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Research: Healthcare
Recently, Hepion released top-line data from its AMBITION Phase IIa trial with CRV431, a cyclophilins inhibitor, in non-alcoholic steatohepatitis (NASH) patients. All primary safety, tolerability and pharmacokinetics were met and support once-a-day dosing. The company plans to conduct a Phase IIb (ASCEND-NASH) trial this year in NASH patients with fibrosis levels 2 or 3 (F2 or F3). The ASCEND-NASH trial will be significantly larger with 300 patients enrolled. The primary endpoint will be a 1-point reduction in fibrosis score in liver biopsies.
Written by
Carol Werther
Hepion Pharmaceuticals |
AMBITION trial shows positive biomarker data |
Clinical update |
Pharma & biotech |
3 August 2021 |
Share price performance
Business description
Next events
Analyst
Hepion Pharmaceuticals is a research client of Edison Investment Research Limited |
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Recently, Hepion released top-line data from its AMBITION Phase IIa trial with CRV431, a cyclophilins inhibitor, in non-alcoholic steatohepatitis (NASH) patients. All primary safety, tolerability and pharmacokinetics were met and support once-a-day dosing. The company plans to conduct a Phase IIb (ASCEND-NASH) trial this year in NASH patients with fibrosis levels 2 or 3 (F2 or F3). The ASCEND-NASH trial will be significantly larger with 300 patients enrolled. The primary endpoint will be a 1-point reduction in fibrosis score in liver biopsies.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
0.0 |
(7.9) |
(3.42) |
0.0 |
N/A |
N/A |
12/20 |
0.0 |
(17.9) |
(1.86) |
0.0 |
N/A |
N/A |
12/21e |
0.0 |
(27.0) |
(0.35) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(28.5) |
(0.36) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortization of acquired intangibles, exceptional items and share-based payments.
Final AMBITION NASH trial results with high dose
Hepion reported that the high dose (225mg) demonstrated a statistically significant 21.1% reduction in alanine transaminases (ALT) levels versus baseline after 28 days. The company has already reported the 75mg dose showed a reduction in liver enzymes of 18.4%. Specifically, CRV431 was safe and well tolerated with pharmacokinetics that support once-a-day dosing, given the half-life is approximately 30 hours.
The ASCEND-NASH Phase IIb trial to begin in Q421
The objective of the study is to determine the efficacy of once daily (QD) oral dosing of CRV431 in biopsy proven NASH F2 and F3 patients compared to placebo. The trial is looking for a 1-point reduction in fibrosis score in liver biopsies (pathologist and AI read). The AI-POWR system is intended to identify biomarkers of CRV431 response from several data sources to identify the NASH patients that could be the best responders in a Phase III trial.
Valuation: Increased to $197.9m from $182.9m
We have adjusted our net present value (NPV) to reflect the positive results from the AMBITION trial. Our probability of success was increased from 15% to 20%. The equity value is now $197.9m, or $2.59 per diluted share, up from $2.40 per share previously. The company has net cash of $115.3m, which we believe should fund operations for the next three years. Despite the positive results, the shares were under pressure. This quarter, Hepion was added to the Russell Microcap Index.
AMBITION NASH Phase IIa trial details
This CRV431 trial enrolled patients with NASH and F2 or F3. At day 28 there was a demonstrated reduction in ALT for both the 75mg and 225mg doses, an early efficacy sign in F2 and F3 subjects. The company has reported that its clinical pharmacology group has already developed a population pharmacokinetic-pharmacodynamic, or PK-PD, model which predicts CRV431 blood concentration effect on ALT reductions, which it indicates is not usually possible at this early stage in drug development.
Most of the adverse events were mild and deemed unrelated. Body aches were possibly related. Probably related were constipation and a sensation of the heart beating strongly. There were no serious adverse events. Hepion uses its artificial intelligence platform (Al-POWR), which revealed significant interactions between the drug with collagen-regulating genes. As the AMBITION trial is evaluated further, we expect the company to release additional details of the data.
Exhibit 1: AMBITION biomarker results
Test |
Placebo |
CRV431 75mg |
CRV431 225mg |
|
n = 14 |
n = 12 |
n = 15 |
ALT (%) |
-6.1% (±) 13.3 (mean ± SD) |
-18.4 +/- 25.8 (mean ± SD)* |
-21.1 ± 21.1 (mean ± SD)* |
|
-5.2 (median) |
-15.9 (median) |
-20.0 (median) |
|
|
||
Area under the ALT curve |
1465.1 ± 810.9 |
1190.5 ± 712.1 |
859.9 ± 387.0** |
AUC (IU*D/L) |
|
Source: Hepion. Note: *Pooled 75mg and 225mg statistically significant versus placebo P<0.05, unpaired t-test. **Statistically significant versus placebo, p<0.05, ANOVA w/ Bonferroni Post-Hoc statistical analysis.
Design of the potential ASCEND-NASH Phase IIb trial
The company plans on beginning a Phase IIb ASCEND-NASH trial in Q421. This trial is expected to enrol 300 biopsy proven NASH subjects with advanced fibrosis (F2/F3). This a multi-centre, triple-blind, placebo-controlled (2:1) study. The current plan is to use the same two doses, 75mg and 225mg, for six months, followed by six months of CRV431 or placebo. There is a three-month observation period at the end of the 12 months. Additional data that will be obtained includes liver biopsies, MRI scans, Fibroscan, ALT, AST, Pro-C3, ELF-Score, fibrosis biomarkers, lipidomics, genomics and proteomics.
|
Exhibit 2: ASCEND-NASH trial design |
|
|
Source: Hepion |
Valuation
We have adjusted our NPV to reflect the positive results from the AMBITION trial. We changed our valuation by increasing the probability of success from 15% to 20%. The new equity valuation is $197.9m, up from $182.9m previously. Our valuation is now $2.59 per diluted share, up from $2.40 per share previously.
Exhibit 3: Valuation of Hepion
Program |
Market |
Prob. of success |
Launch year |
Peak revenue ($m) |
Valuation |
CRV431 |
US |
20% |
2026 |
370.8 |
51.87 |
Europe |
20% |
2027 |
373.0 |
42.53 |
|
R&D & milestones |
(11.86) |
||||
Total |
82.55 |
||||
Net cash and equivalents (Q121) |
115.32 |
||||
Total firm value ($m) |
197.87 |
||||
Total basic shares (m) |
76.23 |
||||
Value per basic share ($) |
2.60 |
||||
Convertible preferred stock |
0.02 |
||||
Dilutive options and warrants (m) |
0.69 |
||||
Total diluted shares (m) |
76.94 |
||||
Value per diluted share ($) |
2.59 |
||||
Source: Hepion reports, Edison Investment Research
Financials
Hepion ended Q121 with $115.3m in net cash ($115.5m gross cash offset by $0.2m debt). On 16 February 2021, Hepion, conducted a public offering of 44,200,000 shares of Hepion common stock at a price of $2.00 per share. This resulted in net proceeds of approximately $82.1m, after deducting underwriting discount, commissions and offering expenses. We expect this to be enough cash to complete the ASCEND-NASH Phase IIb trial and sustain the company for the next three years. Hepion’s approximate burn rate is $5–7m quarterly; this is likely to increase as the ASCEND-NASH trial is underway. We estimate the company may need additional financing of $25m (in 2025).
This quarter, Hepion was included in the Russell Microcap Index.
Exhibit 4: Financial summary
$'000 |
2019 |
2020 |
2021e |
2022e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||
Revenue |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
Cost of Sales |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Profit |
0.0 |
0.0 |
0.0 |
0.0 |
||
R&D |
(3,184.1) |
(11,997.3) |
(21,000.0) |
(22,250.0) |
||
SG&A |
(4,586.0) |
(8,148.8) |
(8,393.3) |
(8,645.1) |
||
EBITDA |
|
|
(7,677.2) |
(17,732.2) |
(27,013.9) |
(28,515.7) |
Normalised operating profit |
|
|
(7,703.9) |
(17,766.7) |
(27,013.9) |
(28,515.7) |
Amortisation of acquired intangibles |
` |
0.0 |
0.0 |
0.0 |
0.0 |
|
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Share-based payments |
(66.2) |
(2,379.4) |
(2,379.4) |
(2,379.4) |
||
Reported operating profit |
(7,770.1) |
(20,146.1) |
(29,393.3) |
(30,895.1) |
||
Net Interest and financial income |
(175.9) |
(177.3) |
0.0 |
0.0 |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(7,879.8) |
(17,944.0) |
(27,013.9) |
(28,515.7) |
Profit Before Tax (reported) |
|
|
(7,946.0) |
(20,323.4) |
(29,393.3) |
(30,895.1) |
Reported tax |
908.7 |
(30.6) |
(44.2) |
(46.5) |
||
Profit After Tax (norm) |
(6,978.7) |
(17,971.0) |
(27,054.6) |
(28,558.6) |
||
Profit After Tax (reported) |
(7,037.3) |
(20,353.9) |
(29,437.5) |
(30,941.6) |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
||
Deemed Dividend |
(5,442.9) |
(5.3) |
0.0 |
0.0 |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
(6,978.7) |
(17,971.0) |
(27,054.6) |
(28,558.6) |
||
Net income (reported) |
(12,480.3) |
(20,359.2) |
(29,437.5) |
(30,941.6) |
||
Basic average number of shares outstanding (m) |
2.0 |
9.7 |
76.2 |
80.0 |
||
EPS - normalised (c) |
|
|
(341.55) |
(185.69) |
(35.49) |
(35.68) |
EPS - diluted normalised ($) |
|
|
(3.42) |
(1.86) |
(0.35) |
(0.36) |
EPS - basic reported ($) |
|
|
(6.11) |
(2.10) |
(0.39) |
(0.39) |
Dividend ($) |
0.00 |
0.00 |
0.00 |
0.00 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
6,222.9 |
6,011.0 |
5,847.0 |
5,683.0 |
Intangible Assets |
1,870.9 |
1,870.9 |
1,870.9 |
1,870.9 |
||
Tangible Assets |
57.2 |
108.4 |
108.4 |
108.4 |
||
Investments & other |
4,294.8 |
4,031.6 |
3,867.6 |
3,703.6 |
||
Current Assets |
|
|
14,388.7 |
42,634.3 |
97,765.2 |
69,552.1 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
0.0 |
0.0 |
0.0 |
0.0 |
||
Cash & cash equivalents |
13,923.0 |
40,726.8 |
95,857.7 |
67,644.7 |
||
Other |
465.7 |
1,907.5 |
1,907.5 |
1,907.5 |
||
Current Liabilities |
|
|
(1,609.5) |
(4,661.8) |
(4,563.2) |
(4,748.4) |
Creditors |
(491.6) |
(3,722.4) |
(3,623.8) |
(3,809.0) |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(1,117.9) |
(939.4) |
(939.4) |
(939.4) |
||
Long Term Liabilities |
|
|
(3,385.4) |
(3,463.0) |
(3,463.0) |
(3,463.0) |
Long term borrowings |
0.0 |
(176.6) |
(176.6) |
(176.6) |
||
Other long term liabilities |
(3,385.4) |
(3,286.5) |
(3,286.5) |
(3,286.5) |
||
Net Assets |
|
|
15,616.7 |
40,520.4 |
95,585.9 |
67,023.7 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
15,616.7 |
40,520.4 |
95,585.9 |
67,023.7 |
CASH FLOW |
||||||
Op Cash Flow before WC and tax |
(7,677.2) |
(17,732.2) |
(27,013.9) |
(28,515.7) |
||
Working capital |
(826.2) |
1,628.8 |
(98.6) |
185.2 |
||
Exceptional & other |
29.7 |
(31.2) |
164.0 |
164.0 |
||
Tax |
908.7 |
(30.6) |
(44.2) |
(46.5) |
||
Net operating cash flow |
|
|
(7,565.1) |
(16,165.2) |
(26,992.7) |
(28,213.0) |
Capex |
(51.5) |
(88.0) |
0.0 |
0.0 |
||
Acquisitions/disposals |
0.0 |
2.2 |
0.0 |
0.0 |
||
Net interest |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
19,826.5 |
42,878.3 |
82,123.6 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(1,119.4) |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
11,090.5 |
26,627.3 |
55,130.9 |
(28,213.0) |
||
Opening net debt/(cash) |
|
|
(1,392.4) |
(13,922.9) |
(40,550.3) |
(95,681.1) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
1,440.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(13,922.9) |
(40,550.3) |
(95,681.1) |
(67,468.1) |
Source: Company reports, Edison Investment Research
|
|
Research: Consumer
With Loungers trading ‘fantastically well’ and its organic growth strategy ‘never looking more relevant’, management is pulling no punches. Since full reopening on 17 May, its first nine weeks’ like-for-like sales growth of 24% on the same period of 2019 shows material market outperformance (restaurants +8% like-for-like in June, according to Coffer CGA Business Tracker) and sustains the buoyancy of its initial month (+27%). Yet more striking is Loungers’ resumption of its historical run rate of 25 openings a year (seven in the latest quarter) with clear scope to accelerate (already filling FY23 pipeline) and at increasingly attractive sites, given the boost from pandemic fallout and strong finances (c £30m current liquidity). Staffing challenges should be mitigated by ensuring that Loungers remains a hospitality employer of choice.