Nicox — Continuing NCX-470 development strategy

Nicox (Euronext Growth: ALCOX)

Last close As at 22/05/2024

EUR0.37

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Market capitalisation

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Research: Healthcare

Nicox — Continuing NCX-470 development strategy

Nicox’s headline FY22 results were in line with the Q422 update provided in January, although greater clarity on gross product sales royalties suggests that Vyzulta sales traction is stronger than we had anticipated. Gross product sales-related licensing revenue came in at €5.2m (+39% year-on-year), the bulk of which we assume was derived from Vyzulta royalties, above our €4.9m estimate. We modestly increased our Vyzulta forecasts, although we note that NCX-470 remains the primary driver for our valuation, and our local currency NCX-470 estimates are unchanged. Given a strengthening euro versus the US dollar and increases in our R&D cost estimates following the FY22 results, we revise our rNPV valuation down to €166.8m (versus €190.4m previously).

Written by

Pooya Hemami

Analyst - Healthcare

Healthcare

Nicox

Continuing NCX-470 development strategy

FY22 update

Pharma and biotech

27 March 2023

Price

€0.68

Market cap

€34m

$1.07/€

Net cash (€m) at 31 December 2022

3.4

Shares in issue

50.2m

Free float

86%

Code

COX

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(18.1)

(39.9)

(65.8)

Rel (local)

(15.8)

(43.9)

(67.6)

52-week high/low

€2.1

€0.7

Business description

France-based Nicox develops therapeutics for the treatment of ocular conditions. Its lead candidate NCX-470 is in Phase III studies for the treatment of glaucoma, and it is advancing NCX-4251 for dry eye disease. Nicox also receives licence revenue for its FDA-approved drugs Vyzulta and Zerviate.

Next events

Start NCX-470 Phase IIIb clinical studies aiming to show retinal cell or perfusion benefits

H123

Analysts

Pooya Hemami,
OD MBA CFA

+1 646 653 7026

Soo Romanoff

+44 (0)20 3077 5700

Nicox is a research client of Edison Investment Research Limited

Nicox’s headline FY22 results were in line with the Q422 update provided in January, although greater clarity on gross product sales royalties suggests that Vyzulta sales traction is stronger than we had anticipated. Gross product sales-related licensing revenue came in at €5.2m (+39% year-on-year), the bulk of which we assume was derived from Vyzulta royalties, above our €4.9m estimate. We modestly increased our Vyzulta forecasts, although we note that NCX-470 remains the primary driver for our valuation, and our local currency NCX-470 estimates are unchanged. Given a strengthening euro versus the US dollar and increases in our R&D cost estimates following the FY22 results, we revise our rNPV valuation down to €166.8m (versus €190.4m previously).

Year
end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/21

8.6

(15.5)

(0.32)

0.0

N/A

N/A

12/22

5.2

(18.3)

(0.34)

0.0

N/A

N/A

12/23e

7.5

(19.0)

(0.38)

0.0

N/A

N/A

12/24e

9.8

(23.6)

(0.47)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Vyzulta continues to show traction

Total US Vyzulta prescriptions grew c 20% in Q422 according to Bausch + Lomb (B+L), with B+L’s reported Vyzulta revenue growing 31% in FY22. While the US market is the predominant driver for Vyzulta sales, the drug has been launched in 15 countries worldwide, and B+L expects it be launched in 10 additional countries in 2023 and beyond. Nicox expects net Vyzulta royalties to continue to grow based on prescription growth and geographic expansion.

NCX-470 development on track

Nicox continues to expect to report top-line results in 2025 for Denali, its second Phase III study of lead candidate NCX-470 in patients with open-angle glaucoma or ocular hypertension. Given the favourable safety profile shown and primary efficacy endpoint being met in Mont Blanc, the first Phase III study, we remain optimistic about NCX-470’s likelihood of eventually obtaining FDA approval, which we model in 2027. Nicox also plans to start two Phase IIIb studies in H123 as part of its refined development strategy aimed at differentiating the potential benefits of NCX-470 in glaucoma versus competing drugs.

Valuation: FX effects lead to adjustment

We obtain an rNPV valuation for Nicox of €166.8m (versus €190.4m previously). After including Q422 net cash of €3.4m, we obtain an equity value of €170.2m, or €3.39 per basic share (versus €4.10 previously). The potential dilutive effect of options and warrants and their effects on net cash would result in a valuation of €3.19 (versus €3.75 previously) per fully diluted share. The strengthening of the euro vs the US dollar is the largest driver of the changes in valuation, followed by the increases in our R&D cost estimates. Nicox is funded through Q224 and we model that it will require €95m in added funding to bring NCX-470 to market.

FY22 results show higher than expected royalties

Nicox’s headline FY22 results were in line with the Q422 update reported in January, but the additional granularity provided on gross royalties and operating expenses provide helpful insights on current operating trends, and allow us to adjust our forecasts accordingly.

Gross product sales-related licensing revenue (primarily gross royalties from B+L from the sale of Vyzulta in the US and other approved markets and, to a lesser extent, Zerviate US royalties from Eyevance/Santen) came in at €5.2m (+39% y-o-y), above our €4.9m estimate.

Cost of sales, which reflects royalties on Vyzulta sales that Nicox must pay to Pfizer, were €2.0m. Hence, FY22 net royalties were €3.3m, up from €2.3m in FY21. The company also noted a c 100% y-o-y elevation in Q422 net royalties to €1.0m (having reached the €1m quarterly run rate for the first time). As a reminder, as part of Nicox’s arrangement with Vyzulta global licensee B+L, it is entitled to tiered net royalties of 6–12% on net sales, which takes into account the Vyzulta-related royalties that Nicox must pay to Pfizer.

It also appears that earlier pricing issues in Vyzulta reimbursement (whereby Vyzulta revenue growth lagged prescription growth) have now abated. Altogether, we believe these yearly increases are largely due to strengthened Vyzulta-related revenue, as total US Vyzulta prescriptions grew c 20% in Q422 according to B+L, with B+L’s reported Vyzulta revenue growing 31% in FY22. While the US market is the predominant driver for Vyzulta sales, the drug has been launched in 15 countries worldwide, and B+L expects it be launched in 10 additional countries in 2023 and beyond. Nicox expects net Vyzulta royalties to continue to grow based on growth in prescriptions and geographic expansion.

The company recognized €4.8m in licence revenue in its FY21 results as part of a €15m payment from Ocumension received in FY20.

Exhibit 1: Nicox FY22 results

€000s (except EPS)

FY22

FY22e

Difference
(%)

FY21

Difference y-o-y (%)

Licence milestones and other revenue

-

300

(100.0)

4,821

(100.0)

Licence royalty payments

5,242

4,893

7.1

3,762

39.3

Total revenue

5,242

5,193

0.9

8,583

(38.9)

Cost of sales

(1,971)

(1,592)

23.8

(1,350)

46.0

Gross profit

3,271

3,601

(9.2)

7,233

(54.8)

General & Administrative

(7,479)

(7,905)

(5.4)

(7,000)

6.8

Gross research & development costs

(17,992)

(15,803)

13.9

(17,910)

0.5

Financial and other income (expenses)

3,942

2,374

66.1

930

323.9

Exceptional items including asset impairment

(12,029)

(11,631)

3.4

(30,658)

(60.8)

PBT (reported)

(30,287)

(29,364)

3.1

(47,405)

(36.1)

PBT (normalised)*

(18,258)

(17,310)

5.5

(15,542)

17.5

Tax credit (expense)

2,528

1,679

50.6

3,644

(30.6)

Net income (reported)

(27,759)

(27,685)

0.3

(43,761)

(36.6)

Net income (normalised)*

(15,730)

(15,631)

0.6

(11,898)

32.2

Reported EPS (€)

(0.59)

(0.59)

0.2

(1.17)

(49.1)

Normalised EPS (€)

(0.34)

(0.33)

0.6

(0.32)

13.8

Source: Edison Investment Research, company reports. Note: *FY22 result is estimated. Full FY22 financials and cash flow statements have not been released and hence amounts such as the extent of R&D tax credits (needed for our measures of net R&D expense, EBITDA and normalised earnings) and total depreciation have not been provided. We expect these amounts to be made available when the annual statement is filed in April 2023.

Gross R&D costs, which are predominantly based on the company’s Denali and Mont Blanc trials (the latter of which was completed in Q422) for lead candidate NCX-470, came in at €18m, above our €15.8m estimate.

Financial and other income in FY22 included non-recurring €3.0m income to reflect the change of the present value of the put option granted by Nicox to Armistice in the Q422 €10m equity financing.

Nicox reported gross cash of €27.7m at 31 December 2022 (versus €25.6m at end September), boosted by the €10m (€8.9m net) private placement announced last November. It reported gross financial debt of c €24.6m at end FY22, consisting of a €18.7m Kreos Capital loan, a €1.8m French state-guaranteed loan (both unchanged versus prior periods) and €4.2m of present value assigned to the put option granted in the Q422 equity financing. We calculate net cash ex-leases of €3.4m after including €0.3m in non-current financial assets.

NCX-470 remains development focus for Nicox

Nicox reiterates that it expects to report top-line results in 2025 for Denali, its second Phase III study of lead candidate NCX-470 in patients with open-angle glaucoma or ocular hypertension. NCX-470 is a second clinical-stage compound based on the company’s proprietary NO-donating platform that combines a nitric oxide (NO) donating molecule with an established prostaglandin F2α analogue (PGA) drug. As explained in an earlier note, Mont Blanc results in Q422 represented the first registration trial whereby a monotherapy drug candidate was able to show statistical non-inferiority to a PGA drug. Given the favourable safety profile also shown, we believe these results bode well for the product’s likelihood of obtaining FDA approval, provided Denali demonstrates similar efficacy parameters. We continue to anticipate potential FDA approval and launch in 2027.

To strengthen NCX-470’s positioning, in Q422 Nicox announced a refined development strategy aiming to build on previously reported preclinical retinal data to help demonstrate that, in addition to lowering intraocular pressure, NCX-470 may improve retinal perfusion and/or retinal cell health and thereby provide a supplemental therapeutic benefit in patients with glaucoma. The company is planning to start two Phase IIIb clinical studies in H123 and additional non-clinical activities to work towards this objective. One of these studies will assess the drug’s possible retinal blood flow effects using optical coherence tomography angiography and the other will assess the drug’s capability to reduce episcleral venous pressure and enhance aqueous humor outflow through the trabecular meshwork. We note that most PGA drugs reduce intraocular pressure through the uveoscleral pathway and not the trabecular meshwork, hence the NO-donating effects of NCX-470 could be a potential differentiator in this regard.

Financials and valuation

Following the FY22 results, we have adjusted our FX assumptions to $1.07/€ versus parity previously, which has the effect of reducing our valuation (as discussed below) as well as longer-term revenue expectations in euros (although our local currency estimates for all products except Vyzulta are unchanged).

Given higher than expected FY22 royalties (which we attribute to stronger than anticipated Vyzulta net revenue), we have increased our medium-term growth expectations for Vyzulta sales and net royalties, although this is offset by our new FX expectations, resulting in a minor change to our peak (FY30e) net royalty forecast (€11.5m versus €11.1m previously).

While we had previously already modelled a y-o-y reduction in FY23e R&D costs (given the completion of Mont Blanc), we have raised our net R&D estimates slightly, although still forecasting a y-o-y decrease in FY22. We now forecast FY23 and FY24 net R&D expenses of €15.3m and €17.1m, respectively, versus our prior estimates of €13.3m and €16.1m, respectively. We now model operating cash burn rates of €17.5m and €25.8m in FY23 and FY24, respectively, versus our prior forecasts of €17.8m and €23.1m, respectively.

In addition to the changes above, we have rolled forward our forecasts, which has resulted in a change in our equity valuation. We now obtain an rNPV valuation for Nicox of €166.8m (versus €190.4m previously). After including Q422 net cash of €3.4m, we obtain an equity value of €170.2m, or €3.39 per basic share (down from €4.10 previously). After considering the potential dilutive effect of options and warrants and their effects on net cash, our fully diluted valuation would be €3.19 (versus €3.75 previously) per fully diluted share. The strengthening of the euro versus the US dollar is the largest driver of the change in valuation, followed by the increases in our R&D cost estimates.

Exhibit 2: Nicox SA rNPV assumptions

Product contribution

Indication

Stage

NPV
(€m)

Probability of success

rNPV
(€m)

rNPV/basic share (€)

Launch year

Peak sales (€m)*

NCX-470 (net of R&D and SG&A costs) in US Market

Glaucoma

Phase III ongoing

132.5

75%

85.6

1.71

2027

240

NCX-470 (net of R&D and SG&A costs) in Europe and unpartnered regions

Glaucoma

Phase III

68.9

60%

39.4

0.79

2028

122

NCX-470 licence fees from Ocumension (China and other)

Glaucoma

Phase III ongoing

6.4

75%

4.6

0.09

2027

2.7**

NCX-4251 (net of R&D and SG&A costs) sales and licence fees/royalties

Dry eye disease

Phase IIb

149.1

25%

37.3

0.74

2028

78**

Vyzulta royalties from Bausch + Lomb

Glaucoma

Commercial

39.8

100%

39.8

0.79

2017

11.5**

Zerviate royalties from Eyevance and others

Allergic conjunctivitis

Commercial

26.4

100%

26.4

0.53

2020

6.3**

Corporate costs

(66.2)

100%

(66.2)

(1.32)

Total

356.8

166.8

3.33

Net cash (Q422) excluding lease liabilities

3.4

3.4

0.07

Total equity value

360.2

170.2

3.39

Basic shares outstanding (000)

50,157

Outstanding options and warrants (000)

12,991

FD shares outstanding (000)

63,148

Source: Edison Investment Research. Note: *Peak projected sales shown for year 2032 except for Vyzulta, where peak anticipated royalties are shown for year 2030. **Reflects net licence and royalties received by Nicox and not commercial sales by licensee.

Nicox continues to expect that funds on hand (€27.7m at end FY22) will be sufficient to maintain operations into Q224 based on the development of NCX-470 alone and our forecasts are similar. We expect the company will require €95m in added funding before the anticipated US launch of NCX-470 (which we forecast in 2027), after which we expect it to be profitable on a self-sustaining basis. Our projections do not include any potential proceeds from the exercise of options or warrants which, if exercised, would lower our funding forecasts accordingly. Our model assumes all financings will be raised through illustrative debt, as per our usual methodology. If our projected funding need of €95m is raised through equity issuances at the prevailing market price of c €0.68, our effective value per share would decrease to €2.24.

The amount of fund-raising which we estimate is necessary for Nicox to bring NCX-470 to commercialisation independently is larger than its current market capitalisation, although we note that funding intervals may be staggered over the next several years, which may alleviate the potential challenges associated with raising sums in excess of a company’s market capitalisation. Furthermore, NIcox is actively seeking potential partnership arrangements in the US and Japanese markets, which could provide non-dilutive funding and alleviate part of our expected funding requirements.

Exhibit 3: Financial summary

€’000s

2018

2019

2020

2021

2022

2023e

2024e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

4,717

8,260

14,423

8,583

5,242

7,475

9,831

Cost of Sales

(690)

(1,405)

(1,516)

(1,350)

(1,971)

(1,812)

(2,226)

Gross Profit

4,027

6,855

12,907

7,233

3,271

5,664

7,605

General & Administrative

(9,506)

(7,666)

(6,677)

(7,000)

(7,479)

(7,629)

(10,886)

Net Research & Development

(15,491)

(16,883)

(11,991)

(17,194)

(17,276)

(15,336)

(17,136)

Amortisation of intangible assets

0

(659)

(1,252)

(1,205)

0

(787)

(768)

Operating profit before exceptionals

(20,970)

(18,353)

(7,013)

(18,166)

(21,484)

(18,088)

(21,185)

EBITDA

 

 

(20,718)

(17,230)

(5,270)

(16,505)

(21,096)

(17,197)

(20,277)

Depreciation & other

(252)

(464)

(491)

(456)

(388)

(104)

(140)

Operating Profit (before amort. and except.)

(20,970)

(17,694)

(5,761)

(16,961)

(21,484)

(17,301)

(20,417)

Exceptionals including asset impairment

302

(6,115)

(6,621)

(30,658)

(12,029)

0

0

Other

0

0

0

0

0

0

0

Operating Profit

(20,668)

(23,809)

(12,382)

(47,619)

(33,513)

(17,301)

(20,417)

Net Interest

2,390

1,690

(4,436)

1,419

3,226

(1,735)

(3,206)

Profit Before Tax (norm)

 

 

(18,580)

(16,004)

(10,197)

(15,542)

(18,258)

(19,036)

(23,623)

Profit Before Tax (FRS 3)

 

 

(18,278)

(22,778)

(18,070)

(47,405)

(30,287)

(19,824)

(24,391)

Tax

(113)

3,856

(28)

3,644

2,528

0

0

Profit After Tax and minority interests (norm)

(18,693)

(12,148)

(10,225)

(11,898)

(15,730)

(19,036)

(23,623)

Profit After Tax and minority interests (FRS 3)

(18,391)

(18,922)

(18,098)

(43,761)

(27,759)

(19,824)

(24,391)

Average Basic Number of Shares Outstanding (m)

29.6

30.3

33.7

37.5

46.7

50.4

50.8

EPS - normalised (€)

 

 

(0.63)

(0.40)

(0.30)

(0.32)

(0.34)

(0.38)

(0.47)

EPS - normalised and fully diluted (€)

 

(0.63)

(0.40)

(0.30)

(0.32)

(0.34)

(0.38)

(0.47)

EPS - (IFRS) (€)

 

 

(0.62)

(0.62)

(0.54)

(1.17)

(0.59)

(0.39)

(0.48)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

112,498

110,660

89,745

66,871

59,480

58,775

58,113

Intangible Assets

71,397

72,120

64,848

39,974

31,692

30,905

30,137

Tangible Assets

25,628

27,517

24,829

26,660

27,463

27,546

27,652

Investments in long-term financial assets

15,473

11,023

68

237

325

325

325

Current Assets

 

 

26,092

32,146

52,521

47,738

33,684

31,989

32,019

Short-term investments

0

0

0

0

0

0

0

Cash

22,059

28,102

47,195

41,970

27,650

26,974

26,951

Other

4,033

4,044

5,326

5,768

6,034

5,015

5,067

Current Liabilities

 

 

(8,069)

(9,828)

(15,404)

(8,000)

(8,206)

(8,004)

(5,124)

Creditors

(8,069)

(7,751)

(10,115)

(8,000)

(8,206)

(8,004)

(5,124)

Short term borrowings

0

(2,077)

(5,289)

0

0

0

0

Long Term Liabilities

 

 

(16,868)

(23,681)

(26,027)

(31,057)

(32,525)

(49,525)

(75,525)

Long term borrowings

0

(9,045)

(12,687)

(20,520)

(24,606)

(41,606)

(67,606)

Other long term liabilities

(16,868)

(14,636)

(13,340)

(10,537)

(7,919)

(7,919)

(7,919)

Net Assets

 

 

113,653

109,297

100,835

75,552

52,433

33,236

9,483

CASH FLOW

Operating Cash Flow

 

 

(21,533)

(17,741)

(956)

(19,900)

(26,442)

(15,754)

(22,571)

Net interest and financing income (expense)

2,390

1,690

(4,436)

1,419

3,226

(1,735)

(3,206)

Tax

0

0

0

0

0

0

0

Net Operating Cash Flow

(19,143)

(16,051)

(5,392)

(18,481)

(23,216)

(17,489)

(25,777)

Capex

(268)

(95)

(20)

(8)

(83)

(187)

(246)

Acquisitions/disposals

0

0

0

0

37

0

0

Financing

0

11,290

13,321

13,804

9,086

0

0

Dividends

0

0

0

0

0

0

0

Net Cash Flow

(19,411)

(4,856)

7,909

(4,685)

(14,176)

(17,676)

(26,023)

Opening net debt/(cash)

 

 

0

(37,532)

(28,003)

(29,287)

(21,687)

(3,369)

14,307

HP finance leases initiated

0

0

0

0

0

0

0

Other

56,943

(4,673)

(6,625)

(2,915)

(4,142)

0

0

Closing net debt/(cash)

 

 

(37,532)

(28,003)

(29,287)

(21,687)

(3,369)

14,307

40,330

Lease debt

N/A

1,527

1,099

986

828

828

828

Closing net debt/(cash) inclusive of IFRS 16 lease debt

(37,532)

(26,476)

(28,188)

(20,701)

(2,541)

15,135

41,158

Source: Edison Investment Research, company reports


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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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