FY18 accounts show cash of €39.8m after the April 2018 payment of €37.2m ($50m) for the deal with Tonghua Dongbao (THDB) in China. The €11.9m 2018 arbitration award ($11.6m plus $1.6m interest) against Lilly should be received in 2019 after further legal aspects are cleared. A successful single-dose Phase I of BioChaperone (BC) pramlintide insulin could lead to a multiple-dose study in Q219. A European/US Phase III of BC Lispro can be run after a short bridging study and if a partner is found.
Written by
Dr John Savin
Adocia |
Chinese progress and US lawyers
Pharma & biotech |
Spotlight – Update
19 March 2019 |
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Edison profile page Adocia is a research client of Edison Investment Research Limited |
FY18 accounts show cash of €39.8m after the April 2018 payment of €37.2m ($50m) for the deal with Tonghua Dongbao (THDB) in China. The €11.9m 2018 arbitration award ($11.6m plus $1.6m interest) against Lilly should be received in 2019 after further legal aspects are cleared. A successful single-dose Phase I of BioChaperone (BC) pramlintide insulin could lead to a multiple-dose study in Q219. A European/US Phase III of BC Lispro can be run after a short bridging study and if a partner is found.
China key to current strategy
The deal with THDB provided an upfront of $50m ($40m for BC Combo and $10m for BC Lispro). Adocia could receive an additional $85m ($50m for BC Combo and $35m for BC Lispro) and double-digit royalties. Pre-mixed insulins are bestsellers in China (see our initiation report). In China, a Phase III of BC Lispro is planned by THDB starting in 2019 and a Phase I of BC Combo may start in late 2019. THDB manufactures lispro and insulin glargine in China and supplies Adocia.
European trials
BC Lispro is stated to be Phase III ready once a European bridging study to show THDB Lispro’s equivalence to Lilly’s lispro is run, but a Phase III will need a partner. Adocia retains rights to the US, Europe and Japan. A multiple-dose BC pramlintide insulin study is planned to start in Q219 after the successful 2018 single-dose Phase I showed a 97% decrease in glucose excursions compared to Humalog.
Legal matters grind on
Adocia is due to receive $11.6m (revenue) plus $1.6m interest (an accrual) from Lilly (€11.9m total) subject to ongoing arbitration; it also claims legal costs, it spent €8.3m in 2018. The cash could provide the funds to develop BC Lispro. Adocia also claims $1.3bn in damages; Lilly has filed counterclaims for $188m. There are also US civil patent actions initiated by Lilly. Hence, legal outcomes could have major value impacts, but can be slow to resolve and require significant cash.
Valuation: Legal may be as key as clinical outcomes
Away from the focus on legal issues, the pipeline is being developed and partnering seems essential in the US and European diabetes markets. China might be the key initial market as THDB is pushing ahead on Phase III. In the US and Europe, Adocia will need a partner to rapidly progress trials and enable marketing against well-established competitors. Adocia’s market cap (12 March) was €101m with debt of €7.1m and cash of €39.8m, making an enterprise value of €68.3m.
Historical financials
Source: Company data |
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Positive progress in Nuevolution’s RORγt partnership with Almirall has triggered a €1m milestone payment (SEK10.5m) and we continue to forecast that it will enter the clinic in 2019. FY18 was defined by the progress in the Amgen partnership as it opted in for two oncology programmes, further validating Nuevolution’s Chemetics technology. In Nuevolution’s BET-BD1 programme, a development candidate (NUE20798) has been nominated; data in animal cancer models highlight that it may have synergistic effects in combination with immunotherapies. The FY18 net loss was down year-on-year to SEK99.7m (from SEK117.5m) as a result of lower R&D costs. Net cash of SEK108m (FY17: SEK110.6m) should fund operations into 2020. We value Nuevolution at SEK20.7/share.
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