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Research: Healthcare
FY21 results highlight delivery on key elements of Oasmia’s ongoing transformation. Notably, ‘rightsizing’ the business and prudent cost control has brought the underlying cash burn rate down to c SEK10m per month in 2021. With the fully secured rights issue expected to raise gross proceeds of c SEK150m, management has guided it can fund operations for 18–24 months. We anticipate material progression can be made across the pipeline during this time, with clinical progress expected from Cantrixil and Docetaxel micellar and the start of commercial royalties from Apealea sales in Europe. Separate financing requirements will be considered for any potential bolt-on acquisitions to the pipeline. We maintain our valuation at SEK2.89bn but place our financial forecasts under review, pending publication of the prospectus and closing of the rights issue.
Written by
Oasmia Pharmaceutical |
FY21 results |
Pharma & biotech |
25 February 2022 |
Share price performance
Business description
Analysts
Oasmia Pharmaceutical is a research client of Edison Investment Research Limited |
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FY21 results highlight delivery on key elements of Oasmia’s ongoing transformation. Notably, ‘rightsizing’ the business and prudent cost control has brought the underlying cash burn rate down to c SEK10m per month in 2021. With the fully secured rights issue expected to raise gross proceeds of c SEK150m, management has guided it can fund operations for 18–24 months. We anticipate material progression can be made across the pipeline during this time, with clinical progress expected from Cantrixil and Docetaxel micellar and the start of commercial royalties from Apealea sales in Europe. Separate financing requirements will be considered for any potential bolt-on acquisitions to the pipeline. We maintain our valuation at SEK2.89bn but place our financial forecasts under review, pending publication of the prospectus and closing of the rights issue.
Delivering on promises |
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
201.8 |
(57.5) |
(0.13) |
0.00 |
N/A |
N/A |
12/21 |
26.2 |
(132.7) |
(0.30) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are as reported. Note financial results have been restated to reflect revised fiscal year-end to December.
Apealea (cremophor-free paclitaxel) remains the primary near-term value driver, in our view. Marketing authorisations have now been transferred to commercial partner Inceptua and European launch is expected in H122 (Germany and the UK), enabling the first flow of royalties in H222. Ultimately, the United States remains the key market for Apealea and Oasmia’s partner Elevar is reviewing the previously planned clinical and regulatory path. We expect an update in the coming months, but understand Elevar’s overarching goals are to maximise Apealea's commercial potential and shorten timelines.
The funding secured with the rights issue should enable Oasmia to make material progress across the rest of the pipeline. Preparations for a Phase II study for Cantrixil in advanced ovarian cancer are underway and substantial progress can be expected throughout 2022. Primarily, a new manufacturing partner needs to be secured before starting this study to ensure supply can support future clinical development. In February, the first patient completed dosing in the ongoing, investigator-initiated Phase Ib study for Docetaxel micellar in advanced prostate cancer, with completion of the study expected by end-2022.
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Research: Metals & Mining
Sylvania’s H122 results showed that despite lower production and higher costs, the company remains highly cash generative, and we expect end-December 2021 net cash of US$110m to surpass US$200m by end FY24. H122 production issues should be mostly resolved by the end of Q322. ZAR unit costs rose in H122 due to western Sylvania Dump Operations (SDO) experiencing water shortages and temporary tailings dam instability at the Lesedi SDO. These issues are being addressed and could further improve the US$ cost outlook, which is already benefiting from a weaker rand. We have cut our FY22 EPS forecast by 10% on lower H122 revenues, offset by lower US$ costs, but our longer-term forecasts remain unchanged. A windfall dividend of 2.25p was declared on 21 February.