US partner on board ahead of PDUFA date

Newron Pharmaceuticals 18 March 2016 Flash note

Newron Pharmaceuticals

US partner on board ahead of PDUFA date

Product partnering news

Pharma & biotech

18 March 2016

Price

CHF20.20

Market cap

CHF287m

Net cash (€m) at 31 December 2015

40.2

Shares in issue

14.2m

Free float

77%

Code

NWRN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

Business description

Newron Pharmaceuticals is an Italian CNS-focused biotechnology company. Xadago (safinamide) for Parkinson’s disease has been launched in Europe; the US PDUFA date is 29 March 2016. Xadago is partnered with Zambon (EU), Meiji Seika (Japan); and US WorldMeds (US).

Analysts

Dr Susie Jana

+44 (0) 20 3077 5700

Lala Gregorek

+44 (0) 20 3681 2527

Newron Pharmaceuticals Pharmaceuticals is a research client of Edison Investment Research Limited

Commercial partner, Zambon, has announced a sublicence agreement with US WorldMeds for the US commercialisation of Parkinson’s disease (PD) therapy Xadago (safinamide). Under the agreement’s terms Zambon will give Newron a share of undisclosed, upfront milestone and royalty payments made by US WorldMeds, in addition to a milestone payment on FDA approval (we estimate €9m, not included in our forecasts). Importantly Xadago’s US PDUFA date is looming (29 March 2016) and a positive decision will clearly bode well for Newron’s share price. Our valuation of Newron remains unchanged at CHF504m or CHF35.5/share.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/14**

1.6

(8.6)

(0.63)

0.0

N/A

N/A

12/15

2.4

(18.3)

(1.17)

0.0

N/A

N/A

12/16e

4.0

(21.4)

(1.51)

0.0

N/A

N/A

12/17e

12.2

(5.5)

(0.39)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items. **FY14 PBT is restated.

US WorldMeds is a Kentucky-based pharmaceutical company that markets a number of specialty products including a treatment for PD (notably APOKYN for the acute treatment of intermittent ‘off’ episodes). If approved Xadago would therefore fit neatly into its portfolio as it would be indicated for use as add-on to Levodopa in mid- to late-stage Parkinson’s disease. US WorldMeds plans to focus more than 60 sales representatives on launching Xadago in the US, which we assume in H216 on the basis of an approval at end March 2016.

Our forecasts and valuation assume Xadago is priced broadly in line with Azilect, leading to peak global sales of c €450m (US represents c 65% of this estimate) based on a 10% penetration of the PD patient market. If Xadago can achieve premium pricing to Azilect across Europe and the US, as it has in Germany so far, then all else being equal our peak sales forecast would be closer to €660m. This would contribute a further CHF160m to our valuation, or CHF12/share. Until pricing is agreed, particularly in the US, we make no changes to our forecasts.

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New Zealand

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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