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Statistically significant clinical insignificance

ASIT biotech 26 November 2019 Update
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ASIT biotech

Statistically significant clinical insignificance

Phase III failure

Pharma & biotech

26 November 2019

Price

€0.46

Market cap

€10m

US$/€0.89

Cash (€m) at 22 November 2019

3.8

Shares in issue (at 7 November 2019)

21.44m

Free float

72%

Code

ASIT

Primary exchange

Euronext Brussels

Secondary exchange

Euronext Paris

Share price performance

%

1m

3m

12m

Abs

(61.7)

(56.5)

(76.8)

Rel (local)

(63.2)

(61.2)

(79.5)

52-week high/low

€2.60

€0.46

Business description

ASIT biotech is a clinical-stage company focused on the development of short-course therapies for allergies. ASIT’s products are based on the proprietary ASIT+ technology platform, allowing the development of products containing highly purified allergen fragments in an adjuvant-free formulation, selected to be safe while maintaining the capacity to stimulate immune tolerance.

Next events

FY19 results

March 2020

Analyst

Dr John Savin MBA

+44 (0)20 3077 5700

ASIT biotech is a research client of Edison Investment Research Limited

Reported gp-ASIT+ Phase III allergy data unfortunately confirmed the outcome of the first Phase III: a statistically proven, inadequate clinical response, in this case a 0.15 reduction in the peak allergy score; 0.3 was the endpoint. Given the current cash position of €3.8m and the €9.23m debt from July now unlikely to convert, it is hard to see how ASIT can fund and progress its remaining preclinical allergy projects or run any revised gp-ASIT+ programme. Our forecasts and valuation are withdrawn till the strategy for the business and the overall financial position become clearer.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/17

0.0

(12.0)

(0.94)

0.0

N/A

N/A

12/18

0.0

(14.3)

(0.86)

0.0

N/A

N/A

Note: *PBT and EPS are both as reported.

Not the crescendo we expected

The second gp-ASIT+ Phase III study showed a clinical allergy score reduction of 0.15 against a 0.3 reduction set, by the German regulator, as the primary endpoint for clinical significance; the drop was statistically valid, P=0.05. The study also confirms the first Phase III result – deemed to have failed due to a poor pollen season. Why the product has shown such a disappointing efficacy remains unclear although analysis of the full data set may offer some insight. The product was safe but, a strong, durable immune tolerance response was clearly not generated. Perhaps a longer dose regimen might have succeeded – but how ASIT might fund the trials needed to test this is not clear. Longer treatment periods were not considered at Phase II which used fast readout surrogate endpoints and not the Phase III scoring system.

Limited cash and financial options

After a major Phase III failure, biotech company recovery depends on strong cash and a viable earlier-stage portfolio. In ASIT’s case, cash on 22 November was €3.8m and the other allergy products are preclinical. The H1 operating loss was €7.8m so ASIT will, on our estimates, have cash into Q120. We assume that the second convertible note tranche of €4.2m, previously expected in December 2019, will not be available. The first loan tranche of €5.03m is now unlikely to convert and is repayable by 31 December 2020 with a 3% interest rate. The Equity Line convertible notes of July 2018 can, on average, provide €600k a month to February 2020 but only if the share price is over €1.1368. At the time of writing, the shares were suspended. The last report of 30 June 2019 showed €5.8m remaining of the equity line but some of this has been drawn down over H219.

Valuation: suspended

A valuation of ASIT is not currently possible. Edison’s valuation and financial forecasts are withdrawn until there is a clear statement about the direction of ASIT from the board.

Exhibit 1: Financial summary

 

 

€'000s

2017

2018

Year end 31 December

 

 

IFRS

IFRS

INCOME STATEMENT

 

 

 

 

Revenue

 

 

 

0

0

Cost of Sales

 

 

 

0

0

Gross Profit

 

 

 

0

0

General and Administrative Expenses

 

(1,676)

(2,468)

Research and Development Expenses

 

(10,903)

(10,856)

Other Operating Income

 

 

604

557

Reported operating profit

 

 

(11,975)

(12,767)

Net Interest

 

 

 

(9)

(1,557)

Profit before tax (as reported)

 

 

(11,984)

(14,324)

Reported tax

 

 

 

(2)

3

Profit after tax (reported)

 

 

(11,986)

(14,321)

Minority interests

 

 

0

0

Net income (reported)

 

 

(11,986)

(14,321)

Basic average number of shares outstanding (m)

 

12.8

16.7

EPS - basic, as reported (€)

 

(0.94)

(0.86)

BALANCE SHEET

 

 

 

 

Non Current Assets

 

 

1,837

2,398

Property Plant and equipment, net

 

691

810

Other intangible assets

 

 

0

0

Other Non Current Assets

 

 

1,146

1,588

Current Assets

 

 

2,448

9,156

Cash and cash equivalents

 

 

2,126

8,458

Accounts receivable

 

 

0

0

Inventories

 

 

 

0

0

Other current assets

 

 

322

698

Current Liabilities

 

 

2,654

4,621

Accounts payable

 

 

1,264

2,980

Short term debt and borrowings

 

34

25

Other current liabilities

 

 

1,356

1,616

Non Current Liabilities

 

 

432

465

Loans and borrowings

 

 

432

465

Other non-current liabilities

 

 

0

0

Equity

 

 

 

1,199

6,468

Common stock / Capital

 

 

9,989

14,350

Additional paid-in capital / Share premium

 

21,957

37,034

Other reserves and surplus

 

 

(28,645)

(42,889)

Other Equity

 

 

 

(2,102)

(2,027)

CASH FLOW

 

 

 

 

 

Cash Flow from Operations

 

 

 

 

Net income (loss)

 

 

(11,986)

(14,321)

Depreciation and Amortization

 

 

205

253

Interest income/expense

 

 

9

1,557

Stock-based compensation

 

 

54

73

Non Cash Adjustments

 

 

(492)

(564)

(Increase) decrease in inventories

 

0

0

(Increase) decrease in trade receivables

 

74

(376)

(Increase) decrease in other current assets

 

(112)

360

Increase (decrease) in trade payables

 

(586)

0

Net cash used in Operating activities

 

(12,834)

(13,018)

Cash Flow from Investing

 

 

 

 

Purchases of fixed assets

 

 

(161)

(371)

Other Investing Activities

 

 

0

0

Net cash used in Investing activities

 

(161)

(371)

Cash Flow from Financing

 

 

 

 

Change in Debt

 

 

0

0

Change in Capital Stock

 

 

0

19,591

Interest paid

 

 

 

(10)

(2)

Other Financing Activities

 

 

1,743

134

Net cash used in Financing activities

 

1,733

19,723

Net Changes in Cash and Cash Equivalent

 

(11,262)

6,334

Net cash/(debt) at the beginning of the period

 

12,956

1,660

Net cash/(debt) at the end of the period

 

1,660

7,968

Source: ASIT biotech accounts


General disclaimer and copyright

This report has been commissioned by ASIT biotech and prepared and issued by Edison, in consideration of a fee payable by ASIT biotech. 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

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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.

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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

1,185 Avenue of the Americas

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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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

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

General disclaimer and copyright

This report has been commissioned by ASIT biotech and prepared and issued by Edison, in consideration of a fee payable by ASIT biotech. 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

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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