Currency in SEK
Last close As at 26/05/2023
SEK8.30
▲ −0.68 (−7.57%)
Market capitalisation
SEK430m
Research: Healthcare
The Phase IIb trial of mesdopetam (partnered with Ipsen) in levodopa-induced dyskinesias in Parkinson’s disease (PD-LIDs) remains a key value driver for IRLAB and top-line data is on track to be reported around the year end 2022. Following the Ipsen deal in 2021, the company has, in our view, further demonstrated the utility of its Integrative Screening Process, progressing pirepemat into Phase IIb trials in PD-related falls and selecting two new preclinical candidates (IRL942 and IRL757). The company recorded SEK32.5m in revenue in H122, primarily relating to the Ipsen licensing agreement and services provided. R&D expenses over the period rose to SEK75.7m (85% of total operating costs) from SEK38.5m in H121, as pirepemat Phase IIb clinical trials commenced and preparations for Phase I trials with preclinical assets began. At end-H122, IRLAB had net cash of SEK322.6m which, at the current burn rate (H122: SEK77.8m) we anticipate will fund the company into FY24. We value IRLAB at SEK6.40bn or SEK123.7per share (previously SEK6.13bn or SEK118.5/share).
IRLAB Therapeutics |
All steady as key catalyst approaches |
H122 update |
Pharma and biotech |
25 August 2022 |
Share price performance
Business description
Next events
Analysts
IRLAB Therapeutics is a research client of Edison Investment Research Limited |
The Phase IIb trial of mesdopetam (partnered with Ipsen) in levodopa-induced dyskinesias in Parkinson’s disease (PD-LIDs) remains a key value driver for IRLAB and top-line data is on track to be reported around the year end 2022 . Following the Ipsen deal in 2021, the company has, in our view, further demonstrated the utility of its Integrative Screening Process, progressing pirepemat into Phase IIb trials in PD-related falls and selecting two new preclinical candidates (IRL942 and IRL757). The company recorded SEK32.5m in revenue in H122, primarily relating to the Ipsen licensing agreement and services provided. R&D expenses over the period rose to SEK75.7m (85% of total operating costs) from SEK38.5m in H121, as pirepemat Phase IIb clinical trials commenced and preparations for Phase I trials with preclinical assets began. At end-H122, IRLAB had net cash of SEK322.6m which, at the current burn rate (H122: SEK77.8m) we anticipate will fund the company into FY24. We value IRLAB at SEK6.40bn or SEK123.7per share (previously SEK6.13bn or SEK118.5/share).
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
0.4 |
(91.4) |
(1.92) |
0.0 |
N/A |
N/A |
12/21 |
207.9 |
91.1 |
1.76 |
0.0 |
N/A |
N/A |
12/22e |
62.1 |
(112.9) |
(2.18) |
0.0 |
N/A |
N/A |
12/23e |
0.3 |
(122.7) |
(2.37) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Pipeline activity expected to increase
Over H122, IRLAB selected two new preclinical candidates, IRL942 and IRL757, which are now in preparation for Phase I trials in cognitive function and apathy, respectively. As such, we expect R&D-related costs to be high in H222/H123 compared to previous periods. However, we anticipate this will be partially offset in H123, as full R&D responsibility for mesdopetam will be transferred to Ipsen, assuming Phase IIb results are positive.
Funded past key readouts
IRLAB reported a net cash position of SEK322.6m at 30 June (it has no debt) and an H122 cash burn rate of SEK77.8m (cash outflow from operations of SEK76.8m and capex of SEK0.99m), a significant increase from H122 (cash burn rate SEK46.2m). Considering this, in addition to the expected changes in the R&D pipeline, we estimate that IRLAB will be funded past key clinical readouts in FY22/23 into FY24.
Valuation: SEK6.40bn or SEK123.7 per share
We value IRLAB at SEK6.40bn or SEK123.7 per share (previously SEK6.13bn or SEK118.5 per share) based on a risk-adjusted NPV of mesdopetam and pirepemat using a 12.5% discount rate and including net cash of SEK322.6m at end H122. Value uplift was realised by rolling our model forward by six months and updating our FX assumptions. We have updated our estimates in light of the H122 results, but our underlying valuation assumptions are unchanged.
Exhibit 1: Financial summary
Accounts: IFRS, year-end: 31 December, SEK’000s |
|
|
2019 |
2020 |
2021 |
2022e |
2023e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
448 |
404 |
207,906 |
62,142 |
317 |
Cost of sales |
|
|
0 |
0 |
0 |
0 |
0 |
Gross profit |
|
|
448 |
404 |
207,906 |
62,142 |
317 |
Total operating expenses |
|
|
(96,296) |
(91,862) |
(155,330) |
(174,977) |
(122,667) |
Research and development expenses |
|
|
(79,381) |
(75,989) |
(99,014) |
(124,014) |
(62,083) |
Exceptionals |
|
|
0 |
0 |
(39,091) |
0 |
0 |
Amortisation |
|
|
(1.0) |
(0.3) |
(0.3) |
(0.3) |
0.0 |
Other operating expenses |
|
|
(16,914) |
(15,873) |
(17,224) |
(50,962) |
(60,584) |
EBITDA (reported) |
|
|
(92,916) |
(89,202) |
56,050 |
(109,095) |
(118,870) |
Operating profit/(loss) |
|
|
(95,848) |
(91,458) |
52,576 |
(112,835) |
(122,351) |
Operating margin % |
|
|
N/A |
N/A |
25.3% |
N/A |
N/A |
Finance income/(expense) |
|
|
(272) |
(195) |
(795) |
(364) |
(364) |
Financial exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
0 |
Profit before tax (reported) |
|
|
(96,120) |
(91,653) |
51,781 |
(113,198) |
(122,715) |
Profit before tax (normalised) |
|
|
(95,121) |
(91,394) |
91,131 |
(112,939) |
(122,715) |
Income tax expense (includes exceptionals) |
|
|
0 |
0 |
0 |
0 |
0 |
Net income (reported) |
|
|
(96,120) |
(91,653) |
51,781 |
(113,198) |
(122,715) |
Net income (normalised) |
|
|
(95,121) |
(91,394) |
91,131 |
(112,939) |
(122,715) |
Basic average number of shares, m |
|
|
40.6 |
47.7 |
51.7 |
51.7 |
51.7 |
Basic EPS (SEK) |
|
|
(2.37) |
(1.92) |
1.00 |
(2.19) |
(2.37) |
Adjusted EPS (SEK) |
|
|
(2.34) |
(1.92) |
1.76 |
(2.18) |
(2.37) |
Dividend per share (SEK) |
|
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
BALANCE SHEET |
|
|
|
|
|
|
|
Tangible assets |
|
|
5,919 |
4,317 |
8,348 |
5,418 |
2,488 |
Intangible assets |
|
|
82,270 |
82,011 |
42,661 |
42,402 |
42,402 |
Other non-current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current assets |
|
|
88,189 |
86,328 |
51,009 |
47,820 |
44,890 |
Cash and equivalents |
|
|
110,527 |
277,009 |
401,897 |
251,647 |
129,792 |
Inventories |
|
|
0 |
0 |
0 |
0 |
0 |
Trade and other receivables |
|
|
9,351 |
6,732 |
19,542 |
19,542 |
19,542 |
Other current assets |
|
|
0 |
0 |
1 |
0 |
0 |
Total current assets |
|
|
119,878 |
283,741 |
421,440 |
271,189 |
149,334 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
Non-current lease liabilities |
|
|
2,900 |
1,270 |
3,566 |
3,566 |
3,566 |
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current liabilities |
|
|
2,900 |
1,270 |
3,566 |
3,566 |
3,566 |
Accounts payable |
|
|
8,438 |
3,683 |
4,634 |
6,968 |
4,898 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
Current lease liabilities |
|
|
1,643 |
1,657 |
3,034 |
3,034 |
3,034 |
Deferred income/contract liability |
|
|
0 |
0 |
42,576* |
0 |
0 |
Other current liabilities |
|
|
13,259 |
15,578 |
19,158 |
19,158 |
19,158 |
Total current liabilities |
|
|
23,340 |
20,918 |
69,402 |
29,160 |
27,090 |
Equity attributable to company |
|
|
181,826 |
347,879 |
399,481 |
286,283 |
163,568 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Operating income |
|
|
(95,848) |
(91,458) |
52,576 |
(112,835) |
(122,351) |
Depreciation and amortisation |
|
|
2,932 |
2,256 |
3,474 |
3,740 |
3,481 |
Share based payments |
|
|
0 |
0 |
0 |
0 |
0 |
Other adjustments |
|
|
(244) |
(195) |
38,296 |
(364) |
(364) |
Movements in working capital and contract liability |
|
|
1,959 |
183 |
34,296 |
(40,242) |
(2,070) |
Cash from operations (CFO) |
|
|
(91,201) |
(89,214) |
128,642 |
(149,700) |
(121,304) |
Capex |
|
|
(137) |
(394) |
(708) |
(551) |
(551) |
Acquisitions & disposals net |
|
|
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(137) |
(394) |
(708) |
(551) |
(551) |
Net proceeds from issue of shares |
|
|
68,970 |
257,706 |
(180) |
0 |
0 |
Movements in debt |
|
|
(1,547) |
(1,616) |
(2,865) |
0 |
0 |
Other financing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
67,423 |
256,090 |
(3,045) |
0 |
0 |
Cash and equivalents at beginning of period |
|
|
134,442 |
110,527 |
277,009 |
401,898 |
251,647 |
Increase/(decrease) in cash and equivalents |
|
|
(23,915) |
166,482 |
124,889 |
(150,251) |
(121,855) |
Effect of FX on cash and equivalents |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents at end of period |
|
|
110,527 |
277,009 |
401,898 |
251,647 |
129,792 |
Net (debt)/cash |
|
|
110,527 |
277,009 |
401,897 |
251,647 |
129,792 |
Source: IRLAB Therapeutics, Edison Investment Research. Note: *Deferred income from Ipsen deal, company expects to record fully by end-FY22.
|
|
Research: Healthcare
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