Currency in EUR
Last close As at 08/06/2023
EUR0.17
▲ −0.01 (−3.47%)
Market capitalisation
EUR6m
Research: Healthcare
Quantum Genomics is expecting two very key pieces of data for firibastat in 2021. First up will be top-line data from the Phase IIb QUORUM study in 294 heart failure patients, which is expected to read out by the end of Q221. Then data from the pivotal Phase III FRESH study in 500 difficult-to-treat or resistant hypertension patients is expected by the end of the year. If positive, these data should help open the door for partnerships with major pharmaceutical companies in the lucrative US and EU markets.
Written by
Maxim Jacobs
Quantum Genomics |
Expecting an eventful 2021 |
Development update |
Pharma & biotech |
29 March 2021 |
Share price performance
Business description
Next events
Analysts
Quantum Genomics is a research client of Edison Investment Research Limited |
Quantum Genomics is expecting two very key pieces of data for firibastat in 2021. First up will be top-line data from the Phase IIb QUORUM study in 294 heart failure patients, which is expected to read out by the end of Q221. Then data from the pivotal Phase III FRESH study in 500 difficult-to-treat or resistant hypertension patients is expected by the end of the year. If positive, these data should help open the door for partnerships with major pharmaceutical companies in the lucrative US and EU markets.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
0.0 |
(10.8) |
(0.53) |
0.0 |
N/A |
N/A |
12/20 |
1.2 |
(13.9) |
(0.50) |
0.0 |
N/A |
N/A |
12/21e |
0.8 |
(20.8) |
(0.65) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(22.5) |
(0.68) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Phase III FRESH study data by year-end
The pivotal FRESH study is a three-month, 500-patient study comparing firibastat to placebo in difficult-to-treat or resistant hypertension patients who are already on treatments from two or three anti-hypertensive classes (firibastat or placebo will be added on top of the current treatment) yet still have systolic automated office blood pressure (AOBP) above 140mmHg. The primary endpoint will be a change from baseline in systolic AOBP. Data are expected by the end of 2021.
Pivotal REFRESH study launched
Quantum Genomics launched the REFRESH pivotal Phase III study, in 750 patients with difficult-to-treat or resistant hypertension. The study will test a 1,000mg once-daily formulation of firibastat (compared to two 250mg capsules twice a day in the FRESH study) and includes a six-month safety follow-up period (following the initial three-month treatment period) for all patients and 12-month follow up for 100 patients. The first patient is guided to be recruited in Q221 with results in mid-2023.
Phase IIb QUORUM study readout in Q221
The Phase IIb QUORUM study is enrolling 294 subjects from 40 centres in the US and Europe within 72 hours of suffering acute myocardial infarction (AMI), commonly referred to as a heart attack. The primary endpoint will be the change from baseline in the left ventricular ejection fraction (LVEF) after a three-month treatment. Data are expected by the end of Q221.
Valuation: €982m or €36.53 per share
We have adjusted our valuation from €1,030m or €46.34 per share to €982m or €36.53 per share. The total valuation decrease is mainly due to pushing back our launch expectations to 2024 from 2023 as the REFRESH study is not expected to readout until 2023, while the per share value was affected by a higher number of shares outstanding. This was mitigated by rolling forward our NPVs and a higher level of net cash.
Additional regional partnerships signed
Quantum Genomics continues to sign licensing agreements for firibastat in difficult-to-treat/treatment-resistant hypertension. In December, the company announced an exclusive licensing and collaboration agreement with DongWha Pharm for South Korea. As part of the agreement, Quantum Genomics will receive upfront and milestone payments of up to US$18.5m and double-digit royalties. Importantly, DongWha Pharm plans to join the Phase III programme in difficult-to-treat/treatment-resistant hypertension, which will enable recruitment in the region. DongWha Pharma was established in 1897 and was the first Korean pharmaceutical company. It is vertically integrated and sells a wide variety of pharmaceutical and over-the-counter products. Revenue for 2020 was KRW272bn (~US$240m).
Also, Quantum Genomics signed a licensing agreement with Faran for Greece. Per this agreement, Quantum Genomics may receive up to US$12.1m in upfront and milestone payments as well as double-digit royalties. Faran may also join the Phase III programme in difficult-to-treat/treatment-resistant hypertension. Faran was founded in 1950 and sells products that treat a wide variety of diseases. Revenue in 2002 was approximately €52m.
With these two additional partnerships, Quantum Genomics currently has six licensing agreements in place covering an addressable market of around 60 million patients.
In addition to the new partnerships, Orient EuroPharma (OEP), the previously announced partner for South-East Asia (specifically, Taiwan, Malaysia, the Philippines, Singapore, Vietnam, Indonesia, Myanmar and Cambodia), Australia and New Zealand, acquired a €870,000 equity stake in Quantum Genomics in February.
Valuation
We have adjusted our valuation from €1,030m or €46.34 per share to €982m or €36.53 per share. The total valuation decrease is mainly due to pushing back our launch expectations to 2024 from 2023. While the company had disclosed the need for a second Phase III with 750 patients previously, precise timing was unknown. With the company now providing guidance for a data readout in mid-2023, our launch expectations are now for 2024. The per share value was affected by a higher number of shares outstanding primarily due to the December 2020 capital raise (described below). This was mitigated by rolling forward our NPVs and a higher level of net cash. We expect to revisit our valuation following the key upcoming results from the QUOROM and FRESH studies.
Exhibit 1: Quantum Genomics valuation table
Product |
Main indication |
Local |
Status |
Probability of success |
Launch year |
Peak sales ($m) |
Patent protection |
rNPV |
||||
Firibastat |
Hypertension |
US |
Phase III |
50% |
2024 |
$1,043 |
2031 |
515 |
||||
Firibastat |
Hypertension |
Europe |
Phase III |
50% |
2024 |
$901 |
2031 |
440 |
||||
Firibastat |
Development costs |
|
|
|
|
(187) |
||||||
Firibastat |
Heart failure |
US |
Phase IIb |
20% |
2024 |
$539 |
2031 |
131 |
||||
Firibastat |
Heart failure |
Europe |
Phase IIb |
20% |
2024 |
$645 |
2031 |
157 |
||||
Firibastat |
Development costs |
(101) |
||||||||||
Total |
|
|
|
|
|
|
|
955 |
||||
Net cash (31 December 2020 (€m) |
27 |
|||||||||||
Total firm value (€m) |
982 |
|||||||||||
Total shares (3 March 2021) (m) |
26.9 |
|||||||||||
Value per basic share (€) |
36.53 |
Source: Edison Investment Research
Financials
The company reported an operational loss of €13.9m in 2020 compared to €10.8m in 2019 with the increase due to higher spending on clinical trials. We continue to expect an acceleration in spending due to the FRESH study and estimate an operating loss of €20.8m in FY21 (this is down from €21.6m as we have incorporated a €0.8m upfront payment from OEP). Once the company discloses additional upfront or milestone payments from its partnerships, we may revise this estimate downward accordingly. We have also introduced FY22 estimates, which feature an operating loss of €22.5m.
Quantum had €27.1m in net cash at the end of 2020. In December, the company raised €20m (4.445m shares at €4.50/share) through a private placement to institutional investors, including Otium Capital, the family office of French entrepreneur Pierre-Edouard Stérin. We forecast €20m in additional financing to the end of 2021 (previously €28m), which we model as illustrative debt. The need for additional funding past this point will depend on the FRESH data and the company’s ability to sign additional partnerships. Assuming no meaningful partnerships we model a financing need of an additional €50m to cover the company’s expenditures through to profitability.
Exhibit 2: Financial summary
€000s |
2019 |
2020 |
2021e |
2022e |
||
Year end 31 December |
PCG |
PCG |
PCG |
PCG |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
0 |
1,203 |
800 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
1,203 |
800 |
0 |
||
EBITDA |
|
|
(10,760) |
(13,858) |
(20,772) |
(22,477) |
Operating Profit (before amort. and except.) |
|
|
(10,760) |
(13,858) |
(20,772) |
(22,477) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Other |
(0) |
0 |
0 |
0 |
||
Exceptionals |
123 |
178 |
0 |
0 |
||
Operating Profit |
(10,637) |
(13,679) |
(20,772) |
(22,477) |
||
Net Interest |
0 |
0 |
0 |
0 |
||
Other |
11 |
(5) |
0 |
31 |
||
Profit Before Tax (norm) |
|
|
(10,760) |
(13,858) |
(20,772) |
(22,477) |
Profit Before Tax (FRS 3) |
|
|
(10,626) |
(13,684) |
(20,772) |
(22,446) |
Tax |
1,547 |
2,148 |
2,700 |
2,922 |
||
Deferred tax |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(9,213) |
(11,710) |
(18,072) |
(19,555) |
||
Profit After Tax (FRS 3) |
(9,078) |
(11,537) |
(18,072) |
(19,524) |
||
Average Number of Shares Outstanding (m) |
17.5 |
23.5 |
27.8 |
28.9 |
||
EPS - normalised (€) |
|
|
(0.53) |
(0.50) |
(0.65) |
(0.68) |
EPS - FRS 3 (€) |
|
|
(0.52) |
(0.49) |
(0.65) |
(0.68) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
884 |
1,454 |
1,859 |
2,166 |
Intangible Assets |
360 |
760 |
760 |
760 |
||
Tangible Assets |
27 |
27 |
431 |
739 |
||
Other |
497 |
667 |
667 |
667 |
||
Current Assets |
|
|
14,222 |
33,498 |
35,891 |
41,028 |
Stocks |
333 |
1,747 |
1,747 |
1,747 |
||
Debtors |
2,486 |
4,328 |
4,328 |
4,328 |
||
Cash |
11,164 |
27,153 |
29,546 |
34,683 |
||
Other |
239 |
270 |
270 |
270 |
||
Current Liabilities |
|
|
(4,061) |
(6,758) |
(6,756) |
(6,756) |
Creditors |
(4,060) |
(6,756) |
(6,756) |
(6,756) |
||
Short term borrowings |
(1) |
(2) |
0 |
0 |
||
Long Term Liabilities |
|
|
(874) |
(1,059) |
(21,059) |
(46,059) |
Long term borrowings |
(6) |
(5) |
(20,005) |
(45,005) |
||
Other long term liabilities |
(869) |
(1,054) |
(1,054) |
(1,054) |
||
Net Assets |
|
|
10,171 |
27,135 |
9,934 |
(9,621) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(10,665) |
(11,958) |
(18,065) |
(19,451) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(118) |
(411) |
(411) |
(411) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
7,382 |
28,501 |
870 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
(232) |
(143) |
0 |
0 |
||
Net Cash Flow |
(3,633) |
15,989 |
(17,606) |
(19,862) |
||
Opening net debt/(cash) |
|
|
(14,783) |
(11,157) |
(27,146) |
(9,541) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
||
Other |
7 |
(1) |
1 |
0 |
||
Closing net debt/(cash) |
|
|
(11,157) |
(27,146) |
(9,541) |
10,322 |
Source: company reports, Edison Investment Research
|
|
Research: Industrials
In 2020, Stern has taken the opportunity to restructure its balance sheet by impairing tax assets and goodwill, and accelerating its digital strategy. This places the company in a good position to weather the current storm and also to play an active part in European or local consolidation. We expect profitability to increase in the next years driven by the restructured organisation, a focus on margin over volume and an improving market environment. Downturns tend to be opportunities to invest in car dealerships, especially those that are likely to emerge stronger and, despite the remaining low visibility due to COVID-19, we believe that the valuation is undemanding, at 6.5x 2022e P/E.
Get access to the very latest content matched to your personal investment style.