Immix Biopharma — All roads lead to NEXICART-2

Immix Biopharma (NASDAQ: IMMX)

Last close As at 19/06/2024

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Research: Healthcare

Immix Biopharma — All roads lead to NEXICART-2

Immix Biopharma’s Q124 report reflected a period focused on its lead CAR-T asset, NXC-201, targeting amyloid light chain amyloidosis (ALA), which was recently bolstered by incremental NEXICART-1 data. The quarter saw a pick-up in preparatory activities in advance of the US NEXICART-2 trial initiation with the finalization of a manufacturing facility in California and selection of the lead clinical trial site. We await the first-patient dosing, expected in mid-2024. We also expect an update on the addition of the autoimmune indication for NXC-201 by year end. The Q1 operating loss of $5.6m was in line with our expectations, and Immix anticipates it will maintain a cash runway through Q225 ($29.3m cash at hand at end-Q124). Our valuation adjusts to $139.5m or $5.3/share, slightly changed from $142.2m or $5.4/share, previously, with the roll forward of our model and quarterly update.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Cancer cells low poly blue

Healthcare

Immix Biopharma

All roads lead to NEXICART-2

Q124 results

Pharma and biotech

20 May 2024

Price

US$2.47

Market cap

US$65m

Net cash (US$m) at 31 March 2024

29.3

Shares in issue

26.4m

Free float

42%

Code

IMMX

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.2)

(22.6)

39.5

Rel (local)

(6.4)

(26.9)

9.4

52-week high/low

US$7.3

US$1.6

Business description

Immix Biopharma is a clinical-stage biopharma developing personalized therapies for oncology and immunology. Lead asset NXC-201 is a BCMA-targeting CAR-T asset, being evaluated for amyloid light chain amyloidosis and multiple myeloma with plans to expand to autoimmune indications. Legacy asset IMX-110 is being investigated in a Phase Ib/IIa study in soft tissue sarcoma and a Phase Ib/IIa trial for solid tumors in combination with tislelizumab.

Next events

NEXICART-2 first patient dosing

Mid-2024

ALA Phase I/II data readout

Q424

First autoimmune indication determination

FY24

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Dr Arron Aatkar

+44 (0)20 3077 5700

Immix Biopharma is a research client of Edison Investment Research Limited

Immix Biopharma’s Q124 report reflected a period focused on its lead CAR-T asset, NXC-201, targeting amyloid light chain amyloidosis (ALA), which was recently bolstered by incremental NEXICART-1 data. The quarter saw a pick-up in preparatory activities in advance of the US NEXICART-2 trial initiation with the finalization of a manufacturing facility in California and selection of the lead clinical trial site. We await the first-patient dosing, expected in mid-2024. We also expect an update on the addition of the autoimmune indication for NXC-201 by year end. The Q1 operating loss of $5.6m was in line with our expectations, and Immix anticipates it will maintain a cash runway through Q225 ($29.3m cash at hand at end-Q124). Our valuation adjusts to $139.5m or $5.3/share, slightly changed from $142.2m or $5.4/share, previously, with the roll forward of our model and quarterly update.

Year
end

Revenue
(US$m)

PBT*
(US$m)

EPS*
(US$)

DPS
(US$)

P/E
(x)

Yield
(%)

12/22

0.0

(7.60)

(0.55)

0.0

N/A

N/A

12/23

0.0

(13.00)

(0.75)

0.0

N/A

N/A

12/24e

0.0

(21.44)

(0.93)

0.0

N/A

N/A

12/25e

0.0

(26.55)

(1.01)

0.0

N/A

N/A

Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.

NXC-201 homing in on US trial launch

Recent business activities highlight Immix’s progress towards the NEXICART-2 trial, expected to commence in mid-2024. With the manufacturing facility established and lead trial site finalized, we believe the trial initiation remains on track. The US study (an open-label, single-arm, multi-site, dose-expansion Phase Ib trial) will evaluate the safety and efficacy of NXC-201 in c 40 ALA patients, aiming to reproduce the favorable efficacy data (including newly announced results) from the first 13 ALA patients treated in NEXICART-1. We note that management intends to file a Biologics License Application as early as 2025, if data continue to be supportive.

EU ODD: Opportunity remains in multiple myeloma

While we believe Immix’s strategic priority is ALA and autoimmune indications, the recent EU orphan drug designation (ODD) for NXC-201 in multiple myeloma (MM) is a reminder that opportunity remains in this indication. EU ODD provides up to 10 years of EU market exclusivity, subject to regulatory approval, and the recent FDA approval of Bristol Myers Squibb’s Abecma and J&J’s Carvykti in earlier-line treatment for MM indicates the market opportunity for novel CAR-T therapies. NXC-201 has demonstrated early efficacy in the NEXICART-1 trial (63 MM patients).

Valuation: Largely stable at $139.5m or $5.3/share

As Q124 results were in line with our expectations, we maintain both our near- and long-term estimates. Our valuation adjusts slightly from $142.2m or $5.4/share, previously, as we roll our model forward reflecting the quarterly results with a slightly lower cash position. Based on our projected burn rates, we continue to estimate the company is sufficiently funded into Q225.

New NEXICART-1 data strengthen ALA data package

Following the quarterly release, Immix reported the latest clinical data for NXC-201, its lead B-cell maturation antigen (BCMA) targeting CAR-T therapy, from NEXICART-1, at the American Society of Gene and Cell Therapy 27th Annual Meeting. This update included results for 13 ALA patients, all of whom were relapsed/refractory to standard-of-care Dara-CyBorD (daratumumab combined with cyclophosphamide, bortezomib and dexamethasone), and 12 of 13 patients had not been exposed to prior BCMA-targeted therapy. Of this population, there was a median of four prior lines of therapy that had failed to stop disease progression (range 3–10). Patients were infused with CAR-T cells at doses of: 150×106 (n=1); 450×106 (n=2); and 800×106 (n=10, the recommended Phase II dose). Key results were:

The overall response rate was 92% (12 of 13 patients).

The overall response rate for the patients not exposed to prior BCMA-targeted therapy was 100% (12 of 12 patients), consistent with the previously announced data from the first 10 patients.

The complete response rate for these patients was 75% (nine of 12 patients).

One patient was previously treated with a BCMA-targeted bispecific antibody therapy, and this patient did not respond to NXC-201.

As of 10 May 2024, the best responder had a duration of response of 28.0 months, and it was noted that the response is ongoing.

Zero cases of immune effector cell-associated neurotoxicity syndrome (ICANS) were observed.

The median cytokine release syndrome (CRS) duration was two days (range 1–5), a slight increase from the one-day CRS noted previously.

Zero cases of CRS events greater than grade 4 (which can include life-threatening symptoms and complications). Two patients experienced no CRS, three patients experienced grade 1 CRS, six patients experienced grade 2 CRS and two patients experienced grade 3 CRS.

Collectively, we believe these results support the potential of NXC-201 in this indication. We also note that the trial population included particularly fragile participants in an already tenuous patient population – 11 of 13 patients with cardiac involvement, five of 13 had New York Heart Association stage 3 or 4 heart failure, and five of 13 had Mayo stage 3 ALA. The positive ALA data seen to date from NEXICART-1 provide a strong foundation for the US NEXICART-2 trial, in our view.

Financials and valuation

Immix’s Q124 results were broadly in line, on an annualized basis, with our FY24 projections, signaling growing intensity in clinical activity for NXC-201 and preparatory work ahead of the initiation of the US-based NEXICART-2 trial, expected to commence in mid-2024. The operating loss more than doubled year-on-year to $5.6m (up from $2.5m in Q123) driven by material increases in both R&D and G&A expenses. R&D-related expenses increased nearly 1.5x y-o-y to $3.2m versus $1.3m in Q123 and reached the highest quarterly mark since listing. Expenses were primarily related to the ongoing CAR-T trials and the upcoming NEXICART-2 study in the US. We note that, in January 2024, Immix signed a lease for a 14,000 sqft biopharmaceutical manufacturing facility in California in preparation for the upcoming trial. G&A expenses ($2.3m) mirrored the previous two quarters, although higher than the Q123 figure of $1.2m. The increase in G&A expenses was largely attributed to an increase in professional services for investor relations and stock-based compensation (c $0.3m each during the quarter). Free cash flows reflected the increased opex of $4.1m versus $2.1m in Q123. We expect expenses during Q224 to be comparable to Q1, although R&D expenses may trend up in the second half of FY24 following the initiation of the US trials. We maintain our previously communicated estimates, including FY24e and FY25e operating losses of $22m and $26.2m, respectively.

Our long-term assumptions for Immix remain unchanged since our last update note. The immediate focus will remain the advancement of the US CAR-T trial in ALA, although we may see updates on MM as the ALA program progresses. We await more information on the additional autoimmune conditions the company intends to target, before incorporating these in our valuation. We also maintain our long-term estimates for the IMX-110 program but note that these are subject to revision based on further updates from management on the plans and clinical progress. Overall, our valuation for Immix remains largely unchanged at $139.5m, down slightly from $142.2m previously, reflecting the lower net cash position of $29.3m (compared to the previously used pro-forma figure of $33.5m), which offset the benefit from rolling forward our model. Our per share valuation adjusts slightly to $5.3, down from $5.4 previously, with the higher share count. Exhibit 1 presents a breakdown of our risk-adjusted net present valuation (rNPV) for Immix.

Exhibit 1: Immix Biopharma rNPV

Product

Indication

Launch

Peak

Peak sales (US$m)

Value
(US$m)

Probability

rNPV
(US$m)

rNPV/
share* (US$)

NXC-201

Amyloid light chain amyloidosis

2027

2033

370.6

193.1

25.0%

45.4

1.7

NXC-201

Multiple myeloma

2030

2035

288.7

131.8

17.5%

30.0

1.1

IMX-110

Soft tissue sarcoma

2029

2034

452.9

140.6

15.0%

22.2

0.8

IMX-110

Solid tumors

2029

2034

451.2

163.5

10.0%

12.6

0.5

Net cash on 31 March 2024

 

 

 

29.3

100%

29.3

1.1

Valuation

 

 

 

 

658.3

 

139.5

5.3

Source: Edison Investment Research. Note: *The per share valuation uses the shares outstanding figure of 26.4m shares.

Immix ended Q124 with a net cash balance of $29.3m (compared to $17.5m at end FY23), which was supported by the equity raise net proceeds of $15.5m in February 2024 and $425.7k from the sale of shares under the July 2023 ATM facility (the facility was suspended in February 2024). Projected cash burn rates remain unchanged since our last update (with operating cash outflows of $21.5m and $26.4m in FY24e and FY25e, respectively), and we continue to see the company funded into Q225. We forecast the need to raise another $15m in 2025, prior to filing the Biologics License Application (BLA) for NXC-201 in ALA (provided data from the NEXICART studies are supportive).

For our model, we have included a licensing deal for NXC-201 worth $500m in 2026, with $50m in an upfront payment. However, should such a deal not materialize, we calculate the need to raise a further $15m in FY26, before breaking even in FY27 following the expected launch of NXC-201 in ALA. If Immix were to raise these funds (a total of $30m across FY25 and FY26) through equity issuance, it would have to issue 12.1m shares (assuming a conversion price of $2.47, based on the last closing price), and our valuation would decrease to $4.4/share (from $5.3/share currently), and the number of shares outstanding would increase to 38.6m from 26.4m currently.

Exhibit 2: Financial summary

Accounts: IFRS, year end 31 December, $000s

2022

2023

2024e

2025e

PROFIT & LOSS

 

 

 

 

Total revenues

0

0

0

0

Cost of sales

0

0

0

0

Gross profit

0

0

0

0

Total operating expenses

(8,219)

(16,141)

(21,963)

(26,159)

Research and development expenses

(4,196)

(8,735)

(13,446)

(16,790)

SG&A

(4,023)

(7,406)

(8,517)

(9,369)

EBITDA (normalized)

(8,217)

(16,136)

(21,958)

(26,013)

Operating income (reported)

(8,219)

(16,141)

(21,963)

(26,159)

Finance income/(expense)

(0)

572

525

(390)

Exceptionals and adjustments

0

0

0

0

Profit before tax (reported)

(8,219)

(15,569)

(21,438)

(26,549)

Profit before tax (normalised)

(7,595)

(13,003)

(21,438)

(26,549)

Income tax expense (includes exceptionals)

(10)

(26)

(36)

(45)

Net income (reported)

(8,230)

(15,596)

(21,474)

(26,594)

Net income (normalised)

(7,606)

(13,030)

(21,474)

(26,594)

Basic average number of shares, m

13.9

17.3

23.2

26.4

Basic EPS (US$)

(0.59)

(0.90)

(0.93)

(1.01)

Adjusted EPS (US$)

(0.55)

(0.75)

(0.93)

(1.01)

Dividend per share (US$)

0.00

0.00

0.00

0.00

 

 

 

 

 

BALANCE SHEET

 

 

 

 

Property, plant and equipment

4

50

1,457

1,311

Other non current assets

7

87

87

87

Total non-current assets

10

137

1,544

1,399

Cash and equivalents

13,437

17,510

11,990

541

Current tax receivables

256

1,172

1,172

1,172

Other current assets

1,205

1,106

1,106

1,106

Total current assets

14,898

19,788

14,268

2,819

Other non-current liabilities

475

0

1,412

1,412

Long term debt

0

0

0

15,000

Total non-current liabilities

475

0

1,412

16,412

Accounts payable

1,273

3,722

3,722

3,722

Other current liabilities

0

0

0

0

Total current liabilities

1,273

3,722

3,722

3,722

Equity attributable to company

13,160

16,203

10,678

(15,916)

 

 

 

 

 

CASH FLOW STATEMENT

 

 

 

 

Net Income

(8,230)

(15,596)

(21,474)

(26,594)

Depreciation and amortisation

2

5

5

146

Share based payments

624

2,566

0

0

Other adjustments

0

0

0

0

Movements in working capital

195

1,653

0

0

Cash from operations (CFO)

(7,408)

(11,371)

(21,469)

(26,449)

Capex

0

(52)

0

0

Acquisitions & disposals net

0

0

0

0

Other investing activities

0

0

0

0

Cash used in investing activities (CFIA)

0

(52)

0

0

Capital changes

2,914

15,521

15,947

0

Debt Changes

0

0

0

15,000

Other financing activities

318

(57)

2

0

Cash from financing activities (CFF)

3,232

15,464

15,949

15,000

Cash and equivalents at beginning of period

17,644

13,437

17,510

11,990

Increase/(decrease) in cash and equivalents

(4,176)

4,040

(5,520)

(11,449)

Effect of FX on cash and equivalents

(32)

33

0

0

Cash and equivalents at end of period

13,437

17,510

11,990

541

Net (debt)/cash

13,437

17,510

11,990

(14,459)

Source: Company reports, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Immix Biopharma and prepared and issued by Edison, in consideration of a fee payable by Immix Biopharma. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Immix Biopharma and prepared and issued by Edison, in consideration of a fee payable by Immix Biopharma. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Research: Healthcare

Creo Medical — Setting the stage for pivotal growth

Creo Medical’s FY23 results recapped strategic, regulatory and operational wins for its core electrosurgical device suite, including Speedboat’s approval for upper gastrointestinal (GI) procedures in Europe and launch of Speedboat UltraSlim. With MicroBlate and SpydrBlade nearing commercial launch and increased traction with partners Intuitive Surgical and CMR Surgical, we anticipate the product uptake curve to steepen in the medium term. FY23 was a solid year with 13.4% y-o-y revenue growth and Creo’s core portfolio more than doubled to £2.3m, with a c 120% increase of its user base. Q124 core revenues were c 14% higher compared to the FY23 quarterly average. Cost optimisation drove the narrowing of operating losses to £16.4m (FY22: £20.8m) and we continue to project topline growth and current cash at hand (gross cash of £17.4m at end-Q124) to support break-even in H126, slightly more conservative than management’s FY25 target. With minor adjustments to our estimates and rolling our model forward, we value Creo at £506m or 140p/share.

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