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Currency in SEK
Last close As at 26/05/2023
SEK1.30
▲ −0.22 (−14.47%)
Market capitalisation
SEK94m
Research: Healthcare
While returning clinical practice to normality is unequivocally desired by all stakeholders, the somewhat paradoxical consequence of the global roll-out of COVID-19 vaccines has been an unavoidable disruption to the routine administration of other vaccines. RhoVac reported in March 2021 that as the COVID-19 vaccine was being rolled out in the age brackets of the ongoing Phase II BRaVac trial, the treatment with RV001 had to be delayed, albeit only by one quarter. The trial readout is still achievable within the existing budget and management has reported no other disruptions to the trial. Our valuation is slightly higher at SEK68.5/share (versus SEK64.2/share).
Written by
Jonas Peciulis
RhoVac |
COVID-19 vaccines versus RV001 |
FY20 results |
Pharma & biotech |
26 April 2021 |
Share price performance
Business description
Next events
Analysts
RhoVac is a research client of Edison Investment Research Limited |
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While returning clinical practice to normality is unequivocally desired by all stakeholders, the somewhat paradoxical consequence of the global roll-out of COVID-19 vaccines has been an unavoidable disruption to the routine administration of other vaccines. RhoVac reported in March 2021 that as the COVID-19 vaccine was being rolled out in the age brackets of the ongoing Phase II BRaVac trial, the treatment with RV001 had to be delayed, albeit only by one quarter. The trial readout is still achievable within the existing budget and management has reported no other disruptions to the trial. Our valuation is slightly higher at SEK68.5/share (versus SEK64.2/share).
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
6.0 |
(36.1) |
(2.33) |
0.0 |
N/A |
N/A |
12/20 |
6.0 |
(46.9) |
(2.06) |
0.0 |
N/A |
N/A |
12/21e |
7.9 |
(41.7) |
(1.79) |
0.0 |
N/A |
N/A |
12/22e |
5.9 |
(38.9) |
(1.64) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
COVID-19 vaccine rollout effect on BRaVac enrolment
Current guidance on COVID-19 vaccines from the US CDC’s Advisory Committee on Immunization Practices is to allow for a minimum of 14 days before or after the administration of any other vaccine. As a result, full recruitment into RhoVac’s Phase IIb BRaVac trial has now been pushed back to Q321 (from Q221), so a minor delay. This should be mitigated to some extent by the opening of new trial centres with the latest addition being Mount Sinai Hospital, New York, which started enrolling patients this month. Sites in six other European nations are also up and running.
Funding in place for key readout poised for mid-2022
According to RhoVac, and in line with our modelling, current funding should still be sufficient to complete the Phase IIb BRaVac trial. The primary endpoint is time to PSA progression, defined as the time from randomisation to the doubling of PSA from the baseline value. Key interim results are expected around mid-2022, while 12-month follow-up data in patients without further RV001 treatment should be ready a year later. Our detailed description of the investment case can be found in our latest outlook report.
Valuation: SEK1.30bn or SEK68.5/share
Our RhoVac valuation is higher at SEK1.30bn or SEK68.5/share due to rolling the model forward offset by a lower cash position (SEK77.5m at end-2020). The slight delay in the interim data readout from the Phase IIb trial does not affect our valuation as the company expects the readout is still achievable with existing funds.
Financials and valuation
With its FY20 results RhoVac reported income of SEK6.0m, which was the allocated portion of the EU Horizon 2020 grant (a total of €2.5m or c SEK27m, of which SEK12m had been received by the end of 2020). Operating costs in FY20 were SEK53.5m versus SEK42.5m a year ago reflecting the continued R&D uplift as new patients are enrolled into the BRaVac study, despite the COVID-19 headwinds outlined above. In 2021 and 2022 we forecast spending will continue at a similar level at c SEK45–50m, partly offset by the remaining instalments expected from the EU Horizon 2020 grant.
The reported end-2020 cash position was SEK77.5m and with no interest-bearing debt. RhoVac will still receive the remaining part of the grant (c SEK15m) and expects around SEK18m in tax credits during the duration of the BRaVac trial. These expected amounts plus pre-paid expenses of SEK15m (current asset on the balance sheet) mean that the total expected funding is around SEK125m, which is sufficient to complete the ongoing Phase IIb study.
Our RhoVac valuation (Exhibit 1) is higher at SEK1.30bn or SEK68.5/share, versus SEK1.22bn or SEK64.2/share, due to rolling the model forward, which offset the lower cash position. Detailed assumptions for our risk-adjusted net present value (rNPV) model can be found in our most recent Outlook note.
Exhibit 1: Sum-of-the-parts RhoVac valuation
Product |
Launch |
Peak sales |
Unrisked NPV (SEKm) |
Technology probability (%) |
rNPV |
rNPV/share (SEK) |
RV001 – prostate cancer |
2027 |
1,775 |
5,415.0 |
15% |
1,227.0 |
64.4 |
Net cash, last reported |
77.5 |
100% |
77.5 |
4.1 |
||
Valuation |
5,492.6 |
1,304.6 |
68.5 |
Source: Edison Investment Research. Note: WACC = 12.5% for product valuations.
In Exhibit 2 below we provide a sensitivity analysis that looks at the potential effect on our valuation of a successful Phase IIb outcome, by rolling forward our model to several future dates during 2022 when the BRaVac data might become available. Assuming the data are positive, we would expect to increase the technological success probability to 40% from our current base case of 15%. Because a successful Phase IIb outcome would also be the first clinical proof-of-concept, we believe this would increase RV001’s potential in other indications. This would allow us to reflect a larger portion of comparable deal economics (currently adjusted at a conservative 40%, as explained in our last published outlook report). There are no historical comparators as to how much this portion should increase, so we will review the totality of data (RhoVac may also conduct preclinical studies in other indications in parallel to the Phase IIb trial).
Exhibit 2: Phase IIa BRaVac trial read-out sensitivity analysis on RV001’s rNPV (SEK/share)
Discount to licensing deal economics |
||||||
rNPV |
10% |
20% |
40% |
80% |
100% |
|
Readout timing |
May 2022 |
101.5 |
117.1 |
148.2 |
210.5 |
241.6 |
June 2022 |
102.5 |
118.3 |
149.7 |
212.6 |
244.0 |
|
July 2022 |
103.5 |
119.4 |
151.2 |
214.7 |
246.4 |
|
August 2022 |
104.6 |
120.6 |
152.7 |
216.8 |
248.9 |
|
Source: Edison Investment Research
Exhibit 3: Financial summary
SEK'000s |
|
2018 |
2019 |
2020 |
2021e |
2022e |
|
December |
Local GAAP |
Local GAAP |
Local GAAP |
Local GAAP |
Local GAAP |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
0 |
5,979 |
6,012 |
7,926 |
5,945 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
5,979 |
6,012 |
7,926 |
5,945 |
||
Research and development |
(19,154) |
(38,743) |
(45,974) |
(50,000) |
(45,000) |
||
EBITDA |
|
|
(20,148) |
(36,498) |
(47,468) |
(42,074) |
(39,055) |
Operating Profit (before amort. and except.) |
|
|
(20,148) |
(36,498) |
(47,468) |
(42,074) |
(39,055) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
1 |
||
Operating Profit |
(20,148) |
(36,498) |
(47,468) |
(42,074) |
(39,054) |
||
Net Interest |
(64) |
382 |
577 |
363 |
148 |
||
Profit Before Tax (norm) |
|
|
(20,212) |
(36,116) |
(46,891) |
(41,711) |
(38,907) |
Profit Before Tax (reported) |
|
|
(20,212) |
(36,116) |
(46,891) |
(41,711) |
(38,906) |
Tax |
2,936 |
3,837 |
7,744 |
7,700 |
7,700 |
||
Profit After Tax (norm) |
(17,276) |
(32,279) |
(39,147) |
(34,011) |
(31,206) |
||
Profit After Tax (reported) |
(17,276) |
(32,279) |
(39,147) |
(34,011) |
(31,206) |
||
Average Number of Shares Outstanding (m) |
8.9 |
13.9 |
19.0 |
19.0 |
19.0 |
||
EPS - normalised (SEK) |
|
|
(1.95) |
(2.33) |
(2.06) |
(1.79) |
(1.64) |
EPS - normalised and fully diluted (SEK) |
|
|
(1.95) |
(2.33) |
(2.06) |
(1.79) |
(1.64) |
EPS - (reported) (SEK) |
|
|
(1.95) |
(2.33) |
(2.06) |
(1.79) |
(1.64) |
Dividend per share (SEK) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
2,848 |
0 |
0 |
0 |
0 |
Intangible Assets |
2,848 |
0 |
0 |
0 |
0 |
||
Tangible Assets |
0 |
0 |
0 |
0 |
0 |
||
Investments |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
20,372 |
149,928 |
101,947 |
69,742 |
37,363 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
240 |
14,391 |
14,619 |
15,201 |
11,401 |
||
Cash |
16,060 |
129,543 |
77,524 |
44,737 |
16,158 |
||
Other |
4,071 |
5,994 |
9,804 |
9,804 |
9,804 |
||
Current Liabilities |
|
|
(4,380) |
(12,574) |
(7,147) |
(9,116) |
(7,942) |
Creditors |
(4,380) |
(12,574) |
(7,147) |
(9,116) |
(7,942) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(596) |
0 |
0 |
0 |
0 |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(596) |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
18,245 |
137,354 |
94,800 |
60,627 |
29,421 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(17,097) |
(43,482) |
(53,838) |
(40,687) |
(36,428) |
Net Interest |
(64) |
(1,834) |
(468) |
200 |
148 |
||
Tax |
2,229 |
2,986 |
3,808 |
7,700 |
7,700 |
||
Capex |
0 |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
21,756 |
154,715 |
0 |
0 |
0 |
||
Other |
(191) |
1,098 |
(1,521) |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
6,632 |
113,483 |
(52,019) |
(32,787) |
(28,579) |
||
Opening net debt/(cash) |
|
|
(9,428) |
(16,060) |
(129,543) |
(77,524) |
(44,737) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
(0) |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(16,060) |
(129,543) |
(77,524) |
(44,737) |
(16,158) |
Source: RhoVac accounts, Edison Investment Research
|
|
Research: Investment Companies
Fidelity European Trust (FEV, formerly Fidelity European Values) aims to achieve long-term growth in both capital and income from a portfolio of European stocks. FEV is managed by Sam Morse and Marcel Stötzel and has an established track record of attractive returns and outperformance – it has made an average annual return of 11.3% in share price terms and 10.1% on an NAV basis over the past 10 years and outperformed the index over three, five and 10 years. The trust also did relatively well over most of 2020 and was substantially ahead of the benchmark for the nine months to end September 2020, but the performance, while still positive, lagged the benchmark in Q420 and Q121 as value stocks and cyclicals outperformed growth strategies. However, the trust’s managers are sceptical of the case for a full-blown rotation into value and they are not tempted to chase the market and adjust the portfolio in anticipation of a sustained value rally. Instead, they intend to maintain their current, more balanced, course, seeking out quality companies with strong balance sheets and positive dividend growth prospects at attractive valuations. They believe this approach has served FEV’s shareholders well and they expect it to continue to do so in the future, when markets are once again guided by fundamentals, rather than expectations of economic developments that are, in their view, far from assured.
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