Newron Pharmaceuticals — Evenamide catalyst approaching

Newron Pharmaceuticals (SIX: NWRN)

Last close As at 22/05/2024

CHF9.93

−0.15 (−1.49%)

Market capitalisation

CHF186m

More on this equity

Research: Healthcare

Newron Pharmaceuticals — Evenamide catalyst approaching

Newron Pharmaceuticals is focused on the development of novel compounds for the treatment of various neurological conditions. Heading the R&D pipeline is evenamide, which is being investigated for the treatment of schizophrenia. In September 2021, the drug began a Phase III pivotal trial (Study 008A) in this indication, with top-line results expected in H123. Positive results here would represent the most significant near-term catalyst for the company, in our view. In June 2022, Newron reported positive safety and efficacy data for evenamide in a parallel trial (Study 014 focused on treatment-resistant schizophrenia), providing encouraging support for Study 008A. At end-June 2022, it had a total cash and liquid asset position of €28.4m, which we estimate will provide a cash runway to H223. We value Newron at CHF113.9m or CHF6.4 per share (previously CHF107m or CHF6 per share).

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Newron Pharmaceuticals

Evenamide catalyst approaching

Company update

Pharma and biotech

15 September 2022

Price

CHF1.43

Market cap

CHF26m

CHF0.96/€; US$1.0/€

Net debt (€m) at end-June 2022

15.5

Shares in issue

17.8m

Free float

99%

Code

NWRN

Primary exchange

SIX

Secondary exchange

XETRA

Share price performance

%

1m

3m

12m

Abs

(0.7)

(4.7)

(32.5)

Rel (local)

2.8

(5.2)

(24.1)

52-week high/low

CHF2.12

CHF1.25

Business description

Newron Pharmaceuticals is focused on the central nervous system. Xadago for Parkinson’s disease is sold in Europe, Japan and the United States. Evenamide, a novel schizophrenia add-on therapy, is involved in a Phase III trial programme targeting schizophrenia.

Next events

Evenamide Phase III Study 008A readouts

H123

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Harry Shrives

+44 (0)20 3077 5700

Newron Pharmaceuticals is a research client of Edison Investment Research Limited

Newron Pharmaceuticals is focused on the development of novel compounds for the treatment of various neurological conditions. Heading the R&D pipeline is evenamide, which is being investigated for the treatment of schizophrenia. In September 2021, the drug began a Phase III pivotal trial (Study 008A) in this indication, with top-line results expected in H123. Positive results here would represent the most significant near-term catalyst for the company, in our view. In June 2022, Newron reported positive safety and efficacy data for evenamide in a parallel trial (Study 014 focused on treatment-resistant schizophrenia), providing encouraging support for Study 008A. At end-June 2022, it had a total cash and liquid asset position of €28.4m, which we estimate will provide a cash runway to H223. We value Newron at CHF113.9m or CHF6.4 per share (previously CHF107m or CHF6 per share).

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/20

5.26

(18.16)

(1.09)

0.0

N/A

N/A

12/21

5.76

(14.12)

(0.79)

0.0

N/A

N/A

12/22e

6.60

(15.51)

(0.87)

0.0

N/A

N/A

12/23e

7.89

(16.41)

(0.92)

0.0

N/A

N/A

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

Xadago cedes focus to evenamide

While royalties for Newron’s marketed Parkinson’s disease (PD) drug Xadago continue to grow its top-line revenues, the near-term value driver for the company is the results from the Phase III Study 008A of evenamide in schizophrenia. New schizophrenia treatments address a significant unmet medical need, and we therefore continue to see a significant opportunity for evenamide in this market, should the drug be approved.

Cash past key catalyst

In our view, with a total cash and current financial asset position of €28.4m and an H122 cash burn of c €5.6m, Newron is sufficiently funded past the key Study 008A readout in H123 to H223. Assuming positive results from this, we anticipate the company will look to find a partner in key regions in mid-2023. Should a partnering deal be delayed or unavailable, the company would need to explore funding options to support its growing R&D pipeline.

Valuation: CHF113.9m or CHF6.4 per share

We value Newron at CHF113.9m or CHF6.4 per share (previously CHF107m or CHF6 per share). We include a risk-adjusted NPV calculation for Xadago in PD and PD levodopa-induced dyskinesias (PD-LIDs) and evenamide in schizophrenia and a net debt position of €15.5m. Value uplift comes from rolling our model forward by 12 months and updating our FX estimates (CHF0.96/€, previously CHF1.09/€ and US$1.0/€, previously US$0.85/€). These are partially offset by a higher net debt position and increased future R&D costs.

Evenamide results are the near-term catalyst

The near-term catalyst for the company revolves around the clinical development programme for evenamide, a glutamate modulator, in schizophrenia. The pivotal Phase III trial Study 008A (NCT04461119) was initiated in September 2021 and is a four-week randomised, double-blind, placebo-controlled study to investigate the use of evenamide in the treatment of chronic schizophrenia in patients already receiving anti-psychotic therapy (n=138). Results from the study are expected in H123 and, in our view, represent a major near-term catalyst for Newron.

Encouragingly, in June 2022 Newron announced interim safety and efficacy data for the use of evenamide as an add-on therapy in treatment-resistant schizophrenia (TRS). Data from the first 100 patients who completed the six-week, open-label Study 014 (assessing the drug candidate as an add-on in moderate-to-severe TRS) found evenamide treatment improved symptoms of psychosis and a high proportion (77%) of all treated patients responded to their antipsychotic therapy after the addition of evenamide. We note that nearly all of the 100 evaluated patients to date received either the 7.5mg or 15mg dose, hence there is a potential for even greater benefit to be shown in the 30mg dose arm once the study is completed. Of the original 100 patients, 90 have now been rolled over to an extended study (015) to observe longer-term safety and efficacy effects. Although we see the overall data from this trial as supportive of evenamide use in TRS, care must be taken when interpreting immature interim data. Patient recruitment in Study 014 is expected to be completed by end-2022 with readouts expected in Q123.

Additionally, Newron intend to initiate Study 003 investigating the safety and efficacy of evenamide as an add-on treatment in patients with TRS not responding to atypical antipsychotic treatment regimens. The eight-week, double-blind, placebo controlled, randomised study is expected to initiate in 2023 and, together with Study 008A, will form a critical part of the Phase II/III evenamide development programme data package, provided results are positive.

Valuation

We value Newron at CHF113.9m or CHF6.4 per share (previously CHF107m or CHF6 per share). Our valuation is based on a risk-adjusted NPV calculation for Xadago in PD and PD-LIDs and evenamide in schizophrenia (Exhibit 1). We include H122 net debt of CHF14.9m (€15.5m). We have revised our underlying R&D costs in FY22 and FY23 corresponding to the Phase III development programme for evenamide and Xadago (see below). Our remaining valuation assumptions are unchanged, but we will revisit them when full results for the Phase III Study 008A are communicated. Value uplift comes from rolling our model forward 12 months and significant changes in FX rates over this period (CHF0.96/€, previously 1.09 and USD1.0/€, previously 0.85), which is partially offset by a higher net debt position and increased future R&D costs.

Exhibit 1: Newron Valuation breakdown

Product

Indication

Launch

Probability

rNPV
(CHFm)

rNPV/share
(CHF/share)

Xadago

Parkinson's disease

2015

45.6

2.6

Dyskinesia

2024

50%

14.3

0.8

Evenamide

Schizophrenia

2025

50%

189.4

10.6

Total direct product value

 

 

249.3

14.0

Direct costs to 2033 less tax

(120.5)

(6.8)

Cash at end-June 2022

27.2

1.5

Loans (fair value June)

(42.1)

(2.4)

Valuation

 

 

113.9

6.4

Source: Edison Investment Research. Note: Valuation figures are converted from to CHF from €.

Financials

In H122 Newron recognised total revenue of €2.8m (H121: €2.6m), comprised largely of royalty payments from partners on sales of Xadago. R&D expenses in H122 fell to €5.3m (H121: €6.8m), with lower costs due to the group conducting preclinical and clinical safety studies with evenamide in H121; however, R&D activities in 2022 have focussed primarily on the phase II/III Study 008A. Following an assessment of recoverability, the company did claim an R&D tax credit in FY21, however this will be deferred to later periods with management communicating that it may be recognised in FY22. In total, operating expenses for H122 amounted to €9.3m (H121: €10.6m) resulting in an operating loss of €6.4m, a decrease of 18% from a year prior (H121: €7.9m). The company reported a pre-tax loss in H122 of €8.6m (H121: €9.1m). Cash used in operations over H122 came to €5.6m, down 36% from €8.8m in H121. The company received the final two loan tranches from a financing agreement with the European Investment Bank (EIB) over FY21, amounting to €15m of non-dilutive funding. We note that the EIB financing agreement has provided the company with a total of €40m in funding since July 2019, with each tranche bearing an interest rate of 3% annually. An additional fixed rate (between 6.75% and 5.25% depending on the tranche) is also payable on expiry of the facility. As part of the agreement Newron issued 807,169 warrants to the EIB. As at end H122, the company had €43.9m in interest-bearing debt.

We estimate revenues for FY22 of €6.6m (FY21: €5.8m) as revenues from Xadago royalties continue to grow at a rate of c 10%. We then estimate revenues of €7.9m in FY23 from Xadago royalties alone. With the evenamide Phase III trial being the primary focus of R&D expenditures in FY22, we expect R&D costs of €11.7m, up from €10.7m in FY21. We expect this increase to be driven largely by increased enrolment in the evenamide Phase III schizophrenia trial, before an expected readout in H123. Further, we anticipate that R&D costs will move significantly higher in FY23 to €16.4m with initiation of the Xadago clinical programme and Study 003 as part of the evenamide Phase II/III clinical study. We therefore estimate operating losses for FY22 and FY23 of €12.6m and €16.4m, respectively.

At end-H122 Newron had a cash position of €18.9m, plus €9.5m in other current financial assets. Considering the H122 burn rate of €5.6m and accounting for our expected rise in operating expenses in FY22, we estimate a cash runway for the company into H223. We note that this is slightly shorter than the company’s guidance for a cash runway into 2024, including royalty income and Italian R&D tax credits, and can be attributed to materially higher R&D expenditure which we have incorporated in forecast years. Assuming a positive readout from Study 008A in H123, we expect Newron will pursue a partnership deal for evenamide in schizophrenia by mid-2023, payment from which may change our runway estimate. In the absence of any partnership deal for evenamide in schizophrenia, we expect management would need to raise additional capital in H223 to continue operations. We estimate a €30m capital requirement through 2024 (FY23: €15m, FY24: €15m), modelled as illustrative debt which, based on our forecasts, would be sufficient to fund the company’s operations until 2025.

Exhibit 2: Financial summary

Accounts: IFRS, year-end: 31 December, €’000s

2019

2020

2021

2022e

2023e

PROFIT & LOSS

 

 

 

 

 

 

 

Total revenues

 

 

7,038

5,258

5,762

6,603

7,899

Cost of sales

 

 

0

0

0

0

0

Gross profit

 

 

7,038

5,258

5,762

6,603

7,899

Total operating expenses

 

 

(27,937)

(23,324)

(18,119)

(19,212)

(24,316)

Research and development expenses

 

 

(17,440)

(14,853)

(10,725)

(11,725)

(16,434)

SG&A

 

 

(10,497)

(8,471)

(7,394)

(7,487)

(7,882)

EBITDA (normalised)

 

 

(18,567)

(16,386)

(11,386)

(11,638)

(16,243)

Operating income (reported)

 

 

(20,899)

(18,066)

(12,357)

(12,609)

(16,417)

Finance income/(expense)

 

 

737

(1,552)

(2,527)

(3,665)

0

Exceptionals and adjustments

 

 

0

0

0

0

0

Profit before tax (reported)

 

 

(20,162)

(19,618)

(14,884)

(16,274)

(16,417)

Profit before tax (normalised)

 

 

(18,036)

(18,157)

(14,122)

(15,512)

(16,417)

Income tax expense (includes exceptionals)

 

 

(45)

(1,380)

(17)

0

0

Net income (reported)

 

 

(20,207)

(20,998)

(14,901)

(16,274)

(16,417)

Net income (normalised)

 

 

(18,081)

(19,537)

(14,139)

(15,512)

(16,417)

Basic average number of shares, m

 

 

17.8

17.8

17.8

17.8

17.8

Basic EPS (€)

 

 

(1.13)

(1.18)

(0.84)

(0.91)

(0.92)

Adjusted EPS (€)

 

 

(1.01)

(1.09)

(0.79)

(0.87)

(0.92)

BALANCE SHEET

 

 

 

 

 

 

 

Property, Plant and Equipment

 

 

116

105

87

14

86

Right of use assets (leases)

 

 

136

629

490

490

490

Intangible Assets

 

 

20

11

2

2

2

Non-current receivables (Tax credits)

 

 

14,525

12,579

10,480

7,694

5,349

Total non-current assets

 

 

14,797

13,324

11,059

8,200

5,927

Cash and equivalents

 

 

22,052

13,213

25,019

12,623

12,604

Current financial assets

 

 

17,111

18,037

9,575

9,575

9,575

Inventories

 

 

0

0

0

0

0

Trade Accounts Receivable

 

 

6,328

6,624

4,833

5,433

5,433

Total current assets

 

 

45,491

37,874

39,427

27,631

27,612

Trade Accounts Payable

 

 

5,535

6,741

3,504

5,123

4,248

Other Current Liabilities

 

 

60

151

150

150

150

Total current liabilities

 

 

5,595

6,892

3,654

5,273

4,398

Long-term Debt

 

 

16,749

25,674

42,542

42,542

57,542

Leasing Obligations

 

 

78

520

389

389

389

share based liabilities

 

 

436

181

213

213

213

Long-term Provisions

 

 

632

685

581

581

581

Total non-current liabilities

 

 

17,895

27,060

43,725

43,725

58,725

Equity attributable to company

 

 

36,798

17,246

3,107

(13,167)

(29,583)

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Pre-tax profit

 

 

(20,162)

(19,618)

(14,884)

(16,274)

(16,417)

Net Financial Income

 

 

234

(531)

(792)

0

0

Depreciation and amortisation

 

 

206

219

209

173

28

Share based payments

 

 

2,126

1,461

762

0

0

Other adjustments

 

 

(4,917)

(842)

3,524

2,786

2,345

Movements in working capital

 

 

537

3,723

(264)

1,019

(875)

Cash from operations (CFO)

 

 

(21,976)

(15,588)

(11,445)

(12,296)

(14,919)

Capex

 

 

(51)

(34)

(20)

(100)

(100)

Acquisitions & disposals net

 

 

(881)

(581)

8,440

0

0

Other investing activities

 

 

0

(1)

0

0

0

Cash used in investing activities (CFIA)

 

 

(932)

(616)

8,420

(100)

(100)

Loans received

 

 

17,500

7,500

15,000

0

0

Illustrative debt

 

 

0

0

0

0

15,000

Loan repayments

 

 

0

0

0

0

0

Equity issued

 

 

0

0

0

0

0

Other Financing Cash Flows (leases)

 

 

(163)

(135)

(169)

0

0

Cash from financing activities (CFF)

 

 

17,337

7,365

14,831

0

15,000

Cash and equivalents at beginning of period

 

 

27,623

22,052

13,213

25,019

12,623

Increase/(decrease) in cash and equivalents

 

 

(5,571)

(8,839)

11,806

(12,396)

(19)

Effect of FX on cash and equivalents

 

 

0

0

0

0

0

Cash and equivalents at end of period

 

 

22,052

13,213

25,019

12,623

12,604

Net (debt)/cash (including liquid resources)

 

 

22,414

5,576

(7,948)

(20,344)

(35,363)

Source: Company reports, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Newron Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by Newron Pharmaceuticals. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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).

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.

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 Newron Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by Newron Pharmaceuticals. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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).

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.

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

More on Newron Pharmaceuticals

View All

Latest from the Healthcare sector

View All Healthcare content

Research: Investment Companies

Henderson Opportunities Trust — Staying the contrarian course

Equity markets have been relatively weak and volatile so far in 2022 as a result of slowing economic growth, rising interest rates, soaring inflation and the ongoing war in Ukraine. Henderson Opportunities Trust (HOT), which has a bias to midsized and smaller companies including those listed on the Alternative Investment Market (AIM), has had a tougher time of it in 2022 after a very strong 2021. The investment process is, as with all James Henderson and Laura Foll mandates, mildly contrarian, incrementally taking advantage of valuation anomalies and market volatility to build a good-quality all-cap portfolio trading on attractive valuations. Through 2022 the managers have been gradually reducing areas that have been relatively strong, such as large caps and energy in particular, to fund purchases in more cyclical parts of the market that have been subject to aggressive selling. There is no exact science to being a contrarian fund manager, but the experience of the team over many cycles can give investors confidence that the portfolio can revert to form and outperform over the medium to longer term.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free