Nicox — €10m financing boosts cash runway into Q224

Nicox (Euronext Growth: ALCOX)

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Research: Healthcare

Nicox — €10m financing boosts cash runway into Q224

Nicox announced a €10m private placement equity financing transaction, resulting in €8.9m in net proceeds. With the company extending the interest-only payment period of its existing Kreos Capital debt by six months (to January 2024), it has extended its estimated cash runway (based on the development of NCX-470 alone) to mid-May 2024, from mid-November 2023, previously. Altogether, Nicox issued 6.849m shares at an offering price of €1.46 per share (a 14% discount to the 21 November closing price) to Armistice Capital Master Fund, a healthcare and consumer sector focused hedge fund registered in the Cayman Islands. Nicox also affirmed that it now expects to complete Denali, the second NCX-470 Phase III study, in 2025, consistent with our existing estimates, although additional capital will be required. Our rNPV of €190.4m is unchanged, but our equity value per basic share is now €4.10 (vs €4.52 previously) given the additional shares outstanding.

Written by

Pooya Hemami

Analyst - Healthcare

Healthcare

Nicox

€10m financing boosts cash runway into Q224

Financing update

Pharma and biotech

23 November 2022

Price

€1.51

Market cap

€84m

$1/€

Pro forma net cash (€m) at 30 September 2022

15.0

Shares in issue (following November 2022 private placement)

50.1m

Free float

86%

Code

COX

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(25.0)

(25.0)

(51.0)

Rel (local)

(31.8)

(27.6)

(47.1)

52-week high/low

€3.1

€1.5

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 announced a €10m private placement equity financing transaction, resulting in €8.9m in net proceeds. With the company extending the interest-only payment period of its existing Kreos Capital debt by six months (to January 2024), it has extended its estimated cash runway (based on the development of NCX-470 alone) to mid-May 2024, from mid-November 2023, previously. Altogether, Nicox issued 6.849m shares at an offering price of €1.46 per share (a 14% discount to the 21 November closing price) to Armistice Capital Master Fund, a healthcare and consumer sector focused hedge fund registered in the Cayman Islands. Nicox also affirmed that it now expects to complete Denali, the second NCX-470 Phase III study, in 2025, consistent with our existing estimates, although additional capital will be required. Our rNPV of €190.4m is unchanged, but our equity value per basic share is now €4.10 (vs €4.52 previously) given the additional shares outstanding.

Year

end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/20

14.4

(10.2)

(0.30)

0.0

N/A

N/A

12/21

8.6

(15.5)

(0.35)

0.0

N/A

N/A

12/22e

5.2

(17.3)

(0.33)

0.0

N/A

N/A

12/23e

7.3

(17.4)

(0.34)

0.0

N/A

N/A

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

Attached warrants could further extend runway

The investor (Armistice) was also granted 6.849m share purchase warrants, exercisable at €1.70 per warrant. Full exercise of these warrants could raise €11.6m in additional proceeds. Given the €8.9m in net proceeds from the current financing, but excluding the effect of the attached warrants, we now expect the company will require €76m in added funding (from €85m previously) before the anticipated launch of NCX-470 (which we forecast in 2027).

Affirming NCX-470 and refining NCX-1728 strategies

Nicox continues to plan to start two Phase IIIb studies in H123, as discussed in our prior note, with the aim of demonstrating that NCX-470 may protect the retinal ganglion cells susceptible to glaucomatous damage through IOP-independent mechanisms, as has been observed in preclinical models. The company also indicated that its studies on its nitric-oxide emitting preclinical stage drug candidate NCX-1728 have established potential utility for retinal conditions, and the company will no longer advance it for the reduction of intraocular pressure (IOP).

Valuation: Revision to reflect new shares outstanding

Nicox reported €25.6m in cash and equivalents at 30 September, and €20.6m in non-lease debt. Following the private placement, we calculate pro forma Q322 net cash of €15.0m, excluding lease liabilities. Adding this amount to our unchanged €190.4m rNPV results in an equity valuation of €205.4m, or €4.10 per basic share (€3.75 fully diluted), down from €4.52 previously (€4.36 fully diluted).

Exhibit 1: Financial summary

€(000)

2018

2019

2020

2021

2022e

2023e

2024e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

4,717

8,260

14,423

8,583

5,193

7,298

9,704

Cost of Sales

(690)

(1,405)

(1,516)

(1,350)

(1,592)

(1,750)

(2,161)

Gross Profit

4,027

6,855

12,907

7,233

3,601

5,548

7,543

General & Administrative

(9,506)

(7,666)

(6,677)

(7,000)

(7,905)

(8,269)

(11,543)

Net Research & Development

(15,491)

(16,883)

(11,991)

(17,194)

(15,063)

(13,336)

(16,136)

Amortisation of intangible assets

0

(659)

(1,252)

(1,205)

(423)

(798)

(778)

Operating profit before exceptionals

(20,970)

(18,353)

(7,013)

(18,166)

(19,790)

(16,856)

(20,914)

EBITDA

 

 

(20,718)

(17,230)

(5,270)

(16,505)

(18,979)

(15,751)

(19,868)

Depreciation & other

(252)

(464)

(491)

(456)

(388)

(307)

(268)

Operating Profit (before amort. and except.)

 

(20,970)

(17,694)

(5,761)

(16,961)

(19,367)

(16,057)

(20,136)

Exceptionals including asset impairment

302

(6,115)

(6,621)

(30,658)

(11,631)

0

0

Other

0

0

0

(1,159)

0

0

0

Operating Profit

(20,668)

(23,809)

(12,382)

(48,778)

(30,998)

(16,057)

(20,136)

Net Interest

2,390

1,690

(4,436)

1,419

2,057

(1,326)

(2,806)

Profit Before Tax (norm)

 

 

(18,580)

(16,004)

(10,197)

(15,542)

(17,310)

(17,383)

(22,942)

Profit Before Tax (FRS 3)

 

 

(18,278)

(22,778)

(18,070)

(48,564)

(29,364)

(18,182)

(23,720)

Tax

(113)

3,856

(28)

3,644

1,679

0

0

Profit After Tax and minority interests (norm)

(18,693)

(12,148)

(10,225)

(13,057)

(15,631)

(17,383)

(22,942)

Profit After Tax and minority interests (FRS 3)

(18,391)

(18,922)

(18,098)

(44,920)

(27,685)

(18,182)

(23,720)

Average Basic Number of Shares Outstanding (m)

29.6

30.3

33.7

37.5

46.7

50.5

51.1

EPS - normalised (€)

 

 

(0.63)

(0.40)

(0.30)

(0.35)

(0.33)

(0.34)

(0.45)

EPS - normalised and fully diluted (€)

 

 

(0.63)

(0.40)

(0.30)

(0.35)

(0.33)

(0.34)

(0.45)

EPS - (IFRS) (€)

 

 

(0.62)

(0.62)

(0.54)

(1.20)

(0.59)

(0.36)

(0.46)

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

61,043

60,121

59,317

Intangible Assets

71,397

72,120

64,848

39,974

32,127

31,329

30,550

Tangible Assets

25,628

27,517

24,829

26,660

28,759

28,634

28,608

Investments in long-term financial assets

15,473

11,023

68

237

158

158

158

Current Assets

 

 

26,092

32,146

52,521

47,738

35,387

34,885

37,654

Short-term investments

0

0

0

0

0

0

0

Cash

22,059

28,102

47,195

41,970

29,938

28,971

31,611

Other

4,033

4,044

5,326

5,768

5,448

5,914

6,043

Current Liabilities

 

 

(8,069)

(9,828)

(15,404)

(8,000)

(7,981)

(6,677)

(5,280)

Creditors

(8,069)

(7,751)

(10,115)

(8,000)

(7,981)

(6,677)

(5,280)

Short term borrowings

0

(2,077)

(5,289)

0

0

0

0

Long Term Liabilities

 

 

(16,868)

(23,681)

(26,027)

(31,057)

(28,846)

(45,846)

(71,846)

Long term borrowings

0

(9,045)

(12,687)

(20,520)

(20,196)

(37,196)

(63,196)

Other long term liabilities

(16,868)

(14,636)

(13,340)

(10,537)

(8,650)

(8,650)

(8,650)

Net Assets

 

 

113,653

109,297

100,835

75,552

59,603

42,483

19,845

CASH FLOW

Operating Cash Flow

 

 

(21,533)

(17,741)

(956)

(19,900)

(22,986)

(16,459)

(20,311)

Net interest and financing income (expense)

2,390

1,690

(4,436)

1,419

2,057

(1,326)

(2,806)

Tax

0

0

0

0

0

0

0

Net Operating Cash Flow

(19,143)

(16,051)

(5,392)

(18,481)

(20,929)

(17,785)

(23,117)

Capex

(268)

(95)

(20)

(8)

(82)

(182)

(243)

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)

(11,888)

(17,967)

(23,360)

Opening net debt/(cash)

 

 

0

(37,532)

(28,003)

(29,287)

(21,687)

(9,900)

8,067

HP finance leases initiated

0

0

0

0

0

0

0

Other

56,943

(4,673)

(6,625)

(2,915)

101

0

0

Closing net debt/(cash)

 

 

(37,532)

(28,003)

(29,287)

(21,687)

(9,900)

8,067

31,427

Lease debt

na

1,527

1,099

986

1,297

1,297

1,297

Closing net debt/(cash) inclusive of IFRS16 lease debt

(37,532)

(26,476)

(28,188)

(20,701)

(8,603)

9,364

32,724

Source: Company reports, Edison Investment Research


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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Nicox and prepared and issued by Edison, in consideration of a fee payable by Nicox. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

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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.

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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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