The year to date has been highly productive for CollPlant. It has completed a new production facility in Rehovot to support its increased commercial efforts. These include both its BioInk product for 3D bioprinting of organs and tissue, as well as VergenixFG and VergenixSTR for wound care and tendinopathy respectively, which are expanding operations in Europe. In addition, the company has announced its intention to de-list from TASE to trade exclusively on NASDAQ.
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CollPlant Holdings |
A productive year to date |
Earnings update |
Pharma & biotech |
30 May 2018 |
Share price performance
Business description
Next events
Analysts
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The year to date has been highly productive for CollPlant. It has completed a new production facility in Rehovot to support its increased commercial efforts. These include both its BioInk product for 3D bioprinting of organs and tissue, as well as VergenixFG and VergenixSTR for wound care and tendinopathy respectively, which are expanding operations in Europe. In addition, the company has announced its intention to de-list from TASE to trade exclusively on NASDAQ.
Year end |
Revenue (NISm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
0.3 |
(27.9) |
(0.28) |
0.0 |
N/A |
N/A |
12/17 |
1.7 |
(20.9) |
(0.16) |
0.0 |
N/A |
N/A |
12/18e |
3.3 |
(21.3) |
(0.12) |
0.0 |
N/A |
N/A |
12/19e |
7.3 |
(19.6) |
(0.10) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
New rhCollagen production facility built
To meet future commercial and research needs, CollPlant opened a new 6,000 sq ft production facility for rhCollagen in Rehovot, Israel, in April 2018. The new facility is certified for good manufacturing practices (cGMP), and is focused on the purification and formulation of rhCollagen. The first production runs in the facility have been completed, and at the last report are in quality testing.
Additional BioInk delivered
The company previously announced that it had received multiple orders of its BioInk product from a biotechnology and medical device company. The orders were intended for research into the development of bioprinted organs and orthopaedic implants respectively. One of the clients placed a repeat order, which was delivered in Q118. The company recorded sales of $222,000 from this order and sales of its Vergenix brand product in Q118.
Financing complete, runway into 2019
The company initiated a series of financings starting in September 2017 with a number of investors (Alpha Capital, Meitav Dash and Ami Sagi), totalling approximately $8m, with up to $15m available through the exercise of warrants. With the NASDAQ uplisting, the company has completed its obligations under these agreements and received its final tranche, bringing estimated net cash to $4.9m ($3.9m at quarter end plus $1m from the final Alpha tranche in April, not accounting for subsequent cash burn), which we expect to provide a runway into 2019. CollPlant also announced that it is in proceedings to voluntarily de-list from the TASE.
Valuation: Increased to $79m or $22.96 per ADS (NIS 1.65 per share)
We have slightly increased our valuation to $79m or $22.96 per ADS from $77m or $22.62 per ADS. This was driven by rolling forward our NPVs, offset by lower net cash. We expect CollPlant to require $7m (up from $5.7m) in additional capital to reach profitability in 2021.
Valuation
We have slightly increased our valuation to $79m or $22.96 per ADS from $77m or $22.62 per ADS. This increase is driven by rolling forward our NPVs, offset by lower net cash. We currently do not include recurring revenue from the BioInk product in our model, although we may add this at a later date if the company continues to receive orders or if the technology is licensed and integrated into a product.
Exhibit 1: Valuation of CollPlant
Product |
Status |
NPV ($m) |
rNPV ($m) |
VergenixFG: Woundcare |
Europe market |
28.3 |
28.3 |
VergenixSTR: Tendonopathy |
Europe market |
56.7 |
56.7 |
Portfolio total |
85.0 |
85.0 |
|
R&D |
(7.1) |
||
SG&A |
(4.2) |
||
Cash (Q118 + Alpha financing) |
4.9 |
||
Overall valuation |
78.6 |
||
ADSs |
3.42 |
||
Value per basic ADS |
22.96 |
||
Warrants, Options, and Debentures |
3.5 |
||
Total diluted ADSs |
7.0 |
||
Diluted value |
103.2 |
||
Value per diluted ADS |
14.83 |
||
Source: CollPlant reports, Edison Investment Research
Financials
Collplant reported revenue of $222,000 in Q118 from sales of its BioInk as well as Vergenix brands in Europe. Operating expenses were $2.3m, compared to $1.5m in Q117. The majority of the increase in costs is attributable to non-cash expenses associated with the Alpha financing agreement and an increase in share-based compensation. We have slightly increased our expected operating loss for 2018 to NIS21.4m ($6.0m) from NIS18.9m ($5.4m) to adjust for these and other expenses. The company ended the quarter with $3.9m in cash and received $1.0m associated with the closing of the Alpha financing in April, which we expect to provide sufficient capital for 2018. We currently forecast that the company will need $7m (increased from $5.7m) in additional capital to reach profitability in 2021, which we record as illustrative debt in 2019.
Exhibit 2: Financial summary
NIS'000s |
2015 |
2016 |
2017 |
2018e |
2019e |
||
Year end 31 Dec |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
0 |
292 |
1,668.00 |
3,272.56 |
7,311.60 |
Cost of Sales |
0 |
0 |
(52) |
(1,333) |
(3,656) |
||
Gross Profit |
0 |
292 |
1,616 |
1,940 |
3,656 |
||
R&D expenses,net |
(11,864) |
(16,789) |
(14,066) |
(14,064) |
(14,767) |
||
SG&A expenses |
(6,950) |
(11,048) |
(8,303) |
(9,280) |
(8,558) |
||
EBITDA |
|
|
(18,026) |
(27,023) |
(19,670) |
(20,330) |
(18,076) |
Operating Profit (before amort. and except) |
|
(18,814) |
(27,545) |
(20,753) |
(21,404) |
(19,670) |
|
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(18,814) |
(27,545) |
(20,753) |
(21,404) |
(19,670) |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Net Interest |
164 |
(348) |
(127) |
90 |
35 |
||
Profit Before Tax (norm) |
|
|
(18,650) |
(27,893) |
(20,880) |
(21,315) |
(19,634) |
Profit Before Tax (FRS 3) |
|
|
(18,650) |
(27,893) |
(20,880) |
(21,315) |
(19,634) |
Tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(18,650) |
(27,893) |
(20,880) |
(21,315) |
(19,634) |
||
Profit After Tax (FRS 3) |
(18,650) |
(27,893) |
(20,880) |
(21,315) |
(19,634) |
||
Average Number of Shares Outstanding (m) |
84.7 |
100.6 |
133.2 |
179.7 |
188.7 |
||
EPS - normalised (NIS) |
|
|
(0.22) |
(0.28) |
(0.16) |
(0.12) |
(0.10) |
EPS - FRS 3 (NIS) |
|
|
(0.22) |
(0.28) |
(0.16) |
(0.12) |
(0.10) |
Dividend per share (NIS) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
4,971 |
6,364 |
5,631 |
7,385 |
6,665 |
Intangible Assets |
1,721 |
1,631 |
1,454 |
1,408 |
1,408 |
||
Tangible Assets |
2,612 |
4,008 |
3,582 |
5,310 |
4,590 |
||
Other |
638 |
725 |
595 |
667 |
667 |
||
Current Assets |
|
|
8,558 |
8,069 |
22,414 |
10,438 |
21,692 |
Stocks |
0 |
487 |
700 |
1,038 |
2,983 |
||
Debtors |
3,241 |
3,785 |
3,897 |
2,483 |
3,147 |
||
Cash |
5,317 |
3,797 |
17,817 |
6,918 |
15,562 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(3,750) |
(6,806) |
(4,918) |
(5,542) |
(5,539) |
Creditors |
(2,496) |
(5,189) |
(2,922) |
(3,837) |
(3,834) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Short term leases |
0 |
0 |
0 |
0 |
0 |
||
Other |
(1,254) |
(1,617) |
(1,996) |
(1,705) |
(1,705) |
||
Long Term Liabilities |
|
|
0 |
(2,467) |
(14,044) |
(1,413) |
(26,413) |
Long term borrowings |
0 |
(286) |
(12,700) |
0 |
(25,000) |
||
Long term leases |
0 |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
0 |
(2,181) |
(1,344) |
(1,413) |
(1,413) |
||
Net Assets |
|
|
9,779 |
5,160 |
9,083 |
10,869 |
(3,595) |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(14,496) |
(19,384) |
(17,903) |
(13,665) |
(15,447) |
Net Interest |
(2) |
8 |
19 |
(254) |
(35) |
||
Tax |
1 |
0 |
0 |
0 |
0 |
||
Capex |
(1,389) |
(492) |
(447) |
(2,260) |
(873) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
10,010 |
18,219 |
20,234 |
17,960 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
27 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(5,849) |
(1,649) |
1,903 |
1,782 |
(16,355) |
||
Opening net debt/(cash) |
|
|
(11,062) |
(5,317) |
(3,511) |
(5,117) |
(6,918) |
HP finance leases initiated |
0 |
0 |
(253) |
0 |
0 |
||
Other |
104 |
(157) |
(44) |
19 |
0 |
||
Closing net debt/(cash) |
|
|
(5,317) |
(3,511) |
(5,117) |
(6,918) |
9,438 |
Source: CollPlant reports, Edison Investment Research
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Research: Industrials
A short AGM update statement echoed previous management comments regarding market conditions and (unchanged) FY18 expectations. This suggests that the underlying trading environment is broadly stable and actions being taken to improve operational efficiency are proceeding to plan. The share price performance will be driven by delivery against these expectations and/or any indication of more robust market conditions, in our view. Ahead of such a catalyst, the prospective 6.6% dividend yield is a clear incentive to invest.