Apontis Pharma — Solid results following a successful IPO

Apontis Pharma (DB: APPH)

Last close As at 22/04/2024

11.10

0.10 (0.91%)

Market capitalisation

95m

More on this equity

Research: Healthcare

Apontis Pharma — Solid results following a successful IPO

Following its successful IPO in May, Apontis’s maiden results highlight that the expansion of its single pill franchise continues at pace and should continue to provide high double-digit sales growth. These pills are combinations of commonly co-prescribed generic drugs that have been reformulated into one branded pill. We believe an increasing mix of these higher-margin single pills will improve profitability. Apontis’s shares have appreciated since they were initially priced at €19.0/share (up c 16%) and the company has a market cap of €187m with an EV of c €157m.

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Healthcare

Apontis Pharma

Solid results following a successful IPO

Pharma & biotech

Scale research report - Flash

24 August 2021

Price

€22.0

Market cap

€187m

Share price graph

Share details

Code

APPH

Listing

Deutsche Börse Scale

Shares in issue

8.5m

Net cash (€m) at 30 June 2021

30.5

Business description

Apontis Pharma is focused purely on the German market, where it has a rich commercial heritage (formerly Schwarz Pharma and then UCB Innere Medizin). Its current focus is on driving uptake of its single pills for cardiovascular disease, but it also co-markets branded respiratory and diabetes drugs for large-cap pharma companies.

Bull

Growing recognition of the compliance, patient outcome and cost benefits of its single pills presents a strong tailwind.

Cardiovascular disease remains on the rise in Germany and is the leading cause of death.

Co-marketing agreements with AstraZeneca and Novartis offers synergies for its reps.

Bear

Failure to execute on co-marketing agreements could lead to early termination; failure to replace or renew these would impact growth ambitions.

Public tenders in Germany could place pricing pressure on its drugs and squeeze margins.

Capitalised R&D inflates intangibles; pipeline attrition may lead to write-downs or impairments.

Analysts

Dr Sean Conroy

+44 203 077 5700

Dr Jonas Peciulis

+44 203 077 5728

Following its successful IPO in May, Apontis’s maiden results highlight that the expansion of its single pill franchise continues at pace and should continue to provide high double-digit sales growth. These pills are combinations of commonly co-prescribed generic drugs that have been reformulated into one branded pill. We believe an increasing mix of these higher-margin single pills will improve profitability. Apontis’s shares have appreciated since they were initially priced at €19.0/share (up c 16%) and the company has a market cap of €187m with an EV of c €157m.

Single pill franchise continues to grow at pace

During H121, revenues grew by 36% to €24.0m, primarily driven by single pill sales which grew 83% to €14.0m. Apontis continues to benefit from prescriber and payor adoption of its single pills, with AXA Health Insurance recommending its antihypertensives to policy holders during the period. Single pills represented 58% of the revenue mix and margins are improving as a result, with the adjusted EBITDA margin up at 11.8% (H120: -8.1%). Substantial investment in its single pill portfolio can be expected over the mid-term to sustain growth momentum, and c €20m of the IPO proceeds are ear-marked for this purpose. Following the IPO, the company is now debt-free with cash of €30.5m at 30 June.

Promising mid-term outlook

Management has guided that based on its existing and developmental portfolio, single pill sales could grow by c €100m from a base of €19.0m in 2020. Assuming these are fully realised by end-2030 would imply a c 20% sales CAGR. An increasing mix of these higher-margin products (>70% gross) should enable it to hit its mid-term group EBITDA target of 30%. Despite being lower margin, co-marketing agreements with AstraZeneca and Novartis for several respiratory and diabetes drugs clearly offer synergies to its single pills and ultimately provide an entry point for its c 130 sales reps, who market to c 23k physicians in Germany.

Valuation: High growth and an enticing margin story

Based on revenue expectations for FY21 (consensus: €49.3m; management: €48.5m) Apontis currently trades at c 3.2x EV/sales, a slight discount to the peer average of c 3.6x. Based on FY21 adjusted EBITDA it trades at c 39x (consensus: €4.0m) or c 28x EV/EBITDA (management: €5.5m), a premium to the peer average of c 14x. Recognition of its double-digit sales growth potential, coupled with the potential for a strong margin story, should continue to underpin share momentum.

Consensus estimates

Year
end

Revenue
(€m)

PBT
(€m)

EPS
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

40.0

(3.1)

(0.37)

0.0

N/A

N/A

12/20

39.2

(1.5)

(0.18)

0.0

N/A

N/A

12/21e

49.3

2.0

0.19

0.0

115.8

N/A

12/22e

58.5

7.0

0.63

0.0

35.9

N/A

Source: Refinitiv

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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

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

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

Any Information, data, analysis and opinions contained in this report do not constitute investment advice by Deutsche Börse AG or the Frankfurter Wertpapierbörse. Any investment decision should be solely based on a securities offering document or another document containing all information required to make such an investment decision, including risk factors. This report has been commissioned by Deutsche Börse AG and prepared and issued by Edison for publication globally.

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 research department of Edison 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 2021 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

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

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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