Currency in SEK
Last close As at 09/06/2023
SEK4.64
▲ 0.03 (0.65%)
Market capitalisation
SEK775m
Research: Healthcare
The interim clinical data in non-small cell lung cancer (NSCLC) and pancreatic duct adenocarcinoma cancer (PDAC) (presented at ASCO 2022) is encouraging, in our view, and Cantargia’s nadunolimab (CAN04) development programme appears to be on track. In H122, the company increased R&D spend to SEK207.1m, from SEK150.1m in H121, as patient enrolment continued in five separate clinical trials. An estimated cash and short-term investments position of SEK575.2m (including the recent rights issue) is anticipated to fund operations into H124, past key readouts from a large portion of the development pipeline. We value Cantargia at SEK7.35bn or SEK44.0 per share compared to SEK6.02bn or SEK60.1 per share previously. The absolute value uplift comes from improved FX, higher net cash and adjustments as we roll our model forward, while our per share figures now include the c 67m new shares from the rights issue.
Cantargia |
A positive H122 supports clinical activity |
H122 update |
Pharma and biotech |
31 August 2022 |
Share price performance
Business description
Next events
Analysts
Cantargia is a research client of Edison Investment Research Limited |
The interim clinical data in non-small cell lung cancer (NSCLC) and pancreatic duct adenocarcinoma cancer (PDAC) (presented at ASCO 2022) is encouraging, in our view, and Cantargia’s nadunolimab (CAN04) development programme appears to be on track. In H122, the company increased R&D spend to SEK207.1m, from SEK150.1m in H121, as patient enrolment continued in five separate clinical trials. An estimated cash and short-term investments position of SEK575.2m (including the recent rights issue) is anticipated to fund operations into H124, past key readouts from a large portion of the development pipeline. We value Cantargia at SEK7.35bn or SEK44.0 per share compared to SEK6.02bn or SEK60.1 per share previously. The absolute value uplift comes from improved FX, higher net cash and adjustments as we roll our model forward, while our per share figures now include the c 67m new shares from the rights issue.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
0.0 |
(173.1) |
(1.94) |
0.0 |
N/A |
N/A |
12/21 |
0.0 |
(370.3) |
(3.70) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(393.8) |
(2.95) |
0.0 |
N/A |
N/A |
12/23e |
0.0 |
(367.5) |
(2.20) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
ASCO data supports development
Cantargia reported encouraging results for its IL1RAP antibody, nadunolimab, from a Phase IIa trial in NSCLC (CANFOUR) and a Phase I/IIa trial in first-line PDAC (CANFOUR), at ASCO 2022. In this, nadunolimab demonstrated notable improvements over historical response and survival rates in both indications. While these data are interim and were interpreted in comparison to historical results (which must be done with care), we see this as important support for clinical development.
Rights issue extends cash runway
With an estimated cash and short-term investment position of SEK575.2m at end-August 2022 and a H122 burn rate of SEK215.9m, we estimate Cantargia is funded into H124. Our runway considers our updated expense forecasts in light of H122 results. In a turbulent market we see Cantargia’s cash runway as a considerable positive as it affords the company significant flexibility in future development plans, in our view.
Valuation: SEK7.35bn or SEK44.0 per share
Based on a risk-adjusted NPV calculation for CAN04 in NSCLC and PDAC, we value Cantargia at SEK7.35bn or SEK44.0 per share, up from SEK6.02bn or SEK60.1 per share, previously. This largely reflects updated exchange rates and our estimated net cash and short-term investment position of SEK575.2m (including SEK225m from the rights issue). Our per share calculations incorporate the post-rights issue share count of 167.0m versus 100.2m previously.
Valuation
We value Cantargia at SEK7.35bn, or SEK44.0 per share, compared to SEK6.02bn, or SEK60.1 per share, previously. Our valuation is based on a risk-adjusted NPV calculation for nadunolimab in NSCLC (rNPV SEK3.28bn or SEK19.6 per share) and PDAC (rNPV SEK3.51bn or SEK21.0 per share) and reflects an estimated net cash and short-term investment position of SEK575.2m, including SEK225m from the rights issue post-H122. Key assumptions are summarised in Exhibit 1.
Exhibit 1: Cantargia valuation breakdown
Product |
|
Launch |
Peak Sales ($m) |
NPV (SEKm) |
NPV/share (SEK) |
Probability |
rNPV (SEKm) |
rNPV/share (SEK) |
CAN04 - NSCLC |
2026 |
2,900 |
11,356.8 |
68.0 |
25.0% |
3,267.6 |
19.6 |
|
CAN04 - Pancreatic Cancer |
2027 |
1,988 |
7,981.8 |
47.8 |
40.0% |
3,509.1 |
21.0 |
|
Estimated Net Cash (including rights issue capital) |
575.2 |
3.4 |
100% |
575.2 |
3.4 |
|||
Valuation |
|
|
|
19,913.8 |
119.3 |
|
7,351.9 |
44.0 |
Source: Edison Investment Research
The increase in the absolute valuation is largely due to the increase in the foreign exchange rate and adjustment to cash as we roll our model forward four months. Our valuation incorporates the following rates, 1 EUR/US$ (previously 1.18 EUR/US$) and 10.67 SEK/US$ (previously 8.46 SEK/US$), which have raised our rNPV for both NSCLC and PDAC. These estimates are offset slightly by the anticipated increase in R&D expenses, in line with H122 results. Our per share calculation incorporates the higher post-rights issue share count of 167.0m versus 100.2m, previously. Our remaining underlying assumptions are unchanged.
Financials
As expected, Cantargia reported no revenues in H122. The company’s R&D-related expenses for the period amounted to SEK207.1m, 38% higher than H121 (SEK150.1m), as continued positive data for CAN04 have supported a ramp-up in clinical activities. In total, operating expenses in H122 came to SEK217.6m, contributing to a cash outflow from operations of SEK215.9m over the period. Considering the H122 results, we have increased our total operating expense estimate for FY22 to SEK393.8m from SEK368.5m previously (Exhibit 2). In FY23 we expect R&D-related expenses for decrease from FY22 as some clinical trials in the CAN04 development programme end.
The company reported a cash and short-term investment position of SEK350.2m (SEK114.1m cash, SEK236.1m short-term investments) at the end of June 2022. Including funds raised through the rights issue in August 2022 of SEK225m (as communicated by management) and with a H122 cash burn rate of SEK215.9m, we estimate this will fund the company’s operations into H124. We note that any delays in clinical trials of larger-than-expected expenses could shorten our runway estimate.
Exhibit 2: Financial summary
SEK'000s |
2019 |
2020 |
2021 |
2022e |
2023e |
||
December |
|||||||
PROFIT & LOSS |
|||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
0 |
0 |
0 |
0 |
||
Research and development |
(97,477) |
(158,396) |
(352,709) |
(372,712) |
(350,000) |
||
EBITDA |
|
|
(111,577) |
(170,697) |
(366,821) |
(390,358) |
(364,024) |
Operating Profit (before amort. and excepts.) |
|
|
(111,589) |
(173,945) |
(370,267) |
(393,804) |
(367,470) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(111,589) |
(173,945) |
(370,267) |
(393,804) |
(367,470) |
||
Net Interest |
780 |
860 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(110,809) |
(173,085) |
(370,267) |
(393,804) |
(367,470) |
Profit Before Tax (reported) |
|
|
(110,809) |
(173,085) |
(370,267) |
(393,804) |
(367,470) |
Tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(110,809) |
(173,085) |
(370,267) |
(393,804) |
(367,470) |
||
Profit After Tax (reported) |
(110,809) |
(173,085) |
(370,267) |
(393,804) |
(367,470) |
||
Average Number of Shares Outstanding (m) |
71.1 |
89.4 |
100.2 |
133.6 |
167.0 |
||
EPS - normalised (ore) |
|
|
(155.74) |
(193.65) |
(369.55) |
(294.78) |
(220.06) |
Dividend per share (ore) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
6,868 |
12,622 |
9,556 |
9,556 |
9,556 |
Intangible Assets |
0 |
7,360 |
6,459 |
6,459 |
6,459 |
||
Tangible Assets |
6,868 |
5,262 |
3,097 |
3,097 |
3,097 |
||
Investments |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
159,189 |
912,892 |
590,687 |
432,931 |
74,001 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
0 |
0 |
0 |
||
Cash |
39,870 |
693,354 |
247,322 |
160,196 |
37,400 |
||
Other* |
119,319 |
219,538 |
343,365 |
272,735 |
36,601 |
||
Current Liabilities |
|
|
(23,785) |
(30,469) |
(66,607) |
(69,116) |
(69,116) |
Creditors |
(23,785) |
(30,469) |
(66,607) |
(69,116) |
(69,116) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
0 |
(3,111) |
(892) |
(892) |
(892) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
0 |
(3,111) |
(892) |
(892) |
(892) |
||
Net Assets |
|
|
142,272 |
891,934 |
532,744 |
372,479 |
13,549 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(111,852) |
(156,887) |
(347,370) |
(388,054) |
(358,929) |
Net Interest |
597 |
500 |
924 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(6,880) |
(890) |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
98,037 |
917,545 |
0 |
224,680 |
(317) |
||
Net (Purchase)/Sale of short-term investments |
(16,560) |
(106,784) |
(99,586) |
76,247 |
236,451 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(36,658) |
653,484 |
(446,032) |
(87,126) |
(122,795) |
||
Opening net debt/(cash) |
|
|
(76,528) |
(39,870) |
(693,354) |
(247,322) |
(160,196) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(39,870) |
(693,354) |
(247,322) |
(160,196) |
(37,400) |
Source: Cantargia company accounts and Edison Investment Research. *Includes short-term investments.
|
|
Research: Industrials
AAC Clyde Space continued to be constrained by the supply chain issues that have persisted across the space industry in Q222. These have delayed project completions and deliveries and constrained revenue as milestones are deferred. However, with SEK145m of its robust SEK400m order backlog expected to be delivered in H222, including delivery for launch of a number of satellites, prospects remain encouraging. These should support the rapid acceleration of higher-margin Space Data as a Service (SDaaS) revenues from FY23 that are key to the growth strategy, driving sustained earnings and cash flow expansion.
Get access to the very latest content matched to your personal investment style.