Last close As at 05/08/2026
SEK6.71
▲ −0.16 (−2.33%)
Market capitalisation
SEK435m
Research: Healthcare
With Mendus’s Q124 results, management recapped its clinical priorities, which are all progressing as expected. The focus remains on the AMLM22-CADENCE trial for lead cancer vaccine vididencel, in combination with oral azacitidine as a maintenance treatment for acute myeloid leukaemia (AML). R&D expenses came in slightly ahead of expectations with the ramp up in clinical activity, including preparation for the subsequent pivotal Phase III trial, with large-scale manufacturing of vididencel (planned initiation in H225) through Mendus’s alliance with NorthX Biologics. The second clinical-stage asset, ilixadencel, is being prepared for a new Phase II trial in soft tissue sarcomas (STS) and is scheduled to launch in Q224. The end-Q124 net cash balance of SEK87.3m was bolstered by the SEK69.1m realised through warrant conversions in April, which we estimate will provide a runway into Q325. Our overall valuation increases slightly to SEK2.11bn (from SEK2.05bn), but the per share valuation declines to SEK2.09, from SEK2.38, with the higher share count.
Mendus |
All hands on deck as inflection points approach |
Q124 results |
Pharma and biotech |
20 May 2024 |
Share price performance
Business description
Next events
Analysts
Mendus is a research client of Edison Investment Research Limited |
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With Mendus’s Q124 results, management recapped its clinical priorities, which are all progressing as expected. The focus remains on the AMLM22-CADENCE trial for lead cancer vaccine vididencel, in combination with oral azacitidine as a maintenance treatment for acute myeloid leukaemia (AML). R&D expenses came in slightly ahead of expectations with the ramp up in clinical activity, including preparation for the subsequent pivotal Phase III trial, with large-scale manufacturing of vididencel (planned initiation in H225) through Mendus’s alliance with NorthX Biologics. The second clinical-stage asset, ilixadencel, is being prepared for a new Phase II trial in soft tissue sarcomas (STS) and is scheduled to launch in Q224. The end-Q124 net cash balance of SEK87.3m was bolstered by the SEK69.1m realised through warrant conversions in April, which we estimate will provide a runway into Q325. Our overall valuation increases slightly to SEK2.11bn (from SEK2.05bn), but the per share valuation declines to SEK2.09, from SEK2.38, with the higher share count.
Year |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
3.4 |
(138.8) |
(0.70) |
0.0 |
N/A |
N/A |
12/23 |
29.6 |
(101.6) |
(0.22) |
0.0 |
N/A |
N/A |
12/24e |
3.1 |
(124.6) |
(0.13) |
0.0 |
N/A |
N/A |
12/25e |
0.0 |
(125.7) |
(0.12) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
All systems go for late-stage vididencel development
Mendus collaborated with the Australasian Leukaemia and Lymphoma Group to launch the CADENCE trial in Q224, on the heels of the regulatory green light in March 2024. In parallel, it is preparing for a separate global registrational trial in H225, following the receipt of positive initial FDA feedback. We understand that clinical data from the prior ADVANCE II trial (vididencel as a monotherapy), the CADENCE trial (vididencel in combination with oral azacitidine) and the planned pivotal trial will contribute to the global registration dossier for vididencel in the AML maintenance setting. Management indicated that Mendus has sufficient inventory for the CADENCE trial, and the NorthX Biologics manufacturing alliance is anticipated to support the registrational study and potential subsequent commercialisation.
Warrant conversions add to the coffers
Mendus closed Q124 with net cash of SEK87.3m (SEK88.2m in cash and SEK0.9m in interest-bearing liabilities), supported by a post-period warrant conversion that provided SEK69.1m in additional funds. Based on our cash burn projections, we expect available funds to provide operational support into Q325. We estimate Mendus will need to raise an additional SEK75m in H225.
Valuation: SEK2.11bn or SEK2.09 per share
As we roll forward our model and reflect the higher cash balance, our valuation increases slightly to SEK2.11bn, from SEK2.05bn, but declines on a per share basis with the higher share count (SEK2.09 from SEK2.38, with 1,007m shares vs 863m previously) with the April 2024 warrant conversion.
Pipeline overview
Heading Mendus’s active clinical pipeline is vididencel, an off-the-shelf cellular immunotherapy. Following the positive survival, immunomonitoring and measurable residual disease data from ADVANCE II, Mendus is now assessing the combination of vididencel with oral azacitidine, the standard of care and only approved drug for AML maintenance. AMLM22-CADENCE (expected n=140) will be a randomised, multi-centre clinical trial consisting of two stages and will involve AML patients in complete remission following high-intensity chemotherapy. The first stage (18–24 months) will assess the safety of vididencel in combination with oral azacitidine, compared to oral azacitidine alone, in 40 patients. The second stage (24–36 months) will assess the efficacy of the combination in a further 100 patients. Per the study protocol, vididencel will be administered as four biweekly intradermal injections, after which three booster injections will be administered up to six months after the start of treatment. We understand that the launch of the planned registrational trial will align with the interim safety readout from CADENCE (H225), but should not affect the planned design.
Vididencel is also being developed as a potential maintenance therapy for ovarian cancer, for which it is currently being investigated in the Phase I ALISON trial. Patient recruitment for this trial was completed in December 2023, and we continue to expect updates throughout 2024, including a detailed analysis of the survival data and primary endpoint readout in H224.
The company’s second asset, ilixadencel, is an intratumoural immune primer, backed by preclinical and clinical data to support its safety, and potential as a treatment for STS, a group of tumours that respond poorly to immunotherapies. Management is engaged in discussions with potential collaborators to perform a Phase II trial aiming to establish efficacy in this indication, and we note that Mendus has already been granted FDA Fast Track and Orphan Drug designations for ilixadencel. Management has communicated that it intends to announce more detailed plans for this trial within Q224, with potential launch in H224.
Further, Mendus continues to make progress with its preclinical research, aiming to design next-generation immune primers based on its DCOne cell line platform, while exploring synergistic combinations with vaccinations and intratumoural priming. The company is also exploring the use of the DCOne platform to expand therapeutic quantities of memory natural killer (NK) cells, which could provide the basis for novel NK cell-based therapies. We expect updates on this front over the rest of 2024, provided ‘candidates make material progress towards the clinical stages of development.
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Exhibit 1: Mendus’s clinical development pipeline |
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|
Source: Mendus Q124 report |
Financials and valuation
In Q124, Mendus reported total operating expenses of SEK38.1m, up 27.4% y-o-y from SEK29.9m in Q123, primarily reflecting the higher R&D expenses on its vididencel and ilixadencel clinical programs and its DCOne platform. R&D expenses, accounting for c 76% of total operating expenses (compared to c 66% in Q123), increased significantly by 46.7% y-o-y to SEK29.0m, from SEK19.8m in the prior period. The increase was largely attributable to the ADVANCE II (AML) and ALISON (ovarian cancer) trials, as well as preparatory activities for the Phase II CADENCE trial (initiation planned in Q224). General and administrative expenses were down to SEK9.0m from SEK9.9m in Q123. While no revenue was recorded during the quarter, other operating income (primarily consisting of patent transfer revenue and a research grant from Oncode-PACT) were reported at SEK2.8m in Q124, compared to SEK0.3m in Q123. The operating loss for the period was SEK35.3m, up from SEK29.6m in Q123. The cash outflow from operating activities stood at SEK30.6m, slightly lower than SEK33.6m in Q123, and was favourably affected by changes in working capital (SEK56m of prepaid expenses and accrued income on the balance sheet in Q124 vs SEK64m in Q423).
Based on the Q124 results, we have made certain adjustments to our FY24 and FY25 estimates. Reflecting the income from patent transfers and grants, we now estimate income of SEK3.1m in FY24. We also tweak our operating expense estimates, and have increased R&D while lowering SG&A across both forecast years to reflect the Q124 performance and management guidance. Our revised R&D estimates are SEK90.0m in FY24 and SEK86.8m in FY25, up from SEK85.4m and SEK88.1m, respectively. Our SG&A expense estimates have been revised down to SEK31.7m in FY24 and SEK32.6m in FY25, from SEK34.0m and SEK35.1m previously. As a result, our operating loss estimates increase slightly to SEK124.8m in FY24 and SEK125.7m in FY25, compared to SEK121.2m and SEK124.9m previously.
At end-Q124, Mendus reported a net cash position of SEK87.3m or gross cash of SEK88.2m adjusted for SEK0.9m in long-term liabilities. The cash balance was bolstered in April by the receipt of SEK69.1m from the exercise of series TO3 warrants issued in connection with the July 2023 raise of SEK317m. In total 144.0m warrants were exercised (at a conversion price of SEK0.48/warrant; 76.3% of the warrants outstanding), resulting in the shares outstanding figure increasing to 1,007m from 863m previously). Based on our cash burn projections, we estimate the pro forma cash balance to be sufficient to support operations into Q325, in line with management guidance. We calculate that the company needs to raise a further SEK75m in H225, before signing a partnership deal for vididencel in FY26. Should the licensing deal not come through, the company would be required to raise a combined SEK300m through FY26 and FY27, according to our calculations.
Other than the discussed changes to our near-term estimates, we keep our long-term assumptions unchanged for Mendus’s current clinical programs. We roll forward our model and adjust our valuation for the latest pro forma net cash figure. Our valuation has improved to SEK2.11bn from SEK2.05bn previously. However, the per share valuation is affected by the higher number of shares outstanding and reduces to SEK2.09, down from SEK2.38 in our last update note. Exhibit 2 presents a breakdown of our valuation assumptions across the clinical programs.
Exhibit 2: Mendus rNPV valuation
Product |
Indication |
Launch |
Peak sales |
NPV |
Probability of success |
rNPV |
NPV/share |
Vididencel (DCP-001) |
AML |
2028 |
980 |
4,268 |
20.0% |
932 |
0.93 |
Vididencel (DCP-001) |
OC |
2031 |
760 |
2,524 |
15.0% |
764 |
0.76 |
Ilixadencel |
GIST |
2029 |
230 |
1,707 |
15.0% |
256 |
0.25 |
Pro-forma net cash at 31 March 2024* |
156.4 |
100.0% |
156.4 |
0.16 |
|||
Valuation |
|
|
|
8,654 |
|
2,108 |
2.09 |
Source: Edison Investment Research. Note: *Adjusted for the SEK69.1m funds realised through post-period warrant conversions.
As indicated above, assuming Mendus takes its assets to commercialisation on its own, we estimate that it will need to raise a total of SEK375m between FY25 and FY27 before reaching profitability in 2028. If this is actioned through an equity issue, the company would be required to issue c 839m shares (at the current share price of SEK0.447), which would lead to the total number of shares outstanding increasing to 1.85bn and our per share valuation being diluted to SEK1.35/share.
Exhibit 3: Financial summary
Accounts: IFRS; year-end 31 December; SEK’000s |
2022 |
2023 |
2024e |
2025e |
Income statement |
|
|
|
|
Total revenue |
3,375 |
29,612 |
3,062 |
0 |
Cost of sales |
0 |
0 |
0 |
0 |
Gross profit |
3,375 |
29,612 |
3,062 |
0 |
SG&A (expenses) |
(44,028) |
(30,748) |
(31,670) |
(32,621) |
R&D costs |
(87,049) |
(92,653) |
(89,968) |
(86,822) |
Other income/(expense) |
(1,134) |
(559) |
0 |
0 |
Exceptionals and adjustments |
0 |
0 |
0 |
0 |
Reported EBITDA |
(128,836) |
(94,348) |
(118,576) |
(119,443) |
Depreciation and amortisation |
(4,848) |
(6,303) |
(6,184) |
(6,289) |
Reported Operating Profit/(loss) |
(133,684) |
(100,651) |
(124,760) |
(125,732) |
Finance income/(expense) |
(5,101) |
(968) |
149 |
64 |
Other income/(expense) |
|
|
|
|
Exceptionals and adjustments |
0 |
0 |
0 |
0 |
Reported PBT |
(138,785) |
(101,619) |
(124,611) |
(125,668) |
Adjusted PBT |
(138,785) |
(101,619) |
(124,611) |
(125,668) |
Income tax expense |
0 |
0 |
0 |
0 |
Reported net income |
(138,785) |
(101,619) |
(124,611) |
(125,668) |
|
|
|
|
|
Basic average number of shares, m |
199.4 |
461.9 |
935.2 |
1,007.2 |
Basic EPS (SEK) |
(0.70) |
(0.22) |
(0.13) |
(0.12) |
Diluted EPS (SEK) |
(0.70) |
(0.22) |
(0.13) |
(0.12) |
|
|
|
|
|
Balance sheet |
|
|
|
|
Property, plant and equipment |
13,899 |
11,197 |
9,197 |
6,897 |
Intangible assets |
532,441 |
532,441 |
532,441 |
532,441 |
Right of use assets |
26,216 |
23,247 |
20,922 |
18,830 |
Other non-current assets |
618 |
624 |
624 |
624 |
Total non-current assets |
573,174 |
567,509 |
563,184 |
558,792 |
Cash and equivalents |
41,851 |
120,782 |
69,595 |
23,320 |
Prepaid expenses and accrued income |
1,919 |
64,359 |
64,359 |
64,359 |
Other current assets |
3,442 |
3,302 |
3,302 |
3,302 |
Total current assets |
47,212 |
188,443 |
137,256 |
90,981 |
Non-current loans and borrowings |
22,845 |
850 |
850 |
75,850 |
Non-current lease liabilities |
23,706 |
21,115 |
21,115 |
21,115 |
Total non-current liabilities |
46,551 |
21,965 |
21,965 |
96,965 |
Trade and other payables |
7,411 |
8,129 |
8,129 |
8,129 |
Current loans and borrowings |
29,198 |
0 |
0 |
0 |
Short-term lease liabilities |
2,413 |
2,523 |
2,523 |
2,523 |
Other current liabilities |
20,375 |
18,608 |
18,608 |
18,608 |
Total current liabilities |
59,397 |
29,260 |
29,260 |
29,260 |
Equity attributable to company |
514,438 |
704,727 |
649,216 |
523,548 |
|
|
|
|
|
Cashflow statement |
|
|
|
|
Operating Profit/(loss) |
(133,684) |
(100,651) |
(124,760) |
(125,732) |
Depreciation and amortisation |
4,848 |
6,303 |
6,184 |
6,289 |
Other adjustments |
(6,390) |
(1,966) |
0 |
0 |
Movements in working capital |
27,030 |
(65,479) |
0 |
0 |
Interest paid / received |
(1,135) |
(968) |
149 |
64 |
Income taxes paid |
0 |
0 |
0 |
0 |
Cash from operations (CFO) |
(109,331) |
(162,761) |
(118,427) |
(119,379) |
Capex |
(12,324) |
(1,823) |
(1,859) |
(1,897) |
Acquisitions & disposals net |
0 |
0 |
0 |
0 |
Other investing activities |
0 |
1,380 |
0 |
0 |
Cash used in investing activities (CFIA) |
(12,324) |
(443) |
(1,859) |
(1,897) |
Net proceeds from issue of shares |
0 |
297,904 |
69,100 |
0 |
Movements in debt |
8,194 |
(55,807) |
0 |
75,000 |
Other financing activities |
0 |
0 |
0 |
0 |
Cash flow from financing activities |
8,194 |
242,097 |
69,100 |
75,000 |
Increase/(decrease) in cash and equivalents |
(113,461) |
78,893 |
(51,187) |
(46,275) |
Cash and equivalents at beginning of period |
155,313 |
41,851 |
120,782 |
69,595 |
Cash and equivalents at end of period |
41,851 |
120,782 |
69,595 |
23,320 |
Net (debt) cash |
(10,192) |
119,932 |
68,745 |
(52,530) |
Source: Company reports, Edison Investment Research
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Research: Industrials
Smith News’ H124 results highlighted the robustness of the underlying business, but also revealed the success that management is achieving in creating long-term shareholder value. For example, 74% of revenue is now contracted until 2029, the recent refinancing saves costs and removes the dividend restriction, and the organic growth initiatives are gaining significant momentum. Furthermore, the revised capital allocation policy raises the possibility that modest, self-funded M&A could add further scope to the growth initiatives. Our revenue and profit forecasts are broadly unchanged, but dividends are materially raised. Our valuation is edged up to 90p.