficacy. Newron is now finalizing the SAP and will submit it shortly to the FDA. Following the FDA’s review and approval of the plan, the contract research organization will finish the software required and then unblind the results. Newron expects to announce the top-line results in the second quarter of 2020.

The regulatory submission could follow in late H220 with a fast track review in 2021. Given disease severity and the lack of other treatments, sarizotan could have a rapid uptake and be transformative for Newron. Newron will commercialise this asset alone in the US with a small but targeted salesforce; a European and broader commercialisation strategy is yet to be defined.

Evenamide: Accumulating extra safety data

In H119, the FDA delayed the planned pivotal studies of schizophrenia drug Evenamide due to safety concerns. Newron is now doing additional preclinical work. On 9 January, Newron announced that a four-week exploratory study in patients with schizophrenia will be run. As yet, this trial has not been posted on the usual clinical trial databases.

Newron anticipates that the new data, due from Q320 will allow the FDA to permit a Phase III programme to start in two indications, perhaps in late 2020/H121. Newron estimates that these studies could take 18 months to run. Trial designs have not been published.

The ideal target indication will be patients who are refractory to clozapine, a common anti-psychotic agent. These patients currently have no other treatment options; Newron estimates there are 20,000 patients in the US. An approval in this indication would give a solid market base that Newron estimates could be worth several hundred million dollars. Note that meeting the primary endpoint in the single clozapine resistant study would potentially suffice for this indication.

Newron will also seek a general schizophrenia indication for patients who are not well controlled on their current anti-psychotic medicine, about 70% of cases. In Newron’s estimates, this could have a market potential of over US$1bn a year. In the general anti-psychotic market, the leading agents are now generic but Evenamide might add onto current therapy rather than seek to replace it. Both the general and clozapine studies need to be successful for FDA approval in this wider indication and safety would need to be acceptable.

If a filing is made by mid-2023, the product could be marketed from H224. Any delays could push this to 2025. The form of matter patent expires in 2028 but the duration of the clinical program means that additional US patent cover, up to five years, could be gained by patent extensions.

Newron estimates that as the studies are on an out-patient basis, they could be funded from company resources. The trials will need to be large enough to show safety, given current concerns and the use by patients of multiple medicines. A marketing partner for a mass-market anti-psychotic will be needed, but Newron plans to sell direct to the smaller clozapine resistant market. Newron envisages partnering once Phase III data is available to get the optimal deal value.

Valuation

Our previous valuation has been updated by the following short-term forecast adjustments and model enhancements.

In the short term, 2020 and 2021, we see Xadago sales growing steadily but see no reason for a much higher sales growth rate. Japanese royalties are not assumed by us to be high but increase the growth rate. We now assume the main market growth will occur after 2024 once the LID indication is obtained (probability adjusted at 50% (unchanged)). We assume €10m trial expenditure and a €4m milestone in 2023. We continue to keep the Xadago forecast under review.

We assume sarizotan sales start from H221 after the delayed read-out. We expect that the dossier might be FDA filed by late 2020 for an expedited review. Other than minor timing changes we have not adjusted the forecast. This will be reviewed once we have primary outcomes data from the study. We assume pre-marketing costs from H220 and then direct marketing.

Approval of sarizotan could give Newron a saleable PRV valued in a recent transaction at €88m. We have not yet added this into the value due to lack of visibility on timing and realisable value. Sale of the PRV might give a useful cash boost in, for example, 2022. However, Newron may decide to retain it for use with Evenamide.

We have not changed the Evenamide peak sales potential, but our overall value has risen as we include additional revenues from a longer protected period. We now assume launch in 2025, patent expiry in 2028 and US patent extension to 2033. In the EU, there will be 10-year exclusivity to 2034.

R&D in 2020 is assumed to reduce as no major clinical studies are running other than the possible small Evenamide study, which is not a high cost. However, trial costs are assumed to increase from 2021. Newron has given guidance of €35–38m in clinical trial costs over the next few years.

Debt has risen due to use of the EIB loan facility. This has a discounted (fair) value of €16.7m in the 2019 balance sheet reflecting €17.5m face value of debt. The fair value has been included as this is largely the source of the cash. A further €22.5m can be drawn down. Cash use in 2019 was €22m.

We have added a line to reflect core cash flows from R&D and general and administrative costs. These are discounted at 10%, as commercial costs, and adjusted for tax. Individual product estimates include sales, additional R&D and clinical trial costs. The base assumption is core 2020 R&D of €7.5m and administration costs of €8m a year (net of warrant gains) inflated at 5%.

The rNPV valuation, which uses a 12.5% discount rate for clinical-stage assets and a 10% discount rate for commercial assets (Xadago in PD), is shown in Exhibit 2. We have rolled forward the model to 1 January 2020 and used 31 December 2019 FX rates.

Exhibit 2: Newron sum-of-the-parts valuation

Product

Indication

Launch

Value (CHFm)

Probability

rNPV (CHFm)

NPV/share (CHF/share)

Xadago

Parkinson's disease

2015

134.3

100%

134.3

7.5

Dyskinesia

2024

46.9

50%

21.9

1.2

Sarizotan

Rett syndrome

2021

715.1

30%

211.1

11.8

Evenamide

Schizophrenia

2025

262.1

30%

65.4

3.7

Total direct product value

 

 

1,158.4

 

432.8

24.3

 

 

Direct costs to 2034 less tax

 

(116.3)

(6.5)

Cash at December 2019

 

42.5

2.4

Loans (fair value December)

 

(18.1)

(1.0)

Valuation

 

 

 

 

340.8

19.1

Source: Edison Investment Research

Xadago reduces in importance from CHF11.3/share to CHF8.7/share as we do not now foresee full sales development until the dyskinesia approval extends the label. By rolling forward the model, sarizotan becomes more important at CHF11.8/share vs CHF9.2/share formerly. Evenamide’s value rises to CHF3.7/share, formerly CHF3.1/share, due to the inclusion of the additional protected period.

Over 2020, the value driver is sarizotan, which as an orphan drug with direct marketing could generate strong revenues. Consequently, the top-line data will be crucial to value re-assessment.

Financials

Reported revenues grew during FY19 to €4.7m (FY18: €4.0m) plus a €2.3m milestone from the Japanese approval – as this did not pass through Zambon, Newron gained the full benefit. Costs in FY19 were predominantly R&D: €22.5m offset by a tax credit of €5.0m and a tiny payment of €50k from Zambon. Tax credits in Italy are complex and the reclaim value on eligible expenses is reduced to 25% from 50% so we are cautious about the offset going forward. R&D tax credits taken via the R&D line in the P&L are non-cash. We have adjusted for this in our cash flow forecast. Some tax credits are used and offset employee taxation costs.

We have decreased our revenue expectations for Xadago royalties in Europe and the US (sublicence), but now include Japan. The Japanese milestone expected in 2020 was received in FY19.

We expect a decline in R&D costs in 2020 as only the small Evenamide exploratory study might be run. There will potentially be preparation costs for pivotal dyskinesia and Phase III Evenamide studies. These are assumed to raise R&D costs in 2021 but timing and magnitude are not certain. The STARS analysis and sarizotan regulatory dossier preparation will require funding in 2020.

We do not expect a major increase in general costs, €9.9m in FY19 and we assume this contains €2.1m of non-cash share option expenses. However, if Newron intends to sell sarizotan direct from H221, investments in a pre-launch sales capability from H220 will be needed so we have added €2.5m in pre-sales costs. Newron might opt for a marketing partner if terms are good.

Newron reported cash and equivalents of €39.2m at 31 December. There is a €22.5m EIB loan facility available and we expect this to be drawn, at least in part, in 2021. This gives Newron cash to beyond 2021. Given timing and trial uncertainties, exact cash flows are uncertain and will be reviewed at the interim stage. Nonetheless, Newron has the cash reserves to develop its products for the next two years. Given the given the current volatile market conditions due to the viral epidemic, this is a big advantage.

Financial forecasts are shown in Exhibit 3.

Exhibit 3: Financial summary

€000s

2018

2019

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

4,025

7,038

5,555

6,630

Cost of Sales

0

0

0

0

Gross Profit

4,025

7,038

5,555

6,630

Research and development before tax credits

(15,775)

(22,399)

(15,500)

(21,500)

EBITDA

 

 

(14,931)

(20,707)

(16,338)

(28,849)

Operating Profit (before amort. and except.)

 

 

(14,967)

(20,899)

(16,544)

(28,872)

Intangible Amortisation

(11)

0

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

(14,978)

(20,899)

(16,544)

(28,872)

Net Interest

(41)

737

(507)

(572)

Profit Before Tax (norm)

 

 

(15,008)

(20,162)

(17,051)

(29,444)

Profit Before Tax (reported)

 

 

(15,019)

(20,162)

(17,051)

(29,444)

Tax

(16)

(45)

0

0

Profit After Tax (norm)

(15,024)

(20,207)

(17,051)

(29,443)

Profit After Tax (reported)

(15,035)

(20,207)

(17,051)

(29,444)

Average Number of Shares Outstanding (m)

17.8

17.8

17.8

17.8

EPS - normalised (c)

 

 

(84.20)

(113.24)

(95.55)

(165.00)

EPS - (reported) (€)

 

 

(0.84)

(1.13)

(0.96)

(1.65)

Dividend per share

0.0

0.0

0.0

0.0

Gross Margin (%)

100.0

100.0

100.0

100.0

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

 

 

487

342

342

332

Intangible Assets

30

20

20

10

Tangible Assets

106

116

116

116

Investments

351

206

206

206

Current Assets

 

 

59,512

59,946

39,345

28,351

Stocks

0

0

0

0

Debtors

15,659

20,783

19,783

19,783

Cash

43,853

39,163

19,562

8,568

Other

0

0

0

0

Current Liabilities

 

 

4,432

(6,081)

(7,081)

(8,081)

Creditors

4,432

(6,081)

(7,081)

(8,081)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

 

731

(15,603)

(15,603)

(38,103)

Long term borrowings

0

(16,749)

(16,749)

(39,249)

Other long term liabilities

731

1,146

1,146

1,146

Net Assets

 

 

65,162

38,604

17,003

(17,501)

CASH FLOW

Operating Cash Flow

 

 

(15,954)

(22,210)

(19,551)

(33,444)

Net Interest

(78)

71

0

0

Tax

0

0

0

0

Capex

(40)

(51)

(50)

(50)

Acquisitions/disposals

0

0

0

0

Financing

51

0

0

22,500

Other

3,002

16,619

0

0

Dividends

0

0

0

0

Net Cash Flow

(13,019)

(5,571)

(19,601)

(10,994)

Opening net debt/(cash)

 

 

(60,081)

(43,853)

(22,414)

(2,813)

HP finance leases initiated

0

0

0

0

Other

(3,209)

(15,868)

0

(22,500)

Closing net debt/(cash)

 

 

(43,853)

(22,414)

(2,813)

30,681

Source: Newron Pharmaceuticals accounts, Edison Investment Research

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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.

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

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United Kingdom

New York +1 646 653 7026

1,185 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

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

1,185 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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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

This document is prepared and provided by Edison 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.

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.

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

1,185 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

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

1,185 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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