e-Therapeutics
e-Therapeutics |
Embarking on the next phase: Deals and data |
New CEO appointed |
Pharma & biotech |
16 January 2017 |
Share price performance
Business description
Next events
Analysts
e-Therapeuticse-Therapeutics is a research client of Edison Investment Research Limited |
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e-Therapeutics (ETX) has appointed a new CEO, Dr Raymond Barlow, who will join the company by 1 May 2017. He brings significant R&D and business development experience, which will be invaluable in driving ETX to the next stage of its evolution. Following its 2016 strategic review, ETX’s near- to mid-term focus is on deriving value from its proprietary network pharmacology discovery platform. Potential deals from late 2017 would provide external validation for the platform and differentiated discovery approach, and generate revenues. Portfolio rationalisation secures ETX’s funding runway into early 2019; deal flow would extend this. Preclinical data on the five core discovery assets should stimulate interest from potential partners/collaborators. Deals and data are the next key catalysts.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
01/15 |
0.0 |
(9.7) |
(2.9) |
0.0 |
N/A |
N/A |
01/16 |
0.0 |
(11.1) |
(3.2) |
0.0 |
N/A |
N/A |
01/17e |
0.0 |
(13.2) |
(4.0) |
0.0 |
N/A |
N/A |
01/18e |
0.0 |
(8.9) |
(2.7) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Commercial expertise to open doors for ETX
Dr Barlow’s international pharma and biotech background, experience and contacts should provide added impetus to achievement of ETX’s strategic objectives. Prior roles include senior business development positions at Amgen, J&J/Crucell and AstraZeneca, where he also worked in drug discovery/development. Dr Barlow has a stated intention of continued development of the network pharmacology platform, generation of further supporting data for internal discovery programmes, and also raising the profile of both ETX and its discovery approach across the industry.
Core assets: Pipeline and platform
ETX’s ability to discover drugs targeting complex disease more efficiently and cost effectively than alternative methods should attract potential partners. Its platform enables analysis of multiple, often interconnected disease pathways providing new insights to complement traditional discovery approaches. Phased investment will be made into improving ETX’s discovery capabilities and into the downsized portfolio (five core assets, from 17). 2017 could mark the next wave of discovery activity.
Financials & valuation: Focused investment
Cash of £19.9m (end-July 2016), future tax credits of c £6m and reduced cash burn should fund ETX through to 2019. R&D costs will fall as spend is focused on a core five product candidates in discovery (down from 17 at end-July); we model £0.6m higher FY17 R&D costs, as legacy assets ETS6103 and ETS2101 wind down. Deals (out-licensing, collaborations or JVs) will be pivotal in unlocking platform value. Execution is key; first deals should catalyse further business development activity and provide more clarity on potential future deal terms or format. Analysis of disclosed deal metrics for preclinical/research stage assets indicates a broad range of upfront payments ($5m to $30m) with a historical industry modal value of $10m.
Exhibit 1: Financial summary
£'000s |
2015 |
2016 |
2017e |
2018e |
||
Year ending 31 January |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
R&D |
(8,549) |
(9,965) |
(14,100) |
(7,500) |
||
G&A |
(1,520) |
(1,375) |
(1,434) |
(1,475) |
||
EBITDA |
|
|
(9,997) |
(11,267) |
(13,353) |
(8,895) |
Operating profit (pre GW and except.) |
|
|
(10,069) |
(11,340) |
(13,433) |
(8,975) |
Share-based payment |
(106) |
(215) |
(250) |
(250) |
||
Operating profit |
(10,175) |
(11,555) |
(15,784) |
(9,225) |
||
Net interest |
357 |
271 |
200 |
110 |
||
Profit before tax (norm) |
|
|
(9,712) |
(11,069) |
(13,233) |
(8,865) |
Profit before tax (as reported) |
|
|
(9,818) |
(11,284) |
(15,584) |
(9,115) |
Tax |
2,041 |
2,570 |
2,700 |
1,500 |
||
Profit after tax (norm.) |
(7,671) |
(8,499) |
(10,533) |
(7,365) |
||
Profit after tax (as reported) |
(7,777) |
(8,714) |
(12,884) |
(7,615) |
||
Average number of shares outstanding (m) |
264.3 |
264.4 |
266.4 |
268.3 |
||
EPS - normalised (p) |
|
|
(2.9) |
(3.2) |
(4.0) |
(2.7) |
EPS - as reported (p) |
|
|
(2.9) |
(3.3) |
(4.8) |
(2.8) |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
||
EBITDA margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating margin (before GW and except) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
733 |
804 |
909 |
1,014 |
Intangible assets |
637 |
740 |
835 |
930 |
||
Tangible assets |
96 |
64 |
74 |
84 |
||
Current assets |
|
|
37,424 |
28,783 |
16,877 |
10,653 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
3,602 |
3,941 |
3,600 |
2,400 |
||
Cash |
33,822 |
24,842 |
13,277 |
8,253 |
||
Other |
0 |
0 |
0 |
0 |
||
Current liabilities |
|
|
(1,133) |
(1,156) |
(1,500) |
(1,500) |
Creditors |
(1,133) |
(1,156) |
(1,500) |
(1,500) |
||
Other creditors |
0 |
0 |
0 |
0 |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Long-term liabilities |
|
|
0 |
0 |
0 |
0 |
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Deferred taxation |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
37,024 |
28,431 |
16,286 |
10,167 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(10,942) |
(11,204) |
(12,668) |
(7,695) |
Net interest |
642 |
329 |
236 |
155 |
||
Tax |
1,087 |
2,027 |
2,570 |
2,700 |
||
Capex |
(31) |
(6) |
(50) |
(50) |
||
Purchase of intangibles |
(158) |
(138) |
(135) |
(135) |
||
Acquisitions/disposals |
0 |
0 |
(1,517) |
0 |
||
Financing |
77 |
12 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Net cash flow |
(9,325) |
(8,980) |
(11,565) |
(5,025) |
||
Opening net debt/(cash) |
|
|
(43,147) |
(33,822) |
(24,842) |
(13,277) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(33,822) |
(24,842) |
(13,277) |
(8,253) |
Source: Edison Investment Research, e-Therapeutics accounts
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