Brighter recently announced that both the United Arab Emirates (UAE) Ministry of Health and Prevention (MOHAP) and the Saudi Food and Drug Authority (SFDA) have provided market approvals for the Actiste device. While all necessary regulatory approvals have been obtained in the UAE, commercialisation in Saudi Arabia will require additional regulatory approvals, such as for consumables, but those are expected to be granted in the coming months. Additional registration efforts are also underway in Malaysia, Singapore, Thailand and Indonesia and are about to start in Kuwait, Oman and Bahrain.
Written by
Maxim Jacobs
Brighter |
Approvals in the UAE and Saudi Arabia |
Financial update |
Pharma & biotech |
24 November 2020 |
Share price performance
Business description
Next events
Analysts
Brighter is a research client of Edison Investment Research Limited |
Brighter recently announced that both the United Arab Emirates (UAE) Ministry of Health and Prevention (MOHAP) and the Saudi Food and Drug Authority (SFDA) have provided market approvals for the Actiste device. While all necessary regulatory approvals have been obtained in the UAE, commercialisation in Saudi Arabia will require additional regulatory approvals, such as for consumables, but those are expected to be granted in the coming months. Additional registration efforts are also underway in Malaysia, Singapore, Thailand and Indonesia and are about to start in Kuwait, Oman and Bahrain.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
1.1 |
(48.8) |
(0.74) |
0.0 |
N/A |
N/A |
12/19 |
3.3 |
(88.7) |
(1.06) |
0.0 |
N/A |
N/A |
12/20e |
12.3 |
(166.5) |
(0.82) |
0.0 |
N/A |
N/A |
12/21e |
93.0 |
(101.5) |
(0.46) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
UAE and Saudi market approvals
Brighter announced approval in the UAE and Saudi Arabia for the Actiste device. While additional regulatory approvals are necessary in Saudi Arabia, those are expected in the coming months. The company expects to use a mix of business-to-consumer (B2C), business-to-business (B2B) and business-to-government (B2G) channels to commercialise Actiste.
High diabetes prevalence in GCC area
Brighter is focusing initially on the Gulf Cooperation Council (GCC) region as this area has an especially high level of unmet need in diabetes. Prevalence ranges from 10.1% to 16.3% of the populations on an age-adjusted basis. In total, 1.2 million adults in the UAE and another 4.3 million in Saudi Arabia are estimated to have the disease.
Progress at Camanio
Camanio, Brighter’s subsidiary that specialises in digital solutions and services for home care, announced that it was included in a nationwide framework agreement in Sweden regarding stationary and mobile care alarms. The agreement is valid for four years and Camanio is one of just five companies included. Additionally, the company announced that sales of the BikeAround jDome and digital therapy animals to municipalities and communities totalled SEK1m on 3 November alone.
Valuation: SEK1,225m or SEK5.64 per basic share
We have lowered our valuation to SEK1,225m or SEK5.64 per share, from SEK1,252m or SEK5.76 per share, mainly due to lower net cash though this was partially offset by rolling forward our NPVs. Brighter had SEK14.4m in gross cash (SEK1.8m net debt) at the end of Q320. We project it will need to raise an additional SEK60m over the rest of the year (previously SEK110m) and SEK175m in 2021. We lowered the financing needs for the rest of the year in part due to lower operating expenses than we expected.
A step forward in the GCC
Brighter announced in November that both the UAE MOHAP and the SFDA have provided market approval for the Actiste device. While all necessary regulatory approvals have been obtained in the UAE, commercialisation in Saudi Arabia will requires additional approvals, such as consumables as well as use of the cellular network for transmission from the Saudi telecoms authority. These additional approvals are expected to be granted in the coming months. The company expects to use a mix of B2C, B2B and B2G channels to commercialise Actiste. According to the International Diabetes Federation, the UAE has 1.2 million diabetics and Saudi Arabia has 4.3 million diabetic adults between the ages of 20 and 79 (see Exhibit 1).
Exhibit 1: Adults aged 20–79 with diabetes in 2019 in target markets
Country |
Age-adjusted prevalence |
Prevalence of diabetes in adults aged 20–79 (‘000s) |
GCC |
||
UAE |
16.3 |
1,223.4 |
Saudi Arabia |
15.8 |
4,275.2 |
Kuwait |
12.2 |
681.1 |
Oman |
10.1 |
291.8 |
Qatar |
15.6 |
347.0 |
Bahrain |
15.6 |
202.7 |
South-East Asia |
||
Indonesia |
6.3 |
10,681.4 |
Thailand |
7.0 |
4,284.9 |
Singapore |
5.5 |
640.4 |
Malaysia |
16.7 |
3,652.6 |
Europe |
||
Sweden |
4.8 |
521.2 |
Source: IDF Diabetes Atlas, Ninth Edition
Additional registration efforts are also under way in Malaysia, Singapore, Thailand and Indonesia, and about to start in Kuwait, Oman and Bahrain. Also, as of May the service is commercially available in Sweden and the company is harvesting user insights that will help it improve the experience over time.
Camanio subsidiary progressing
Camanio, Brighter’s subsidiary that specialises in digital solutions and services for home care, announced that it was included in a nationwide framework agreement with the Swedish Association of Local Authorities and Regions (SALAR) regarding stationary and mobile care alarms. The agreement is valid for four years and Camanio is one of just five companies included. A similar framework agreement from October 2016 to December 2019 resulted in SEK194m in sales for the participating companies over the same period.
Additionally, the company announced that Camanio sales of the BikeAround jDome and digital therapy animals to municipalities and communities totalled SEK1m on 3 November alone (though we believe the sales were likely timed to coincide and that the daily run rate will not be that high over the quarter). Demand for these products and services have increased due to the COVID-19 pandemic.
Valuation
We have lowered our valuation to SEK1,225m or SEK5.64 per share, from SEK1,252m or SEK5.76 per share, mainly due to lower net cash though this was partially offset by rolling forward our NPVs.
Exhibit 2: Brighter valuation table
Programme |
Market |
Probability of success |
Launch year |
Upper tier launch pricing |
Lower tier launch pricing |
Peak revenue ($m) |
Valuation (SEKm) |
||||||
Actiste |
Nordic region |
30% |
2020 |
131.3 |
71.6 |
5.5 |
26.3 |
||||||
Gulf Cooperation Council countries |
30% |
2020 |
112.5 |
61.4 |
45.7 |
178.3 |
|||||||
South East Asia |
30% |
2020 |
93.8 |
51.1 |
54.7 |
261.7 |
|||||||
EU |
25% |
2021 |
133.9 |
73.0 |
243.1 |
680.0 |
|||||||
US |
20% |
2021 |
143.1 |
78.0 |
193.1 |
487.8 |
|||||||
Unallocated costs |
(407.7) |
||||||||||||
Total |
1,226.4 |
||||||||||||
Net cash (debt) (at 30 September 2020) (SEKm) |
(1.8) |
||||||||||||
Total firm value (SEKm) |
1,225 |
||||||||||||
Total shares (m) |
217.3 |
||||||||||||
Value per basic share (SEK) |
5.64 |
Source: Edison Investment Research
Financials
The company reported sales of SEK2.5m in Q320, up from SEK2.1m in Q220, with the vast majority of sales coming from the Camanio segment. The companywide Q320 operating loss was SEK41.0m for the quarter, compared to a loss of SEK12.6m in Q319, as operating expenses increased in part due to the acquisitions of Pink Nectarine Health and Camanio in late 2019/early 2020. However, this loss is down from the SEK46.4m loss seen in Q220 as external costs were reduced. Following these results, we have lowered our 2020 revenue estimates from SEK15.8m to SEK12,3m, but have kept our 2021 sales estimates the same. We have also decreased our operating expense estimate by approximately SEK15m for both years due to a lower expense run rate versus our prior expectations.
The company had SEK14.4m in gross cash on hand at the end of Q320. In September, prior to the end of the quarter, Brighter had raised SEK21.7m through a warrant exercise and an additional SEK21.0m through a directed share issue. At the end of the quarter, the company reported SEK7.0m in short-term debt and SEK9.2m in long-term debt; after considering gross cash, we calculate SEK1.8m net debt. We project Brighter will need to raise an additional SEK60m by the end of this year (versus our previous estimate of SEK110m,) and SEK175m in 2021. We lowered the financing needs for the rest of the year in part due to lower operating expenses than we expected. The company management has stated that there is an equity-based financing contract in place for funding routine operations for at least the next 12 months.
Exhibit 3: Financial summary
SEK'000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
1,052 |
3,284 |
12,312 |
93,039 |
Cost of Sales |
0 |
(1,246) |
(4,432) |
(18,608) |
||
Gross Profit |
1,052 |
2,039 |
7,879 |
74,431 |
||
General and Administrative Expenses |
(13,014) |
(23,418) |
(71,439) |
(72,153) |
||
Other Operating Expenses |
(32,201) |
(52,365) |
(72,157) |
(72,879) |
||
EBITDA |
|
|
(44,163) |
(73,744) |
(135,716) |
(70,600) |
Operating Profit (before amort. and except.) |
|
|
(44,326) |
(78,857) |
(163,866) |
(98,750) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Operating Profit |
(44,326) |
(78,857) |
(163,866) |
(98,750) |
||
Net Interest |
(4,476) |
(9,875) |
(2,584) |
(2,739) |
||
Other |
(4,278) |
(953) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(48,802) |
(88,732) |
(166,450) |
(101,490) |
Profit Before Tax (FRS 3) |
|
|
(53,080) |
(89,685) |
(166,450) |
(101,490) |
Tax |
0 |
0 |
0 |
0 |
||
Deferred tax |
(0) |
(0) |
(0) |
(0) |
||
Profit After Tax (norm) |
(48,802) |
(88,732) |
(166,450) |
(101,490) |
||
Profit After Tax (FRS 3) |
(53,080) |
(89,685) |
(166,450) |
(101,490) |
||
Average Number of Shares Outstanding (m) |
71.7 |
84.7 |
203.3 |
219.5 |
||
EPS - normalised (ore) |
|
|
(74.00) |
(105.85) |
(81.86) |
(46.24) |
EPS - FRS 3 (SEK) |
|
|
(0.74) |
(1.06) |
(0.82) |
(0.46) |
Dividend per share (ore) |
0.00 |
0.00 |
0.00 |
0.00 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
112,430 |
186,740 |
271,289 |
331,973 |
Intangible Assets |
102,930 |
158,677 |
222,556 |
282,869 |
||
Tangible Assets |
8,537 |
16,470 |
37,115 |
37,486 |
||
Other |
964 |
11,593 |
11,618 |
11,618 |
||
Current Assets |
|
|
58,186 |
68,925 |
132,385 |
149,408 |
Stocks |
7,070 |
6,831 |
19,065 |
19,065 |
||
Debtors |
40,358 |
44,396 |
80,780 |
80,780 |
||
Cash |
9,031 |
9,340 |
19,475 |
36,498 |
||
Other |
1,727 |
8,358 |
13,065 |
13,065 |
||
Current Liabilities |
|
|
(63,698) |
(46,308) |
(38,886) |
(54,352) |
Creditors |
(11,805) |
(35,666) |
(31,930) |
(47,396) |
||
Short term borrowings |
(51,893) |
(10,642) |
(6,956) |
(6,956) |
||
Long Term Liabilities |
|
|
0 |
(1,581) |
(69,266) |
(244,272) |
Long term borrowings |
0 |
(1,390) |
(69,203) |
(244,203) |
||
Other long term liabilities |
0 |
(191) |
(63) |
(69) |
||
Net Assets |
|
|
106,918 |
207,776 |
295,522 |
182,757 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(68,249) |
(93,902) |
(176,113) |
(86,017) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(29,986) |
(40,125) |
(71,512) |
(71,960) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
34,655 |
150,532 |
244,053 |
0 |
||
Conversion of convertible debt instruments |
43,065 |
0 |
0 |
0 |
||
Dividends |
0 |
(494) |
0 |
0 |
||
Other |
(14,406) |
(18,685) |
(35,965) |
0 |
||
Net Cash Flow |
(34,921) |
(2,673) |
(39,536) |
(157,977) |
||
Opening net debt/(cash) |
|
|
(1,580) |
42,862 |
2,692 |
56,684 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
||
Other |
(9,521) |
42844 |
(14,456) |
0 |
||
Closing net debt/(cash) |
|
|
42,862 |
2,692 |
56,684 |
214,661 |
Source: Edison Investment Research, company accounts
|
|
Research: Industrials
Both of Carr’s Group’s divisions have continued to operate throughout the coronavirus lockdowns as they serve key markets. While adjusted PBT was 17% lower year-on-year during FY20 because of an unseasonably mild winter in the UK and delays in engineering contracts, a pick-up in US cattle prices at the year-end helped deliver a full-year result ahead of our estimates, which were revised down in March.
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