Celyad
Celyad |
Japan deal on NKR-T cancer therapy |
NKR-T allogeneic deal |
Pharma & biotech |
13 July 2016 |
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Celyad is a research client of Edison Investment Research Limited |
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The Japanese pharmaceutical company ONO is jumping a therapeutic generation by licensing Celyad’s allogeneic preclinical NKR-T cancer cell therapy for Japan, Korea and Taiwan. Allogeneic NKR-T has the same action as the Phase I/II NKR-T autologous product; allogeneic versions could be mass produced and provided “off the shelf”. ONO paid €11.25m cash with €270.75m possible in milestones plus royalties. NKR-T is being tested in two haematological cancers with trials in solid tumours planned for early 2017. On an interim basis, until more data on NKR-T and C-Cure are available, the indicative value moves from €32 to €41 per share.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
0.15 |
(18.46) |
(2.73) |
0.0 |
N/A |
N/A |
12/15 |
0.00 |
(28.35) |
(3.26) |
0.0 |
N/A |
N/A |
12/16e |
11.25 |
(14.30) |
(1.54) |
0.0 |
N/A |
N/A |
12/17e |
0.00 |
(57.69) |
(6.20) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
ONO buys into allogeneic
The NKR-T technology uses a ubiquitous set of ligands expressed on many cancerous cell types. These ligands are recognised by the natural killer NKG2 receptor. By creating T-cells with the NKG2 receptor added, a variety of cancer types, including solid tumours, in theory, can be targeted. Preclinical models of cancer support this. Currently, this is being trialled in autologous cell therapy where the patient’s own cells are harvested, transformed and transfused. The allogeneic version uses the same general mechanism, but is still preclinical. CAR approaches by other companies need a new ligand type every time unless the cancer types are very similar. This CAR complexity and cost explains ONO’s interest in allogeneic NKR-T: a single, mass produced cancer therapy against multiple cancers.
Current status of NKR-T
The US NKR-2 immuno-oncology autologous Phase I is dosing at the anticipated maximum 30m cell dose level (report). It is not certain if this will be the maximum tolerated dose (MTD). Once a dose is found, the trial will move into an expansion phase where six acute myeloid leukemia (AML) and six multiple myeloma (MM) patients are recruited in total. Celyad management expects solid tumor indication studies to move into clinical development from late 2016-Q117.
Valuation: Revised from €32 to €41 per share
ONO has given the allogeneic technology a benchmark value in its deal for Japan, Korea and Taiwan (plus an option over autologous). This supports NKR-T generally. On an interim basis, we have increased the NKR-T probability from 17.5 to 18.5% while clinical data are awaited, probably by late summer. A nominal €10m value for allogeneic is also added for the first time. This moves the indicative value to €41/share from €32 previously. A scenario value of up to €519m If NKR-T moved into solid tumour indications was presented in our 8 April 2015 note.
Exhibit 1: Financial summary
€000s |
2014 |
2015 |
2016e |
2017e |
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
PROFIT & LOSS |
||||
Revenue |
146 |
3 |
11,250 |
0 |
Cost of Sales |
(115) |
(1) |
0 |
0 |
Gross Profit |
31 |
2 |
11,250 |
0 |
EBITDA |
(18,247) |
(28,639) |
(14,519) |
(57,669) |
Operating Profit (before amort and except) |
(18,440) |
(28,912) |
(14,792) |
(57,942) |
Intangible Amortisation |
(677) |
(760) |
(760) |
(760) |
Other income and charges |
3,778 |
0 |
0 |
0 |
Share-based payments |
(1,098) |
(795) |
(795) |
(795) |
Operating Profit |
(16,437) |
(30,467) |
(16,347) |
(59,497) |
Net Interest |
(16) |
558 |
500 |
250 |
Profit Before Tax (norm) |
(18,456) |
(28,354) |
(14,292) |
(57,692) |
Profit Before Tax (FRS 3) |
(16,453) |
(29,909) |
(15,847) |
(59,247) |
Tax |
0 |
0 |
0 |
0 |
Profit After Tax (norm) |
(18,456) |
(28,354) |
(14,292) |
(57,692) |
Profit After Tax (FRS 3) |
(16,453) |
(29,909) |
(15,847) |
(59,247) |
Average Number of Shares Outstanding (m) |
6.8 |
8.7 |
9.3 |
9.3 |
EPS - normalised (c) |
(273.41) |
(326.28) |
(153.56) |
(619.87) |
EPS - (IFRS) (€) |
(2.44) |
(3.44) |
(1.70) |
(6.37) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
Gross Margin (%) |
N/A |
N/A |
N/A |
N/A |
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
Operating Margin (before GW and except) (%) |
N/A |
N/A |
N/A |
N/A |
BALANCE SHEET |
||||
Fixed Assets |
11,041 |
50,105 |
49,222 |
48,339 |
Intangible Assets |
10,266 |
48,789 |
48,029 |
47,269 |
Tangible Assets |
598 |
1,136 |
1,013 |
890 |
Investments |
177 |
180 |
180 |
180 |
Current Assets |
30,265 |
109,420 |
87,440 |
29,173 |
Stocks |
0 |
0 |
0 |
0 |
Debtors |
830 |
549 |
549 |
0 |
Cash |
27,633 |
107,513 |
85,637 |
27,919 |
Other |
1,802 |
1,358 |
1,254 |
1,254 |
Current Liabilities |
(6,053) |
(11,490) |
(11,592) |
(11,215) |
Creditors |
(5,276) |
(10,592) |
(10,592) |
(10,592) |
Deferred revenue |
0 |
0 |
0 |
0 |
Walloon loans for cash payment |
(777) |
(898) |
(1,000) |
(623) |
Long Term Liabilities |
(11,239) |
(36,561) |
(30,357) |
(30,357) |
Walloon loans (non-current) |
(10,778) |
(10,484) |
(9,280) |
(9,280) |
Other long term liabilities |
(461) |
(26,077) |
(21,077) |
(21,077) |
Net Assets |
24,014 |
111,474 |
94,713 |
35,940 |
CASH FLOW |
||||
Operating Cash Flow |
(17,398) |
(27,862) |
(18,928) |
(56,856) |
Net Interest |
(16) |
558 |
645 |
124 |
Tax |
0 |
0 |
0 |
0 |
Capex |
(640) |
(838) |
(150) |
(150) |
Acquisitions/disposals |
(1,550) |
(5,186) |
0 |
0 |
Financing |
26,417 |
109,155 |
0 |
0 |
Dividends |
0 |
0 |
0 |
0 |
Other |
1,638 |
(3,287) |
(1,151) |
(1,144) |
Net Cash Flow |
8,451 |
72,540 |
(19,584) |
(58,026) |
Opening net debt/(cash) |
(9,557) |
(16,078) |
(96,131) |
(77,649) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
Walloon loan recognition (non-cash) |
(1,930) |
7,513 |
1,102 |
42 |
Closing net debt/(cash) |
(16,078) |
(96,131) |
(77,649) |
(19,666) |
Source: Edison Investment Research estimates, Celyad reports and announcements. Note: No cardiac deals or royalties included.
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