Xbrane now focuses on developing high-margin biosimilar products with Xlucane, its Lucentis biosimilar, as the lead product. After the July 2018 SEK78m upfront deal with STADA, Xbrane is starting the global XPLORE Phase III trial. The primary endpoint reports in mid-2020 and XPLORE completes in February 2021. Xbrane is raising SEK59.3m at SEK30/ share to help fund its 50% share of the XPLORE study. Xbrane sold SEK20m of Spherotide (a triptorelin generic) to Iran in 2018. A partner is needed to progress development in Europe. Our valuation remains at SEK581m.
Written by
Xbrane Biopharma |
Biosimilar focus with Phase III trial about to start |
FY18 results and rights issue |
Pharma & biotech |
4 March 2019 |
Share price performance
Business description
Next events
Analyst
Xbrane Biopharma is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Xbrane now focuses on developing high-margin biosimilar products with Xlucane, its Lucentis biosimilar, as the lead product. After the July 2018 SEK78m upfront deal with STADA, Xbrane is starting the global XPLORE Phase III trial. The primary endpoint reports in mid-2020 and XPLORE completes in February 2021. Xbrane is raising SEK59.3m at SEK30/ share to help fund its 50% share of the XPLORE study. Xbrane sold SEK20m of Spherotide (a triptorelin generic) to Iran in 2018. A partner is needed to progress development in Europe. Our valuation remains at SEK581m.
Year |
Revenue* (SEKm) |
PBT** |
EPS** |
DPS |
P/E |
Yield |
12/17 |
20.77 |
(44.16) |
(8.14) |
0.0 |
N/A |
N/A |
12/18 |
20.49 |
(12.59) |
(2.04) |
0.0 |
N/A |
N/A |
12/19e |
20.00 |
(146.95) |
(19.06) |
0.0 |
N/A |
N/A |
12/20e |
20.00 |
(240.41) |
(28.96) |
0.0 |
N/A |
N/A |
Note: *Revenue includes other income. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Xlucane now the core focus with STADA partnering
Xbrane is developing Xlucane, a monthly biosimilar of Lucentis (ranibizumab, Roche (US) Novartis (Eur); 2018 sales: $3.6bn) to treat wet age-related macular degeneration. In July 2018, it was globally partnered with STADA, a private, €2.3bn sales company. Costs and profits are split 50:50. In Europe, the partners aim to launch in 2022 on Lucentis patent expiry; US patent expiry is in 2020. The global Phase III (NCT03805100, XPLORE) aims to recruit 580 patients starting in March 2019. The primary endpoint data are due in May 2020. The full 52-week trial ends in February 2021. Competitors include bioeq - Formycon with Phase III data and Samsung Bioepis with a Phase III reporting primary data soon. Roche has a bispecific antibody, Faricimab, entering Phase III after a good Phase II performance with one injection every 16 weeks. It is also trialling new Lucentis delivery systems.
Spherotide seeking a European partner
Spherotide is a generic triptorelin depot that treats prostate cancer, endometriosis and uterine fibroids. In 2018, Ipsen, the market leader, sold €372.6m of Decapeptyl (triptorelin), an 8% volume rise. Spherotide 2018 bulk sales to Iran were SEK20m at a 22% margin; payment is difficult due to sanctions. Xbrane reported a SEK13m upfront in H118 in a deal with Chinese CR Pharma. European development depends on signing a partner to fund trials; Xbrane does not plan to invest directly.
Valuation: Value at SEK581m, SEK59.3m rights issue
Our indicative valuation revised in November 2018 remains at SEK581m based on Xbrane expectations of up to a €100m Xlucane yearly profit share. This equates to SEK92/share before dilution. Xbrane is raising SEK59.3m at SEK30/share before expenses less a pro-rata of SEK6.4m set off against the SEK45m loan; further funds will be needed in 2020 to cover its 50% share of the company-estimated €30–40m XPLORE costs. Operating costs after sales in 2018 were SEK111m. Pre-payments for XPLORE are SEK34m, (SEK1m 2017). Xbrane gained SEK99.7m in deal fees and borrowed SEK45m in 2018. Year-end cash was SEK101m.
Exhibit 1: Financial summary
SEK 000s |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
GAAP |
GAAP |
GAAP |
GAAP |
||
PROFIT & LOSS |
|
|
|
|
||
Revenue |
|
|
20,771 |
20,485 |
20,000 |
20,000 |
Cost of Sales |
(15,829) |
(15,907) |
(15,800) |
(15,800) |
||
Gross Profit |
4,942 |
4,578 |
4,200 |
4,200 |
||
Other income |
2,515 |
99,742 |
0 |
0 |
||
EBITDA |
|
|
(40,871) |
(7,468) |
(140,527) |
(233,986) |
Operating Profit (before amort. and except.) |
|
(43,939) |
(10,890) |
(143,949) |
(237,408) |
|
Intangible Amortisation |
(779) |
(525) |
(525) |
(525) |
||
Other |
0 |
0 |
0 |
0 |
||
Operating Profit |
(44,718) |
(11,415) |
(144,474) |
(237,933) |
||
Net Interest |
(217) |
(1,700) |
(3,000) |
(3,000) |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(44,156) |
(12,590) |
(146,949) |
(240,408) |
Profit Before Tax (FRS 3) |
|
|
(44,935) |
(13,115) |
(147,474) |
(240,933) |
Tax |
0 |
(121) |
0 |
0 |
||
Profit After Tax (norm) |
(44,156) |
(12,711) |
(146,949) |
(240,408) |
||
Profit After Tax (FRS 3) |
(44,935) |
(13,236) |
(147,474) |
(240,933) |
||
Average Number of Shares Outstanding (m) |
5.4 |
6.2 |
7.7 |
8.3 |
||
EPS - normalised (öre) |
|
|
(814) |
(204) |
(1,906) |
(2,896) |
EPS - normalised fully diluted (öre) |
|
|
(814) |
(204) |
(1,906) |
(2,896) |
EPS - FRS 3 (öre) |
|
|
(828) |
(213) |
(1,913) |
(2,903) |
Dividend per share (öre) |
0 |
0 |
0 |
0 |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
82,861 |
89,798 |
83,532 |
81,610 |
Intangible Assets |
63,657 |
64,182 |
59,838 |
59,838 |
||
Tangible Assets |
18,569 |
16,745 |
14,823 |
12,901 |
||
Investments |
635 |
8,871 |
8,871 |
8,871 |
||
Current Assets |
|
|
28,101 |
161,658 |
65,070 |
46,585 |
Stocks |
3,065 |
5,525 |
5,525 |
5,525 |
||
Debtors |
8,072 |
10,494 |
10,494 |
10,494 |
||
Cash |
7,903 |
100,972 |
4,384 |
10,139 |
||
Other current assets |
9,061 |
44,667 |
44,667 |
20,427 |
||
Current Liabilities |
|
|
(17,029) |
(160,439) |
(154,039) |
(154,039) |
Creditors |
(17,029) |
(114,878) |
(114,878) |
(114,878) |
||
Short term borrowings |
0 |
(45,561) |
(39,161) |
(39,161) |
||
Long Term Liabilities |
|
|
(4,664) |
(7,704) |
(17,629) |
(258,036) |
Long term borrowings |
(1,119) |
(4,159) |
(4,159) |
(224,159) |
||
Other long term liabilities |
(3,545) |
(3,545) |
(3,545) |
(3,545) |
||
Net Assets |
|
|
89,269 |
83,313 |
(23,065) |
(283,881) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(36,848) |
46,707 |
(143,016) |
(212,238) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(3,347) |
(1,598) |
(1,500) |
(1,500) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
20,004 |
48,238 |
48,437 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
(2,637) |
(278) |
(508) |
(508) |
||
Net Cash Flow |
(22,828) |
93,069 |
(96,588) |
(214,246) |
||
Opening net debt/(cash) |
|
|
(29,612) |
(6,784) |
(51,252) |
38,936 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
(48,601) |
6,400 |
0 |
||
Closing net debt/(cash) |
|
|
(6,784) |
(51,252) |
38,936 |
253,181 |
Source: Edison Investment Research, Xbrane Biopharma accounts
|
|
The award of a €165m (US$188m) contract to provide water treatment to Abidjan, the largest city in Ivory Coast, is transformative in our view. This turnkey project will supply 150,000m3/day of water to 4.7 million people and include a range of treatment solutions. The win establishes Fluence as a supplier of large, innovative solutions and leads us to double our FY20 adjusted EPS forecast to US$c3.8. Despite organic revenue growth in FY19 and FY20 of well over 50%, the share price implies an FY20 P/E of 7x.