Biotie Therapies — Update 19 November 2015

Biotie Therapies — Update 19 November 2015

Biotie Therapies

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Biotie Therapies

Pipeline progressing on track

Q3 update

Pharma & biotech

20 November 2015

Price

€0.16

Market cap

€155m

Gross cash (€m) at Q315

84

Shares in issue

978.2m

Free float

90.0%

Code

BTH1V (OMX)
BITI (NASDAQ)

Primary exchange

OMX, Helsinki

Secondary exchange

NASDAQ GM

Share price performance

%

1m

3m

12m

Abs

(7.6)

(25.8)

(21.8)

Rel (local)

(13.5)

(28.4)

(31.3)

52-week high/low

€0.26

€0.14

Business description

Biotie Therapies is a Finnish/US biotech company focused on CNS disorders. Selincro for alcohol dependence is partnered with Lundbeck and launched in Europe. Parkinson's therapy tozadenant has entered Phase III; two other programmes are in Phase II studies.

Next events

Istradefylline (Kyowa Hakko Kirin) Phase III results (read-across to tozadenant)

H116

SYN120: top-line data from Phase IIa study

H216

BTT1023: interim analysis of Phase IIa study

H216

Analysts

Dr Lucy Codrington

+44 (0)20 3681 2527

Christian Glennie

+44 (0)20 3077 5727

Opexa Therapeutics is a research client of Edison Investment Research Limited

Initial recruitment is on track for the Phase III pivotal study (TOZ-PD) of Biotie’s lead product candidate, tozadenant. Tozadenant offers a novel mechanism of action for the treatment of Parkinson’s disease (PD) patients experiencing motor fluctuations on levodopa. Top-line data from the double-blind portion of the trial are expected by end 2017. Meanwhile, two other products, SYN120 (Parkinson’s disease dementia, PDD) and BTT1023 (primary sclerosing cholangitis, PSC), are in Phase II studies; data are expected by end 2016. We value Biotie at €273m, or €0.28/share.

Year end

Revenue (€m)

PBT* (€m)

EPS* (€)

DPS (€)

P/E (x)

Yield (%)

12/13

27.7

3.7

0.01

0.0

15.8

N/A

12/14

14.9

(7.6)

(0.02)

0.0

N/A

N/A

12/15e

3.8

(32.3)

(0.05)

0.0

N/A

N/A

12/16e

6.4

(31.8)

(0.03)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items.

Tozadenant in pivotal territory

TOZ-PD, along with the completed Phase IIb study, would form the basis of an NDA submission for tozadenant. Agreed under Special Protocol Assessment with the FDA, it is divided into two phases: a 24-week, placebo-controlled phase (n=450), followed by a 52-week, open-label phase. If the primary endpoint is met in the placebo-controlled phase, a second 52-week, open-label study will be performed (n=450) to generate the requisite 1,500 unique patient exposures for approval.

Mid-stage pipeline offers nearer-term catalysts

SYN120 could potentially offer a unique therapeutic profile for the treatment of neurodegenerative diseases, combining pro-cognitive and anti-psychotic effects. It is in a Phase IIa proof-of-concept (POC) study, SYNAPSE, for the treatment of PDD (n=80). BTT1023 is also in a Phase II POC study, BUTEO, in PSC, an orphan fibrotic disease for which there are no FDA-approved treatments. SYNAPSE initial data and a pre-planned interim analysis of BUTEO are both expected by end 2016.

Maintained outlook following Q315 financials

Lundbeck reported flat Selincro sales in Q315 (c €6.3m in Q315); accordingly, royalty income was steady at €0.8m; no milestones were received in Q315. R&D (€7.3m) and G&A (€2.2m) spend increased as the pipeline progresses through clinical trials (vs €4.2m and €1.6m in Q314). We maintain our forecast revenues of €3.8m for FY15e. Our net loss is largely unchanged at €32.3m (vs €32.6m); the reduced ‘other operating income’ (€0.5m vs €1m) is offset by the now positive net interest income owing to the increased cash position after the H115 equity raise.

Valuation: Risk-adjusted NPV of €273m

Our valuation has increased to €273m or €0.28/share (vs €268m or €0.27/share), primarily due to rolling the model forwards to 2016 and updating for end-FY15e gross cash (€74m). Our model continues to suggest a cash runway to end 2017, when initial data from the pivotal tozadenant study are expected.

Exhibit 1: Financial summary

Year end 31 December

€000s

2013

2014

2015e

2016e

2017e

2018e

Accounting basis

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

27,712

14,901

3,849

6,373

9,216

11,776

of which: Selincro milestones

4,000

6,000

500

800

1,500

0

Selincro royalties

155

923

3,136

5,573

7,712

11,768

UCB payments for tozadenant

23,457

7,853

213

0

0

0

Other

100

125

0

0

0

0

Cost of sales

0

0

0

0

0

0

Gross profit

27,712

14,901

3,849

6,373

9,216

11,776

R&D expenses (continuing operations, excludes write-downs)

(17,807)

(17,192)

(27,500)

(30,000)

(29,000)

(25,000)

G&A expenses (continuing operations, excludes exceptionals)

(8,971)

(7,326)

(8,791)

(9,451)

(9,734)

(10,026)

Other operating income (includes grants, eg MJFF)

565

1,132

500

1,000

1,000

1,000

EBITDA

 

 

1,499

(8,485)

(31,942)

(32,077)

(28,518)

(22,250)

Operating profit (before GW and except)

 

 

1,499

(8,485)

(31,942)

(32,077)

(28,518)

(22,250)

Intangible amortisation

0

0

0

0

0

0

Exceptionals (R&D write-downs)

0

(27,605)

0

0

0

0

Currency translation differences

0

0

0

0

0

0

Operating profit

 

 

1,499

(36,090)

(31,942)

(32,077)

(28,518)

(22,250)

Net interest

2,152

925

(333)

260

210

160

Profit before tax (norm)

 

 

3,651

(7,560)

(32,275)

(31,817)

(28,308)

(22,090)

Profit before tax (FRS 3)

 

 

3,651

(35,165)

(32,275)

(31,817)

(28,308)

(22,090)

Tax (credit)

2,195

0

0

0

0

0

Profit after tax (norm)

 

 

5,846

(7,560)

(32,275)

(31,817)

(28,308)

(22,090)

Profit after tax (FRS3)

 

 

5,846

(35,165)

(32,275)

(31,817)

(28,308)

(22,090)

Average number of shares outstanding (m)*

446.2

450.7

717.1

978.2

978.2

978.2

EPS - normalised (€)

 

 

0.01

(0.02)

(0.05)

(0.03)

(0.03)

(0.02)

EPS - FRS 3 (€)

 

 

0.01

(0.08)

(0.05)

(0.03)

(0.03)

(0.02)

BALANCE SHEET

Fixed assets

 

 

75,745

54,132

62,613

62,838

63,062

63,285

Intangible assets

74,059

53,155

57,883

57,933

57,983

58,033

Tangible assets

627

653

803

978

1,152

1,325

Other non-current assets

1,059

324

3,927

3,927

3,927

3,927

Current assets

 

 

44,253

34,199

75,608

43,306

14,563

2,090

Debtors

575

1,806

1,500

1,500

1,500

1,500

Cash

43,678

32,393

74,108

41,806

13,063

590

Other

0

0

0

0

0

0

Current liabilities

 

 

(6,483)

(2,677)

(2,500)

(2,500)

(2,500)

(2,500)

Creditors

(5,740)

(2,677)

(2,500)

(2,500)

(2,500)

(2,500)

Short-term borrowings

0

0

0

0

0

0

Deferred revenue

(743)

0

0

0

0

0

Long-term liabilities

 

 

(33,149)

(33,031)

(33,031)

(33,031)

(33,031)

(43,031)

Long-term borrowings

(20,690)

(20,690)

(20,690)

(20,690)

(20,690)

(30,690)

Provisions

(569)

(670)

(670)

(670)

(670)

(670)

Other long-term liabilities (includes loan interest)

(8,918)

(9,671)

(9,671)

(9,671)

(9,671)

(9,671)

Non-current deferred revenues

(2,972)

(2,000)

(2,000)

(2,000)

(2,000)

(2,000)

Net assets

 

 

80,366

52,623

102,690

70,613

42,094

19,844

CASH FLOW

Operating cash flow

 

 

10,590

(14,065)

(32,350)

(32,027)

(28,468)

(22,200)

Net interest

(13)

(27)

(75)

(50)

(50)

(50)

Tax

0

0

0

0

0

0

Capex

(329)

(146)

(150)

(175)

(174)

(173)

Expenditure on intangibles

(52)

(50)

(50)

(50)

(50)

(50)

Acquisitions/disposals

0

1,350

0

0

0

0

Financing

370

126

74,340

0

0

0

Dividends

0

0

0

0

0

0

Other

(214)

323

0

0

0

0

Net cash flow

 

 

10,352

(12,489)

41,715

(32,302)

(28,742)

(22,473)

Opening net debt/(cash)

 

 

(1,866)

(14,070)

(2,032)

(43,747)

(11,445)

17,298

Other

1,852

451

0

0

0

0

Closing net debt/(cash)

 

 

(14,070)

(2,032)

(43,747)

(11,445)

17,298

39,771

Source: Biotie accounts; Edison Investment Research. Note: *The 978m outstanding shares do not include the 106m shares issued to Biotie itself in October 2015 to cover the half of the warrants issued in May 2015.

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