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Research: Healthcare
In a breakthrough achievement for Paion, the FDA has approved ByFavo (remimazolam) for US sale for procedural sedation (PS) taking under 30 minutes – mainly 25m colonoscopy and bronchoscopy procedures. A €15m milestone is due from US partner Cosmo. Cosmo has sublicensed ByFavo to Acacia in the US; launch is indicated in autumn 2020. Paion has operational funds and loan facilities until 2022. Our valuation has been updated to reflect US approval and is now €283m vs €270m previously.
Written by
Paion |
ByFavo – poised for autumn US launch |
Gain of regulatory approval |
Pharma & biotech |
7 July 2020 |
Share price performance
Business description
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Analysts
Paion is a research client of Edison Investment Research Limited |
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In a breakthrough achievement for Paion, the FDA has approved ByFavo (remimazolam) for US sale for procedural sedation (PS) taking under 30 minutes – mainly 25m colonoscopy and bronchoscopy procedures. A €15m milestone is due from US partner Cosmo. Cosmo has sublicensed ByFavo to Acacia in the US; launch is indicated in autumn 2020. Paion has operational funds and loan facilities until 2022. Our valuation has been updated to reflect US approval and is now €283m vs €270m previously.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
2.77 |
(12.45) |
(15.9) |
0.0 |
N/A |
N/A |
12/19 |
8.00 |
(9.35) |
(10.8) |
0.0 |
N/A |
N/A |
12/20e |
20.30 |
2.42 |
3.7 |
0.0 |
82.2 |
N/A |
12/21e |
4.21 |
(20.88) |
(31.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding exceptional items.
Approved in US with sales via Acacia
The FDA approved ByFavo for PS on 2 July 2020. Cosmo (Paion’s US partner) has sublicensed US sales to Acacia, a company selling Barhemsys for post-operative recovery using an. Paion will receive a €15m milestone and a 20–25% royalty; we expect a price of about $25 per 20mg vial. Acacia states that the US colonoscopy market is 25m procedures in an overall 40m procedure market. ByFavo launch is expected by us in Q420, after Drug Enforcement agency classification (probably the same as midazolam). We forecast that royalties will become significant from H221. The market positioning, supported by the clinical trials, targets midazolam as ByFavo claims increased patient throughput due to its fast onset and shorter recovery times - so potentially giving higher clinic revenues. The US ByFavo label is based on the midazolam label with similar warnings. Acacia notes that 80% of US partial sedation procedures involve an anaesthetic provider, a group specifically targeted by the approximately 50-person Acacia salesforce.
Other indications and countries
In Japan, remimazolam (Anerem) is approved for general anaesthesia (GA), with partner Mundipharma planning a mid-2020 launch. Remimazolam is undergoing an EMA review for PS with the outcome likely in H121. The European GA Phase III closed in H120, allowing an H220 analysis with a likely abbreviated EMA application in Q421. There is some ICU use with COVID-19 patients in Italy.
Valuation: Increased to €283m with funding until 2022
Paion has stated that it aims to become a profitable company within five years. It has cash (€18m at 31 March), expected milestones in 2020 (€20m) and EIB loan facilities (€20m) to cover planned expenses to H221, plus potential royalties from late 2020 and especially from 2021 given the US ByFavo and Anerem (in Japan) approvals. We have moved the US probability from 90% to 100% with the full €15m milestone. All other forecasts are unchanged. This gives an indicative value of €283m (formerly €270m).
Exhibit 1: Financial summary
€'000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 December |
||||||
PROFIT & LOSS |
||||||
Revenue |
|
|
2,766 |
8,000 |
20,295 |
4,207 |
Cost of sales |
0 |
0 |
(120) |
(1,284) |
||
Gross profit |
2,766 |
8,000 |
20,175 |
2,924 |
||
Operating profit |
(12,711) |
(9,346) |
2,210 |
(21,096) |
||
Depreciation and amortisation |
(256) |
(120) |
(214) |
(214) |
||
Share-based payments |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(12,455) |
(9,226) |
2,424 |
(20,882) |
Operating profit (before amort. and except.) |
|
|
(12,455) |
(9,226) |
2,424 |
(20,882) |
Net Interest |
6 |
(122) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(12,449) |
(9,348) |
2,424 |
(20,882) |
Profit before tax (reported) |
|
|
(12,449) |
(9,448) |
2,230 |
(21,076) |
Tax |
2,510 |
2,432 |
0 |
0 |
||
Profit after tax (norm) |
(9,939) |
(6,916) |
2,424 |
(20,882) |
||
Profit after tax (reported) |
(9,939) |
(7,016) |
2,230 |
(21,076) |
||
Average number of shares outstanding (m) |
62.5 |
63.9 |
66.0 |
67.0 |
||
EPS - normalised (c) |
|
|
(15.9) |
(10.8) |
3.7 |
(31.2) |
EPS - reported (c) |
|
|
(15.9) |
(11.0) |
3.4 |
(31.5) |
Dividend per share (c) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
Gross margin (%) |
NA |
NA |
NA |
NA |
||
EBITDA margin (%) |
NA |
NA |
NA |
NA |
||
Operating margin (before GW and except.) (%) |
NA |
NA |
NA |
NA |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
2,286 |
2,262 |
2,068 |
1,874 |
Intangible assets |
2,212 |
2,137 |
1,943 |
1,749 |
||
Tangible assets |
74 |
46 |
46 |
46 |
||
Refund from assumption of dev costs |
0 |
0 |
0 |
0 |
||
Other |
0 |
79 |
79 |
79 |
||
Current assets |
|
|
22,037 |
22,650 |
23,048 |
12,165 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
1,500 |
500 |
0 |
464 |
||
Cash |
17,227 |
18,787 |
22,252 |
10,905 |
||
Other |
3,311 |
3,363 |
796 |
796 |
||
Current liabilities |
|
|
(3,501) |
(10,179) |
(3,800) |
(3,800) |
Trade payables |
(2,218) |
(4,843) |
(2,843) |
(2,843) |
||
Short-term borrowings |
0 |
(4,354) |
0 |
0 |
||
Provisions |
(630) |
(956) |
(956) |
(956) |
||
Other current liabilities |
(654) |
(26) |
0 |
0 |
||
Long-term liabilities |
|
|
0 |
0 |
0 |
(10,000) |
Long-term borrowings |
0 |
0 |
0 |
(10,000) |
||
Provisions |
0 |
0 |
0 |
0 |
||
Long-term deferred income |
0 |
0 |
0 |
0 |
||
Deferred taxes |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
20,822 |
14,733 |
21,316 |
240 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(16,547) |
(5,274) |
944 |
(21,326) |
Net interest |
5 |
(8) |
0 |
0 |
||
Tax |
3,729 |
2,435 |
2,567 |
0 |
||
Capex |
0 |
(15) |
(20) |
(20) |
||
Purchase of intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
(13) |
1 |
0 |
0 |
||
Equity Financing |
5,214 |
0 |
4,354 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
4,421 |
(4,380) |
10,000 |
||
Net cash flow |
(7,612) |
1,560 |
3,465 |
(11,346) |
||
Opening net debt/(cash) |
|
|
(24,839) |
(17,227) |
(14,433) |
(22,252) |
Effect of exchange rate changes |
(0) |
0 |
0 |
0 |
||
Other |
0 |
(4,354) |
4,354 |
(10,000) |
||
Closing net debt/(cash) |
|
|
(17,227) |
(14,433) |
(22,252) |
(905) |
Source: Edison Investment Research, company accounts
|
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Research: Financials
Numis’ update for Q320 was positive, reflecting both the need for equity funding in the market and the strength of the group’s franchise as well as its ability to deal with current operating constraints. Subject to the market background in its final quarter, we now expect Numis to achieve a full-year result in line with or ahead of the high end of our previous scenario range.