On July 11 ASIT biotech raised €12m in commitments in a heavily oversubscribed convertible bond placement. In raising this additional capital, ASIT outlined the primary use of the proceeds which is to fund the Phase III study of its short-course grass pollen allergy immunotherapy (AIT) product gp-ASIT+. An update was provided on its earlier-stage products – house dust mite and peanut allergy AITs. We speculated on the latter in our initiation note and it is now confirmed.
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ASIT biotech |
All go on Phase III |
Over-subscribed fund-raising |
Pharma & biotech |
16 July 2018 |
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On July 11 ASIT biotech raised €12m in commitments in a heavily oversubscribed convertible bond placement. In raising this additional capital, ASIT outlined the primary use of the proceeds which is to fund the Phase III study of its short-course grass pollen allergy immunotherapy (AIT) product gp-ASIT+. An update was provided on its earlier-stage products – house dust mite and peanut allergy AITs. We speculated on the latter in our initiation note and it is now confirmed.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0 |
(12.0) |
(0.9) |
0.0 |
N/A |
N/A |
12/18e |
0 |
(11.8) |
(0.8) |
0.0 |
N/A |
N/A |
12/19e |
0 |
(12.2) |
(0.7) |
0.0 |
N/A |
N/A |
12/20e |
10.4 |
(4.9) |
(0.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Good news fund-raising
ASIT biotech’s €12m convertible bond (CB) fund-raising was heavily over-subscribed and the committed capital will be paid in equal tranches over the next 20 months. Proceeds from the placement will fund the second confirmatory Phase III study for the company’s grass pollen AIT, which is expected to start recruiting patients in Q418 and report in Q419. In addition, the funding allows the continued development of ASIT’s second product – hdm-ASIT+ – the house dust mite AIT and the third product, which we had previously termed a food allergy AIT, and has now been announced as a peanut allergy AIT (pnt-AIST+).
A funded pipeline results in optionality
ASIT now has the financial resources to complete the second Phase III for gp-ASIT+ which we have assumed will be commercialised by ASIT in Europe. The fund-raising puts ASIT in a much stronger position in partnering negotiations on gp-ASIT+ and other products that the company is developing outside Europe. This includes the recently disclosed pnt-ASIT+ – a short-course AIT for peanut allergy. Peanut allergies are anaphylactic reactions that potentially fatal and often require emergency hospitalisation. A GlobalData study estimated the 2017 disease prevalence in the eight major markets of 6.9m patients, with 44% of patients in the US and EU5 markets.
Valuation updated for cash and pipeline progression
We have included the cash flows from the €12m CB offering in our model which will result in 20 equal cash tranches over the next 20 months. We have assumed that the initial cash inflows will be modest (€3m in H218) and that the dilution starts 19 months from the date of CB issue and ends in H120. The only other change we have made to our model is to update spot foreign exchange rates. Our risk-adjusted rNPV valuation has increased to €121.8m, or €7.4 per share from €119.6m or €7.3 per share.
Exhibit 1: Financial summary
|
|
|
EUR ('000) |
2015 |
2016 |
2017 |
2018e |
2019e |
2020e |
2021e |
Year end 31 December |
|
|
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|
INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
4 |
0 |
0 |
0 |
0 |
10,351 |
14,916 |
Cost of Sales |
|
|
|
(3) |
0 |
0 |
0 |
0 |
0 |
0 |
Gross Profit |
|
|
|
1 |
0 |
0 |
0 |
0 |
10,351 |
14,916 |
General and Administrative Expenses |
|
(947) |
(1,822) |
(1,676) |
(1,659) |
(1,643) |
(1,626) |
(1,610) |
||
Research and Development Expenses |
|
(6,691) |
(12,123) |
(10,903) |
(10,903) |
(11,365) |
(14,322) |
(15,570) |
||
Other Operating Income |
|
|
(3) |
1,667 |
604 |
634 |
666 |
699 |
734 |
|
Reported operating profit |
|
|
(7,640) |
(12,278) |
(11,975) |
(11,928) |
(12,341) |
(4,898) |
(1,529) |
|
Net Interest |
|
|
|
(75) |
(60) |
(9) |
104 |
107 |
37 |
7 |
Profit before tax (reported) |
|
|
(7,715) |
(12,338) |
(11,984) |
(11,824) |
(12,235) |
(4,861) |
(1,523) |
|
Reported tax |
|
|
|
0 |
(1) |
(2) |
(2) |
2 |
1,458 |
457 |
Profit after tax (reported) |
|
|
(7,715) |
(12,339) |
(11,986) |
(11,826) |
(12,232) |
(3,403) |
(1,066) |
|
Minority interests |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Net income (reported) |
|
|
(7,715) |
(12,339) |
(11,986) |
(11,826) |
(12,232) |
(3,403) |
(1,066) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic average number of shares outstanding |
|
8,504 |
11,219 |
12,806 |
15,526 |
16,432 |
16,432 |
16,432 |
||
EPS - basic reported (EUR) |
|
|
-0.91 |
-1.10 |
-0.94 |
-0.76 |
-0.74 |
-0.21 |
-0.06 |
|
Stock price |
|
|
|
3.46 |
4.46 |
5.46 |
3.66 |
3.66 |
3.66 |
3.66 |
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
Non Current Assets |
|
|
506 |
1,770 |
1,837 |
1,886 |
1,931 |
1,825 |
1,684 |
|
Property Plant and equipment, net |
|
494 |
736 |
691 |
740 |
785 |
679 |
538 |
||
Other intangible assets |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Other Non Current Assets |
|
|
12 |
1,034 |
1,146 |
1,146 |
1,146 |
1,146 |
1,146 |
|
Current Assets |
|
|
4,968 |
13,785 |
2,448 |
8,037 |
3,024 |
1,951 |
1,205 |
|
Cash and cash equivalents |
|
|
4,621 |
13,387 |
2,126 |
7,715 |
2,702 |
1,629 |
883 |
|
Accounts receivable |
|
|
2 |
3 |
0 |
0 |
0 |
0 |
0 |
|
Inventories |
|
|
|
11 |
0 |
0 |
0 |
0 |
0 |
0 |
Other current assets |
|
|
334 |
395 |
322 |
322 |
322 |
322 |
322 |
|
Current Liabilities |
|
|
6,332 |
2,004 |
2,654 |
3,218 |
3,282 |
3,707 |
3,884 |
|
Accounts payable |
|
|
1,611 |
1,707 |
1,264 |
1,828 |
1,892 |
2,317 |
2,494 |
|
Short term debt and borrowings |
|
4,232 |
12 |
34 |
34 |
34 |
34 |
34 |
||
Other current liabilities |
|
|
489 |
285 |
1,356 |
1,356 |
1,356 |
1,356 |
1,356 |
|
Non Current Liabilities |
|
|
0 |
419 |
432 |
432 |
432 |
432 |
432 |
|
Loans and borrowings |
|
|
0 |
419 |
432 |
432 |
432 |
432 |
432 |
|
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Equity |
|
|
|
(858) |
13,132 |
1,199 |
6,273 |
1,241 |
(362) |
(1,428) |
Common stock / Capital |
|
|
11,625 |
17,506 |
9,989 |
13,615 |
13,615 |
13,615 |
13,615 |
|
Additional paid-in capital / Share premium |
|
0 |
21,957 |
21,957 |
23,405 |
18,372 |
16,770 |
15,704 |
||
Other reserves and surplus |
|
|
(12,483) |
(24,229) |
(28,645) |
(28,645) |
(28,645) |
(28,645) |
(28,645) |
|
Other Equity |
|
|
|
0 |
(2,102) |
(2,102) |
(2,102) |
(2,102) |
(2,102) |
(2,102) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operations |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(7,715) |
(12,339) |
(11,986) |
(11,826) |
(12,232) |
(3,403) |
(1,066) |
|
Depreciation and Amortization |
|
|
80 |
141 |
205 |
189 |
202 |
203 |
172 |
|
Interest income/expense |
|
|
75 |
60 |
9 |
(104) |
(107) |
(37) |
(7) |
|
Stock-based compensation |
|
|
18 |
0 |
54 |
0 |
0 |
0 |
0 |
|
Non Cash Adjustments |
|
|
0 |
11 |
(492) |
0 |
0 |
0 |
0 |
|
(Increase) decrease in inventories |
|
3 |
0 |
0 |
0 |
0 |
0 |
0 |
||
(Increase) decrease in trade receivables |
|
(819) |
(62) |
74 |
0 |
0 |
0 |
0 |
||
(Increase) decrease in other current assets |
|
0 |
(1,016) |
(112) |
0 |
0 |
0 |
0 |
||
Increase (decrease) in trade payables |
|
751 |
(492) |
(586) |
564 |
64 |
424 |
178 |
||
Net cash used in Operating activities |
|
(7,606) |
(13,697) |
(12,834) |
(11,177) |
(12,073) |
(2,812) |
(722) |
||
Cash Flow from Investing |
|
|
|
|
|
|
|
|
|
|
Purchases of fixed assets |
|
|
(372) |
(383) |
(161) |
(239) |
(247) |
(98) |
(31) |
|
Other Investing Activities |
|
|
1 |
(6) |
0 |
0 |
0 |
0 |
0 |
|
Net cash used in Investing activities |
|
(371) |
(389) |
(161) |
(239) |
(247) |
(98) |
(31) |
||
Cash Flow from Financing |
|
|
|
|
|
|
|
|
|
|
Change in Debt |
|
|
4,130 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Change in Capital Stock |
|
|
0 |
22,199 |
0 |
16,900 |
7,200 |
1,800 |
0 |
|
Interest paid |
|
|
|
(6) |
(204) |
(10) |
(23) |
(23) |
(23) |
(23) |
Other Financing Activities |
|
|
33 |
857 |
1,743 |
128 |
130 |
60 |
30 |
|
Net cash used in Financing activities |
|
4,157 |
22,852 |
1,733 |
17,004 |
7,307 |
1,837 |
7 |
||
Net Changes in Cash and Cash Equivalent |
|
(3,820) |
8,766 |
(11,262) |
5,589 |
(5,013) |
(1,073) |
(746) |
||
Net cash (debt) at the beginning of the period |
|
8,441 |
4,621 |
12,968 |
1,694 |
7,283 |
2,270 |
1,197 |
||
Net cash (debt) at the end of the period |
|
4,621 |
12,968 |
1,694 |
7,283 |
2,270 |
1,197 |
451 |
||
Source: Company accounts, Edison Investment Research
|
|
Research: Healthcare
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