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Research: Healthcare
BerGenBio (BGBIO) has made continued progress in H121 in advancing the development of lead asset bemcentinib (an oral, once-a-day, highly selective AXL inhibitor). A deluge of data presentations from Phase II studies in COVID-19, AML and NSCLC continue to highlight the broad potential of this first-in-class treatment. Discussions with regulators are ongoing regarding a pivotal study in relapsed AML in combination with LDAC, which could enable potential approval and launch in 2024. COVID-19 presents a potential opportunity to expedite bemcentinib’s route to market in 2022. Discussions with regulators will determine the next steps following top-line data from two Phase II trials. We value BGBIO at NOK4.91bn.
Written by
BerGenBio |
Advancing towards pivotal studies |
Interim results |
Pharma & biotech |
20 August 2021 |
Share price performance
Business description
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Analysts
BerGenBio is a research client of Edison Investment Research Limited |
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BerGenBio (BGBIO) has made continued progress in H121 in advancing the development of lead asset bemcentinib (an oral, once-a-day, highly selective AXL inhibitor). A deluge of data presentations from Phase II studies in COVID-19, AML and NSCLC continue to highlight the broad potential of this first-in-class treatment. Discussions with regulators are ongoing regarding a pivotal study in relapsed AML in combination with LDAC, which could enable potential approval and launch in 2024. COVID-19 presents a potential opportunity to expedite bemcentinib’s route to market in 2022. Discussions with regulators will determine the next steps following top-line data from two Phase II trials. We value BGBIO at NOK4.91bn.
Year end |
Revenue (NOKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
8.9 |
(199.3) |
(3.43) |
0.0 |
N/A |
N/A |
12/20 |
0.6 |
(257.0) |
(3.43) |
0.0 |
N/A |
N/A |
12/21e |
0.0 |
(322.1) |
(3.67) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(335.1) |
(3.81) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Multiple opportunities in oncology
In June, the FDA granted bemcentinib fast track designation in combination with an anti-PD-L1 agent (like Keytruda) for second-line, AXL-positive NSCLC patients (without driver mutations). This highlights the regulator’s recognition of AXL-positive patients as a molecular targetable patient population and provides strong validation of AXL as a negative prognostic marker in NSCLC. First efficacy data, expected in H221 from Cohort C of the ongoing Phase II study, will be critical to defining bemcentinib’s utility in this setting. BGBIO presented data from the ongoing Phase II trial in combination with LDAC in AML at EHA. Notably, durable responses were observed in relapsed AML patients (ORR of 31%; 5/16), together with impressive median overall survival of 13.3 months (more than double historical survival data).
COVID-19 regulatory discussions ongoing
BGBIO presented encouraging combined data from two Phase II studies of bemcentinib in addition to standard of care in hospitalised COVID-19 patients at ECCMID. Post hoc analysis in a subgroup of patients with a higher disease severity (>60% of evaluable patients) showed a significantly reduced likelihood (69%) of progression to ventilation and significantly increased likelihood (88%) of shorter time to recovery or discharge. Treatment with bemcentinib also led to numerically fewer deaths and preclinical studies highlight potential continued efficacy against COVID-19 variants. BGBIO is in discussions with regulators about the next steps. We expect an additional global Phase III study will be required before approval.
Valuation: NOK4.91bn or NOK55.8 per share
We value BGBIO at NOK4.91bn or NOK 55.8/share vs NOK4.72bn or NOK53.8/ share previously. We have rolled forward our model and reflect net cash of NOK572.8m at 30 June 2021. We have updated our financial forecasts to reflect H121 results and increased R&D expenses (FY21: NOK228.8m vs NOK205.9m, FY22: NOK233.4m vs NOK216.2m) due to growing clinical trial activities.
Exhibit 1: Financial summary
Accounts: IFRS, year-end 31 December, NOK’000s |
|
2018 |
2019 |
2020 |
2021e |
2022e |
PROFIT & LOSS |
|
|
|
|
|
|
Operating revenues |
|
2,335 |
8,900 |
601 |
0 |
0 |
Licensing revenues |
|
2,335 |
8,900 |
601 |
0 |
0 |
Other revenues |
|
0 |
0 |
0 |
0 |
0 |
Total operating expenses |
|
(196,874) |
(213,274) |
(261,692) |
(328,830) |
(337,280) |
Other operating expenses (R&D) |
|
(133,699) |
(141,630) |
(163,442) |
(228,819) |
(233,395) |
EBITDA (reported) |
|
(194,335) |
(203,589) |
(260,365) |
(328,002) |
(336,724) |
Depreciation and amortisation |
|
(204) |
(785) |
(726) |
(829) |
(556) |
Reported operating income |
|
(194,539) |
(204,374) |
(261,091) |
(328,830) |
(337,280) |
Operating margin % |
|
N/A |
N/A |
N/A |
N/A |
N/A |
Finance income/(expense) |
|
2,793 |
5,096 |
4,062 |
6,775 |
2,176 |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
Profit before tax (reported) |
|
(191,746) |
(199,278) |
(257,029) |
(322,056) |
(335,104) |
Income tax expense |
|
0 |
0 |
0 |
0 |
0 |
Net income (reported) |
|
(191,746) |
(199,278) |
(257,029) |
(322,056) |
(335,104) |
Basic average number of shares (m) |
|
53.3 |
58.0 |
74.9 |
87.8 |
88.0 |
Year-end number of shares (m) |
|
54.7 |
61.1 |
87.3 |
88.0 |
88.0 |
Basic EPS (NOK) |
|
(3.60) |
(3.43) |
(3.43) |
(3.67) |
(3.81) |
Adjusted EPS (NOK) |
|
(3.60) |
(3.43) |
(3.43) |
(3.67) |
(3.81) |
Dividend per share (NOK) |
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
BALANCE SHEET |
|
|
|
|
|
|
Property, plant and equipment |
|
581 |
974 |
2,332 |
1,570 |
1,081 |
Intangible assets |
|
0 |
0 |
0 |
0 |
0 |
Total non-current assets |
|
581 |
974 |
2,332 |
1,570 |
1,081 |
Cash and equivalents |
|
360,414 |
253,586 |
721,641 |
422,577 |
90,787 |
Other current assets |
|
17,831 |
15,818 |
14,228 |
15,023 |
14,626 |
Total current assets |
|
378,245 |
269,404 |
735,869 |
437,600 |
105,412 |
Total non-current liabilities |
|
0 |
0 |
1,367 |
1,367 |
1,367 |
Trade and other payables |
|
23,939 |
26,746 |
22,550 |
33,841 |
35,668 |
Other current liabilities |
|
12,875 |
21,803 |
38,046 |
38,585 |
39,185 |
Provisions |
|
4,732 |
2,074 |
6,008 |
2,439 |
2,439 |
Total current liabilities |
|
41,546 |
50,623 |
66,604 |
74,865 |
77,292 |
Equity attributable to company |
|
337,280 |
219,754 |
670,229 |
362,937 |
27,833 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
Profit before taxes |
|
(191,746) |
(199,278) |
(257,029) |
(322,056) |
(335,104) |
Depreciation and amortisation |
|
204 |
785 |
726 |
829 |
556 |
Share based payments |
|
1,678 |
3,842 |
7,412 |
4,514 |
0 |
Other adjustments |
|
1,712 |
(2,990) |
4,644 |
(3,569) |
0 |
Movements in working capital |
|
1,446 |
13,164 |
13,572 |
11,620 |
3,410 |
Interest paid/received |
|
0 |
(2,206) |
(3,614) |
0 |
0 |
Income taxes paid |
|
0 |
0 |
0 |
0 |
0 |
Cash from operations (CFO) |
|
(186,706) |
(186,683) |
(234,290) |
(308,662) |
(331,138) |
Capex |
|
(228) |
0 |
(67) |
(67) |
(67) |
Acquisitions & disposals net |
|
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
0 |
2,206 |
3,614 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
(228) |
2,206 |
3,548 |
(67) |
(67) |
Net proceeds from issue of shares |
|
176,998 |
77,910 |
700,092 |
10,250 |
0 |
Movements in debt |
|
0 |
0 |
0 |
0 |
0 |
Other financing activities |
|
0 |
(593) |
(585) |
(585) |
(585) |
Cash from financing activities (CFF) |
|
176,998 |
77,317 |
699,507 |
9,665 |
(585) |
Cash and equivalents at beginning of period |
|
370,350 |
360,414 |
253,586 |
721,641 |
422,577 |
Increase/(decrease) in cash and equivalents |
|
(9,936) |
(107,160) |
468,765 |
(299,064) |
(331,790) |
Effect of FX on cash and equivalents |
|
0 |
332 |
(710) |
0 |
0 |
Cash and equivalents at end of period |
|
360,414 |
253,586 |
721,641 |
422,577 |
90,787 |
Net (debt)/cash |
|
360,414 |
253,586 |
720,274 |
421,210 |
89,420 |
Source: Company accounts, Edison Investment Research
|
|
Research: Investment Companies
Utilico Emerging Markets Trust (UEM) is facing a continuation vote at the September 2021 AGM; since inception, the fund has generated NAV total returns of c 10.0% pa and has outperformed the MSCI Emerging Markets Index over the last decade. It is managed by Charles Jillings at specialist investment firm ICM Group. The manager is very encouraged by the robust operating performance of the majority of UEM’s investee companies, helped by higher revenues and strict cost control, which has been supportive for their share prices this year. UEM has an above-market dividend yield and the growing annual distribution is fully covered by portfolio income.