Currency in USD
Last close As at 26/05/2023
USD0.84
▲ 0.05 (6.33%)
Market capitalisation
USD13m
Research: Healthcare
Management has announced that Context Therapeutics will focus its R&D efforts on onapristone extended release (ONA-XR) in the ELONA trial along with the preclinical Claudin 6 (CLDN6) program while deprioritizing other preclinical activities. The Phase Ib/II ELONA trial, investigating ONA-XR’s use in metastatic breast cancer in combination with Menarini Group’s elacestrant, remains on schedule to begin patient enrolment in Q422 and interim data are now expected in Q423. We estimate reduced operating costs of $17.6m (previously $21.9m) in FY22, as the company cuts other preclinical R&D-related expenses. Importantly, we estimate an extended cash runway into Q124, from Q423 previously, past interim data from ELONA and IND filing for CLDN6 (expected in Q124). Our valuation is largely unchanged at $150m or $9.39 per share.
Context Therapeutics |
Cash runway extended to Q124 |
Guidance update |
Pharma and biotech |
28 September 2022 |
Share price performance
Business description
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Analysts
Context TherapeuticsContext Therapeutics is a research client of Edison Investment Research Limited |
Management has announced that Context Therapeutics will focus its R&D efforts on onapristone extended release (ONA-XR) in the ELONA trial along with the preclinical Claudin 6 (CLDN6) program while deprioritizing other preclinical activities. The Phase Ib/II ELONA trial, investigating ONA-XR’s use in metastatic breast cancer in combination with Menarini Group’s elacestrant, remains on schedule to begin patient enrolment in Q422 and interim data are now expected in Q423. We estimate reduced operating costs of $17.6m (previously $21.9m) in FY22, as the company cuts other preclinical R&D-related expenses. Importantly, we estimate an extended cash runway into Q124, from Q423 previously, past interim data from ELONA and IND filing for CLDN6 (expected in Q124). Our valuation is largely unchanged at $150m or $9.39 per share.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
0.0 |
(3.2) |
(9.28) |
0.0 |
N/A |
N/A |
12/21 |
0.0 |
(10.6) |
(3.74) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(17.6) |
(1.10) |
0.0 |
N/A |
N/A |
12/23e |
0.0 |
(27.4) |
(1.72) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.
New development priorities
Following management’s announcement, Context’s clinical efforts will focus on the development of ONA-XR for the treatment of 2L/3L ER+, PR+, HER2- breast cancer in combination with elacestrant (Menarini) and the CLDN6xCD3 bispecific antibody program, which is currently in preclinical development. We do not expect the three Phase II, investigator-led studies using ONA-XR that are currently underway in breast, ovarian and endometrial cancer to be affected by this announcement, hence our development assumptions for ONA-XR are unchanged.
Cash runway past key milestones
We expect management’s cost reductions will result in a reduced cash burn for the company over H222 and FY23, as non-critical R&D activities are deferred and future overheads and infrastructure expenses are reduced, as per company guidance. We therefore estimate an FY22 and FY23 operating loss of $17.6m and $27.4m (previously $21.9m and $34.2m) and an operating cash outflow of $26.6m (previously $33.2m). At an estimated FY23 cash burn rate of $26.6m, we estimate the company’s net cash position of $42.9m at end-June 2022 is sufficient to fund operations into Q124. Importantly, this will see the company past interim data from the ELONA trial and IND submission for the CLDN6 program.
Valuation: $150m or $9.39 per share
We have adjusted our model to account for Context’s new focus and our valuation is virtually unchanged at $150m or $9.39 per share (previously $148m or $9.28 per share). For details of our valuation assumptions, see our initiation report.
Exhibit 1: Financial summary
$000s |
2020 |
2021 |
2022e |
2023e |
2024e |
||
Year end 31 December |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
0 |
0 |
0 |
0 |
||
Research and Development Expenses |
(1,642) |
(6,893) |
(9,218) |
(14,881) |
(19,089) |
||
Sales, General and Administrative Expenses |
(931) |
(3,633) |
(8,356) |
(12,534) |
(13,787) |
||
EBITDA |
|
|
(2,572) |
(10,526) |
(17,574) |
(27,415) |
(32,876) |
Operating profit (before amort. and excepts.) |
|
|
(2,572) |
(10,526) |
(17,574) |
(27,415) |
(32,876) |
Amortisation of acquired intangibles |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Share-based payments |
0 |
0 |
0 |
0 |
0 |
||
Reported operating profit |
(2,572) |
(10,526) |
(17,574) |
(27,415) |
(32,876) |
||
Net Interest |
(661) |
(64) |
0 |
0 |
0 |
||
Joint ventures & associates (post tax) |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
9,878 |
133 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(3,233) |
(10,590) |
(17,574) |
(27,415) |
(32,876) |
Profit Before Tax (reported) |
|
|
6,644 |
(10,457) |
(17,574) |
(27,415) |
(32,876) |
Reported tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(3,233) |
(10,590) |
(17,574) |
(27,415) |
(32,876) |
||
Profit After Tax (reported) |
6,644 |
(10,457) |
(17,574) |
(27,415) |
(32,876) |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
||
Discontinued operations |
0 |
0 |
0 |
0 |
0 |
||
Net income (normalised) |
(3,233) |
(10,590) |
(17,574) |
(27,415) |
(32,876) |
||
Net income (reported) |
6,644 |
(10,457) |
(17,574) |
(27,415) |
(32,876) |
||
Average Number of Shares Outstanding (m) |
0 |
3 |
16 |
16 |
16 |
||
EPS - basic normalised ($) |
|
|
(9.28) |
(3.74) |
(1.10) |
(1.72) |
(2.06) |
EPS - normalised fully diluted (c) |
|
|
(928.15) |
(373.72) |
(110.07) |
(171.71) |
(205.91) |
EPS - basic reported ($) |
|
|
19.07 |
(3.69) |
(1.10) |
(1.72) |
(2.06) |
Dividend ($) |
0 |
0 |
0 |
0 |
0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
118 |
0 |
0 |
0 |
0 |
Intangible Assets |
0 |
0 |
0 |
0 |
0 |
||
Tangible Assets |
0 |
0 |
0 |
0 |
0 |
||
Investments & other |
118 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
350 |
51,306 |
35,763 |
9,129 |
5,616 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
0 |
0 |
0 |
||
Cash & cash equivalents |
341 |
49,686 |
35,115 |
8,480 |
4,968 |
||
Other |
9 |
1,620 |
648 |
648 |
648 |
||
Current Liabilities |
|
|
(9,548) |
(3,033) |
(5,065) |
(5,845) |
(5,208) |
Creditors |
(2,708) |
(1,826) |
(3,049) |
(3,330) |
(2,795) |
||
Tax and social security |
0 |
0 |
0 |
0 |
0 |
||
Short term borrowings |
(5,884) |
0 |
0 |
0 |
0 |
||
Other |
(956) |
(1,207) |
(2,015) |
(2,515) |
(2,413) |
||
Long Term Liabilities |
|
|
(69) |
0 |
0 |
0 |
(30,000) |
Long term borrowings |
(69) |
0 |
0 |
0 |
(30,000) |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
(9,150) |
48,272 |
30,698 |
3,284 |
(29,592) |
Convertible preferred stock |
(7,771) |
0 |
0 |
0 |
0 |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
||
Shareholders' equity |
|
|
(16,921) |
48,272 |
30,698 |
3,284 |
(29,592) |
CASH FLOW |
|||||||
Operating Cash Flow |
(2,572) |
(10,526) |
(17,574) |
(27,415) |
(32,876) |
||
Working capital |
1,318 |
(2,225) |
3,003 |
780 |
(637) |
||
Exceptional & other |
219 |
3,951 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Net operating cash flow |
|
|
(1,035) |
(8,799) |
(14,571) |
(26,635) |
(33,513) |
Capex |
0 |
(250) |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Net interest |
0 |
0 |
0 |
0 |
0 |
||
Equity financing |
0 |
58,394 |
0 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(1,035) |
49,345 |
(14,571) |
(26,635) |
(33,513) |
||
Opening net debt/(cash) |
|
|
21,742 |
13,384 |
(49,686) |
(35,115) |
(8,480) |
FX |
0 |
0 |
0 |
0 |
0 |
||
Other non-cash movements |
9,393 |
13,725 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
13,384 |
(49,686) |
(35,115) |
(8,480) |
25,032 |
Source: company reports, Edison Investment Research
|
|
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