Medigene has announced an expansion of its bluebird partnership, giving significant external validation of its T-cell receptor (TCR) technology platform. The full partnership now covers six targets and is worth potentially US$1.5bn in development and commercial milestones, in addition to royalties on any future sales. Medigene’s own internal pipeline continues to advance with its MDG1011 Phase I/II TCR clinical trial now enrolling patients. Additionally, we forecast that the Phase I part of the TCR trial and the now fully enrolled Phase I/II DC vaccine trial will read out in 2019. We have updated our forecasts and now value Medigene at €416m (€18.65/share) vs €396m (€17.8/share) previously.
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Medigene |
bluebird bio back for more |
Trading update |
Pharma & biotech |
17 May 2018 |
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Medigene is a research client of Edison Investment Research Limited |
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Medigene has announced an expansion of its bluebird partnership, giving significant external validation of its T-cell receptor (TCR) technology platform. The full partnership now covers six targets and is worth potentially US$1.5bn in development and commercial milestones, in addition to royalties on any future sales. Medigene’s own internal pipeline continues to advance with its MDG1011 Phase I/II TCR clinical trial now enrolling patients. Additionally, we forecast that the Phase I part of the TCR trial and the now fully enrolled Phase I/II DC vaccine trial will read out in 2019. We have updated our forecasts and now value Medigene at €416m (€18.65/share) vs €396m (€17.8/share) previously.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
9.7 |
(13.4) |
(0.66) |
0.0 |
N/A |
N/A |
12/17 |
11.4 |
(12.4) |
(0.60) |
0.0 |
N/A |
N/A |
12/18e |
11.1 |
(22.1) |
(0.99) |
0.0 |
N/A |
N/A |
12/19e |
11.2 |
(22.0) |
(0.99) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
bluebird expansion further validates technology
In September 2016, bluebird and Medigene signed a partnership agreement to develop four TCR product candidates. This deal has now been expanded to include an additional two TCRs, taking the total to six ongoing programmes. The expansion includes a one-off payment of €8m to Medigene and up to €250m in potential milestone payments per candidate. Medigene has a unique platform for identifying and characterising specific TCRs to target antigens. The selection of the correct antigen/major histocompatibility complex (MHC) restriction combination is a complex undertaking and we believe this expanded agreement further validates Medigene’s expertise in this area.
Financials: bluebird revenue lowers FY cash burn
We have rolled forward our model and updated it to include in 2018 the €8m one-off payment (recognised over the length of the contract) from bluebird. In 2018, we also include a €1m payment as a result of the first collaboration project under the new agreement, on top of increased R&D funding. We now expect increased R&D costs for Medigene in 2018 of €25.3m vs €23.8m previously. We now forecast an operating loss of €22.0m in 2018 and a cash burn of €17.4m.
Valuation: €416m (€18.65/share)
We value Medigene at €416m (€18.65/share) vs €396m (€17.8/share) previously. This is based on a risk-adjusted NPV of its TCR, DC and legacy assets in addition to deal metrics for the bluebird bio partnership and legacy asset, Veregen. We have rolled forward our model and now include the two new product candidates in the bluebird deal. Note that we currently value no sales-related income for the bluebird partnership; we await initiation of the first partnered clinical trial to give clarification on the commercial opportunity.
Exhibit 1: Financial summary
€'000s |
2016 |
2017 |
2018e |
2019e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
9,749 |
11,375 |
11,069 |
11,218 |
of which: Veregen revenues (royalties/milestones/supply) |
3,048 |
2,790 |
1,433 |
1,582 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
3,155 |
0 |
0 |
0 |
||
Non-cash income (Eligard) |
2,493 |
3,699 |
3,699 |
3,699 |
||
bluebird bio partnership |
1,053 |
4,886 |
5,938 |
5,938 |
||
Cost of sales |
(1,402) |
(1,621) |
(553) |
(613) |
||
Gross profit |
8,347 |
9,754 |
10,516 |
10,605 |
||
Selling, general & administrative spending |
(10,025) |
(8,266) |
(7,186) |
(7,395) |
||
R&D expenditure |
(11,538) |
(14,877) |
(25,291) |
(25,544) |
||
Other operating spending |
0 |
0 |
0 |
0 |
||
Operating profit |
(8,974) |
(13,389) |
(21,961) |
(22,333) |
||
Goodwill & intangible amortisation |
(525) |
(524) |
(523) |
(522) |
||
Exceptionals |
4,242 |
0 |
0 |
0 |
||
Share-based payment |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(12,371) |
(12,122) |
(21,213) |
(21,586) |
Operating Profit (before amort. and except.) |
|
|
(12,691) |
(12,865) |
(21,438) |
(21,811) |
Net interest |
(1,009) |
(1,434) |
(1,959) |
(1,746) |
||
Other (forex gains/losses; associate profit/loss) |
263 |
1,884 |
1,278 |
1,546 |
||
Profit Before Tax (norm) |
|
|
(13,437) |
(12,415) |
(22,119) |
(22,011) |
Profit before tax (reported) |
|
|
(9,720) |
(12,939) |
(22,642) |
(22,533) |
Tax |
228 |
(634) |
0 |
0 |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(13,209) |
(13,049) |
(22,119) |
(22,011) |
||
Profit after tax (reported) |
(9,492) |
(13,573) |
(22,642) |
(22,533) |
||
Average number of shares outstanding (m) |
20.0 |
21.6 |
22.3 |
22.3 |
||
EPS - normalised (c) |
|
|
(66.20) |
(60.42) |
(99.19) |
(98.71) |
EPS - Reported (€) |
|
|
(0.48) |
(0.63) |
(1.02) |
(1.01) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
47,742 |
48,595 |
49,457 |
50,400 |
Intangible assets & goodwill |
35,767 |
36,292 |
35,769 |
35,247 |
||
Tangible assets |
3,323 |
4,329 |
5,714 |
7,179 |
||
Other non-current assets |
8,652 |
7,974 |
7,974 |
7,974 |
||
Current assets |
|
|
63,973 |
63,342 |
45,946 |
19,624 |
Stocks |
7,866 |
7,724 |
7,724 |
7,724 |
||
Debtors |
1,175 |
1,699 |
1,699 |
1,699 |
||
Cash |
52,630 |
51,724 |
34,328 |
8,006 |
||
Other |
2,302 |
2,195 |
2,195 |
2,195 |
||
Current liabilities |
|
|
(11,966) |
(9,808) |
(9,808) |
(9,808) |
Trade accounts payable |
(973) |
(725) |
(725) |
(725) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Deferred income |
(3,575) |
(3,575) |
(3,575) |
(3,575) |
||
Other |
(7,418) |
(5,508) |
(5,508) |
(5,508) |
||
Long-term liabilities |
|
|
(21,157) |
(15,962) |
(12,625) |
(9,287) |
Pension provisions |
(408) |
(405) |
(405) |
(405) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(2,395) |
(3,672) |
(3,672) |
(3,672) |
||
Deferred revenues (Eligard non-cash income & bluebird bio) |
(18,354) |
(11,885) |
(8,548) |
(5,210) |
||
Net assets |
|
|
78,592 |
86,167 |
72,970 |
50,929 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(3,611) |
(20,729) |
(16,994) |
(24,386) |
Net interest |
(45) |
(45) |
(459) |
(246) |
||
Tax |
(102) |
(75) |
0 |
0 |
||
Capex |
(1,677) |
(1,533) |
(1,610) |
(1,690) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
10,537 |
480 |
0 |
0 |
||
Equity financing |
(77) |
19,329 |
0 |
0 |
||
Other |
846 |
1,667 |
1,667 |
0 |
||
Net cash flow |
5,871 |
(906) |
(17,396) |
(26,322) |
||
Opening net debt/(cash) |
|
|
(46,759) |
(52,630) |
(51,724) |
(34,328) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(52,630) |
(51,724) |
(34,328) |
(8,006) |
Source: Medigene, Edison Investment Research
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Jupiter US Smaller Companies (JUS) aims to generate long-term capital growth from a focused portfolio of mid- and small-cap US equities. Since 2001, the trust has been managed by Robert Siddles. Following the announcement of adjustments to JUS’s investment process – running a more concentrated portfolio, a greater focus on selling underperforming holdings, while holding on to successful positions for longer – the trust has enjoyed an improvement in investment performance. It has delivered above market results in periods of both positive and negative stock market returns, illustrating its commitment to capital preservation. The board has also reduced JUS’s management fees, removed the performance fee and introduced the trust’s first gearing facility.