Cerulean Pharma
Written by
Cerulean Pharma |
Phase II renal data pushed to Q3 from Q2 |
Full year results |
Pharma & biotech |
17 May 2016 |
Share price performance
Business description
Next events
Analysts
Cerulean Pharma is a research client of Edison Investment Research Limited |
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Cerulean reported first quarter results and provided a pipeline update on 2 May, while confirming an expected cash runway for the company into 2017. Management has pushed back its timing for an announcement on the highly awaited top-line data for CRLX101 in renal cancer. Critical Phase II top-line data in RCC are now expected in Q316 (changed from end-June), due to an apparent slowing of the rate of disease progression in patients.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
0.0 |
(21.4) |
(1.64) |
0.0 |
N/A |
N/A |
12/15 |
0.0 |
(39.6) |
(1.56) |
0.0 |
N/A |
N/A |
12/16e |
0.0 |
(40.4) |
(1.48) |
0.0 |
N/A |
N/A |
12/17e |
0.0 |
(42.7) |
(1.52) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.
Phase II top-line data in renal now in Q316
Cerulean will now report highly awaited top-line data (progression-free survival and overall response rates) from its Phase II trial of CRLX101 with Avastin in advanced renal cell carcinoma (mRCC) in Q316. Up until a few weeks ago, results were expected by the end of June, with management reporting the change on an apparent recent slowdown in the rate of disease progression. Positive results would lead to the initiation of a Phase III study in mRCC by year end. Meanwhile, upcoming news in Q216 includes the dosing of first patients in a Phase Ib/II trial for the Cerulean-AZ-NCI collaboration and the initiation of a Phase IIa trial of CRLX301 in solid tumors.
Positive results in ovarian cancer and solid tumors
Recently Cerulean announced encouraging results from two ongoing studies in platinum resistant ovarian cancer. On 19 April, Phase II stage 1 results showing greater benefit for CRLX101 with Avastin than CRLX101 alone on all observed parameters were reported, including primary endpoint of PFS6 as well as overall response rate and stable disease rate. On 25 April, preliminary Phase Ib results were reported for CRLX101 paclitaxel in ovarian cancer, a trial conducted in collaboration with the GOG foundation. Partial response and stable disease were seen in 56% (5/9) and 11% (1/9) of patients. Additionally, promising clinical proof data was published in Q116 in The Proceedings of the National Academy of Sciences showing CRLX101 localizes selectively in human tumors, sparing adjacent tissue.
Valuation: $250m ($9.12 per share)
In Q116 Cerulean reported a net loss of $13.5m with a rise in R&D costs to $9.8m (from $5.0m in Q115) to fund its growing clinical development programs. Cash holdings were $60.5m at end Q116 and Cerulean continues to guide sufficient cash to fund operations into 2017. We value Cerulean at $250m ($9.12 per share), down from $264m ($9.65/share) in our last note in March 2016 as we roll our valuation forward one quarter. Our fair value offers significant upside on the current share price of $2.32. Cerulean market cap is now just circa $21m above net cash.
Financial summary
Exhibit 1: Financial summary
$000s |
2013 |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 December |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
6 |
80 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
6 |
80 |
0 |
0 |
0 |
||
Research and development |
(9,700) |
(11,772) |
(25,948) |
(27,500) |
(28,500) |
||
General & administrative |
(6,166) |
(8,587) |
(11,224) |
(12,346) |
(13,581) |
||
EBITDA |
|
|
(16,057) |
(20,405) |
(37,364) |
(40,019) |
(42,287) |
Operating Profit (before GW and except.) |
|
|
(15,860) |
(20,279) |
(37,172) |
(39,846) |
(42,081) |
Intangible Amortization |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals/Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(15,860) |
(20,279) |
(37,172) |
(39,846) |
(42,081) |
||
Net Interest |
(1,485) |
(1,074) |
(2,422) |
(602) |
(612) |
||
Other (includes change in fair value of warrants) |
202 |
(1,989) |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(17,345) |
(21,353) |
(39,594) |
(40,449) |
(42,693) |
Profit Before Tax (FRS 3) |
|
|
(17,143) |
(23,342) |
(39,594) |
(40,449) |
(42,693) |
Tax |
0 |
0 |
0 |
0 |
0 |
||
Deferred tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(17,345) |
(21,353) |
(39,594) |
(40,449) |
(42,693) |
||
Profit After Tax (FRS 3) |
(17,143) |
(23,342) |
(39,594) |
(40,449) |
(42,693) |
||
Average Number of Shares Outstanding (m) |
0.7 |
14.5 |
25.4 |
27.3 |
28.1 |
||
EPS - normalized fully diluted (c) |
|
|
(25.35) |
(1.64) |
(1.56) |
(1.48) |
(1.52) |
EPS - FRS 3 (c) |
|
|
(25.35) |
(1.64) |
(1.56) |
(1.48) |
(1.52) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
380 |
557 |
923 |
1,034 |
1,119 |
Intangible Assets |
0 |
0 |
0 |
0 |
0 |
||
Tangible Assets |
245 |
342 |
576 |
687 |
772 |
||
Other |
135 |
215 |
347 |
347 |
347 |
||
Current Assets |
|
|
6,447 |
52,836 |
77,302 |
39,020 |
38,914 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
959 |
1,662 |
1,394 |
1,394 |
1,394 |
||
Cash |
5,488 |
51,174 |
75,908 |
37,626 |
37,520 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(15,146) |
(8,061) |
(16,337) |
(16,337) |
(16,337) |
Creditors |
(12,012) |
(4,937) |
(8,685) |
(8,685) |
(8,685) |
||
Short term borrowings |
(3,134) |
(3,124) |
(7,652) |
(7,652) |
(7,652) |
||
Long Term Liabilities |
|
|
(85,980) |
(7) |
(13,145) |
(13,346) |
(53,549) |
Long term borrowings |
(3,124) |
0 |
(12,672) |
(12,873) |
(53,076) |
||
Other long term liabilities |
(82,856) |
(7) |
(473) |
(473) |
(473) |
||
Net Assets |
|
|
(94,299) |
45,325 |
48,743 |
10,370 |
(29,853) |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(17,202) |
(19,477) |
(31,915) |
(37,706) |
(39,868) |
Net Interest |
588 |
416 |
0 |
610 |
616 |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(7) |
(225) |
(277) |
(284) |
(291) |
||
Acquisitions/disposals |
0 |
40 |
23 |
0 |
0 |
||
Equity Financing |
35 |
60,002 |
39,813 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
8,236 |
8,064 |
(412) |
(1,035) |
0 |
||
Net Cash Flow |
(8,350) |
48,820 |
7,232 |
(38,415) |
(39,543) |
||
Opening net debt/(cash) |
|
|
(7,580) |
770 |
(48,050) |
(55,584) |
(17,100) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
302 |
(69) |
288 |
||
Closing net debt/(cash) |
|
|
770 |
(48,050) |
(55,584) |
(17,100) |
22,155 |
Source: Cerulean Pharma accounts, Edison Investment Research
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