Herantis Pharma progressed on multiple levels in 2019. With the main study of the Phase I/II cerebral dopamine neurotrophic factor (CDNF) study now complete in Parkinson’s disease (PD) (top-line safety and efficacy data are expected in Q120), positive trial data could validate the research efforts and enable future partnering opportunities. Advances have been made on the development of a non-invasive next-generation CDNF (xCDNF); three lead candidates have progressed into lead optimisation stage. The Phase II Adenovirus gene therapy for the treatment of LymphEdema (AdeLE) study evaluating Lymfactin in breast cancer-associated lymphedema (BCAL) has fully recruited (data expected H121). In H219 Herantis successfully completed a share offering (€4.17m gross raised) and a secondary listing on NASDAQ Stockholm. We value Herantis at €60.8m.
Written by
Herantis Pharma |
2019 progress made; next up, CDNF data |
Corporate update |
Pharma & biotech |
22 January 2020 |
Share price performance
Business description
Next events
Analysts
Herantis Pharma is a research client of Edison Investment Research Limited |
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Herantis Pharma progressed on multiple levels in 2019. With the main study of the Phase I/II cerebral dopamine neurotrophic factor (CDNF) study now complete in Parkinson’s disease (PD) (top-line safety and efficacy data are expected in Q120), positive trial data could validate the research efforts and enable future partnering opportunities. Advances have been made on the development of a non-invasive next-generation CDNF (xCDNF); three lead candidates have progressed into lead optimisation stage. The Phase II Adenovirus gene therapy for the treatment of LymphEdema (AdeLE) study evaluating Lymfactin in breast cancer-associated lymphedema (BCAL) has fully recruited (data expected H121). In H219 Herantis successfully completed a share offering (€4.17m gross raised) and a secondary listing on NASDAQ Stockholm. We value Herantis at €60.8m.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.0 |
(2.2) |
(0.5) |
0.0 |
N/A |
N/A |
12/18 |
0.0 |
(4.2) |
(0.8) |
0.0 |
N/A |
N/A |
12/19e |
0.0 |
(5.8) |
(1.0) |
0.0 |
N/A |
N/A |
12/20e |
0.0 |
(4.2) |
(0.7) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
CDNF and Lymfactin inflection points approaching CDNF is a neuroprotective factor that Herantis hopes could have a disease-modifying effect on patients with PD. Top-line efficacy and safety data from the ongoing Phase I/II trial testing CDNF in PD patients are expected in Q120. The current PD treatment armament focuses on symptoms and a product that modifies disease would be a game changer. Herantis’s second clinical asset, Lymfactin, has completed patient enrolment in the Phase II AdeLE trial in BCAL patients (data expected Q121). The non-invasive xCDNF has moved into lead-optimisation stage of preclinical development; although early days, it could improve CDNF’s profile given CDNF is dosed intracranially once a month as an infusion using an implanted drug-delivery device behind the ear.
Financials: Cash runway extended
In H219, Herantis issued 618,018 new shares (subscription price of €6.70), raising gross €4.17m and extending the cash runway to key value inflection points. In the near term, Herantis will continue to be cash consumptive and operate as a non-revenue-generating biotech. We note most funding for the Phase I/II CDNF trial comes from an EU grant. Cash burn amounted to €2.7m in H119 (H118: €1.8m), implying a cash runway to 2021.
Valuation: €60.8m or €9.1/share
Our valuation is €60.8m (€9.1/share) versus €58.7m (€9.7/share) previously; it includes net cash of €1.2m (FY 2019 estimate) and is based on an rNPV of CDNF in PD (€3.5/share) and Lymfactin in BCAL (€5.4/share). We have rolled our model forward and updated for FX and an increased number of outstanding shares after the recent capital raise. For more details please see our initiation note.
Exhibit 1: Financial summary
Accounts: IFRS, year-end: December, €m |
|
|
2016 |
2017 |
2018 |
2019e |
2020e |
INCOME STATEMENT |
|
|
|
|
|
|
|
Total revenues |
|
|
25 |
0 |
0 |
0 |
0 |
Cost of sales |
|
|
0 |
0 |
0 |
0 |
0 |
Reported gross profit |
|
|
25 |
0 |
0 |
0 |
0 |
SG&A (expenses) |
|
|
(942) |
(1,024) |
(1,244) |
(1,493) |
(1,508) |
R&D costs |
|
|
(27) |
0 |
0 |
(2,840) |
(1,988) |
Other (includes exceptionals) |
|
|
(2,273) |
(1,703) |
(2,424) |
232 |
235 |
Depreciation |
|
|
(1,203) |
(1,218) |
(1,202) |
(1,213) |
(910) |
Adjusted EBIT |
|
|
(4,420) |
(3,945) |
(4,871) |
(5,313) |
(4,171) |
Reported EBIT |
|
|
(4,420) |
(3,945) |
(4,871) |
(5,313) |
(4,171) |
Finance income/ (expense) |
|
|
(4) |
1,780 |
691 |
(464) |
(47) |
Other income (expense) (includes exceptionals) |
|
|
0 |
0 |
0 |
0 |
0 |
Adjusted PBT |
|
|
(4,425) |
(2,165) |
(4,180) |
(5,778) |
(4,218) |
Reported PBT |
|
|
(4,425) |
(2,165) |
(4,180) |
(5,778) |
(4,218) |
Income tax expense |
|
|
0 |
0 |
0 |
0 |
0 |
Adjusted net income |
|
|
(4,425) |
(2,165) |
(4,180) |
(5,778) |
(4,218) |
Reported net income |
|
|
(4,425) |
(2,165) |
(4,180) |
(5,778) |
(4,218) |
Earnings per share |
|
|
|
|
|
|
|
Basic EPS (€) |
|
|
(1.1) |
(0.5) |
(0.8) |
(1.0) |
(0.7) |
Diluted EPS (€) |
|
|
(1.1) |
(0.5) |
(0.8) |
(1.0) |
(0.7) |
Adjusted basic EPS (€) |
|
|
(1.1) |
(0.5) |
(0.8) |
(1.0) |
(0.7) |
Adjusted diluted EPS (€) |
|
|
(1.1) |
(0.5) |
(0.8) |
(1.0) |
(0.7) |
Average number of shares - basic (m) |
|
|
4.1 |
4.2 |
4.9 |
5.5 |
6.1 |
Average number of shares - diluted (m) |
|
|
4.1 |
4.9 |
5.5 |
6.1 |
6.1 |
BALANCE SHEET |
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
9 |
7 |
5 |
4 |
3 |
Goodwill |
|
|
0 |
0 |
0 |
0 |
0 |
Intangible assets |
|
|
6,590 |
5,663 |
4,735 |
3,524 |
2,616 |
Other non-current assets |
|
|
712 |
392 |
118 |
117 |
116 |
Total non-current assets |
|
|
7,311 |
6,061 |
4,857 |
3,644 |
2,734 |
Cash and equivalents |
|
|
2,829 |
5,402 |
2,186 |
8,424 |
5,117 |
Inventories |
|
|
0 |
0 |
0 |
0 |
0 |
Trade and other receivables |
|
|
65 |
109 |
105 |
105 |
105 |
Other current assets |
0 |
0 |
0 |
0 |
0 |
||
Assets classified for sale |
|
|
0 |
0 |
0 |
0 |
0 |
Total current assets |
|
|
2,895 |
5,511 |
2,290 |
8,529 |
5,221 |
Non-current loans and borrowings |
|
|
8,018 |
6,022 |
5,878 |
6,729 |
6,729 |
Trade and other payables |
|
|
0 |
0 |
0 |
0 |
0 |
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current liabilities |
|
|
8,018 |
6,022 |
5,878 |
6,729 |
6,729 |
Trade and other payables |
|
|
186 |
278 |
200 |
200 |
200 |
Current loans and borrowings |
|
|
103 |
547 |
507 |
507 |
507 |
Other current liabilities |
|
|
324 |
634 |
651 |
651 |
651 |
Liabilities of assets held for sale |
|
|
0 |
0 |
0 |
0 |
0 |
Total current liabilities |
|
|
613 |
1,460 |
1,358 |
1,358 |
1,358 |
Equity attributable to company |
|
|
1,575 |
4,090 |
(89) |
4,086 |
(132) |
Non-controlling interest |
|
|
0 |
0 |
0 |
0 |
0 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Profit before tax |
|
|
(4,425) |
(2,165) |
(4,180) |
(5,778) |
(4,218) |
Depreciation of tangible assets |
|
|
1,203 |
1,218 |
1,202 |
1,213 |
910 |
Amortisation of intangible assets |
|
|
0 |
0 |
0 |
0 |
0 |
Share based payments |
|
|
(0) |
(2,021) |
(3) |
0 |
0 |
Other adjustments |
|
|
5 |
240 |
(688) |
464 |
47 |
Movements in working capital |
|
|
166 |
372 |
(79) |
0 |
0 |
Net cash from operating activities (pre-tax) |
|
|
(3,052) |
(2,355) |
(3,747) |
(4,100) |
(3,261) |
Interest paid / received |
|
|
16 |
(244) |
15 |
(464) |
(47) |
Income taxes paid |
|
|
0 |
0 |
0 |
0 |
0 |
Cash from operations (CFO) |
|
|
(3,036) |
(2,599) |
(3,732) |
(4,565) |
(3,308) |
Capex (includes acquisitions) |
|
|
(10) |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
(61) |
(0) |
7 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(71) |
(0) |
7 |
0 |
0 |
Net proceeds from issue of shares |
|
|
0 |
4,680 |
0 |
9,953 |
0 |
Movements in debt |
|
|
0 |
0 |
509 |
851 |
0 |
Other financing activities |
|
|
396 |
492 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
396 |
5,172 |
509 |
10,804 |
0 |
Currency translation differences and other |
|
|
0 |
0 |
0 |
0 |
0 |
Increase/(decrease) in cash and equivalents |
|
|
(2,711) |
2,573 |
(3,216) |
6,239 |
(3,308) |
Cash and equivalents at beginning of period |
|
|
5,541 |
2,829 |
5,402 |
2,186 |
8,424 |
Cash and equivalents at end of period |
|
|
2,829 |
5,402 |
2,186 |
8,424 |
5,117 |
Net (debt)/cash |
|
|
(5,291) |
(1,168) |
(4,200) |
1,188 |
(2,120) |
Movement in net (debt)/cash over period |
|
|
N/A |
4,123 |
(3,033) |
5,388 |
(3,308) |
Source: Edison Investment Research
|
|
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