SenSen Networks — Eyeing scalable growth through smart cities

SenSen Networks (ASX: SNS)

Last close As at 18/05/2024

AUD0.03

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Research: TMT

SenSen Networks — Eyeing scalable growth through smart cities

SenSen’s Q1 update signals positive momentum following record FY23 results. Q1 saw customer receipts exceed operating costs on a trailing 12-month basis, a key milestone towards its target to reach profitability this year. Encouraging FY24 lead indicators include a recent tender announcement, potentially one of SenSen’s most significant smart cities deals yet, and the settlement of the Angel dispute, which marks SenSen’s gaming exit. Proceeds from Angel’s investment in SenSen and the ongoing rights issue should support the company to more actively pursue the much larger smart cities opportunity, which is now the group’s sole focus.

Max Hayes

Written by

Max Hayes

Associate Analyst

Digital signals flying over highway. Digital transformation. Internet of Things.

TMT

SenSen Networks

Eyeing scalable growth through smart cities

Q124 update

Software and comp services

2 November 2023

Price

A$0.04

Market cap

A$27m

US$0.63/A$

Net debt (A$m) at 30 September 2023

1.9

Shares in issue
(pre upcoming share issues)

681.7m

Free float

67%

Code

SNS

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(14.5)

(38.2)

(41.7)

Rel (local)

(11.9)

(32.5)

(40.5)

52-week high/low

A$0.07

A$0.04

Business description

SenSen Networks, an Australia-based technology company, operates in the field of sensory artificial intelligence and provides ‘live awareness’. By applying its SenDISA AI platform to physical space monitoring, it extracts real-time insights that can be used in smart cities.

Next events

Q224 update

January 2024

Analysts

Max Hayes

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5700

SenSen Networks is a research client of Edison Investment Research Limited

SenSen’s Q1 update signals positive momentum following record FY23 results. Q1 saw customer receipts exceed operating costs on a trailing 12-month basis, a key milestone towards its target to reach profitability this year. Encouraging FY24 lead indicators include a recent tender announcement, potentially one of SenSen’s most significant smart cities deals yet, and the settlement of the Angel dispute, which marks SenSen’s gaming exit. Proceeds from Angel’s investment in SenSen and the ongoing rights issue should support the company to more actively pursue the much larger smart cities opportunity, which is now the group’s sole focus.

Year end

Revenue (A$m)

Adj EBITDA*
(A$m)

PBT**
(A$m)

EPS**
(c)

P/sales
(x)

Net debt/
(cash)*** (A$m)

06/21

5.5

(2.2)

(2.9)

(0.59)

4.9

(3.9)

06/22

9.1

(7.6)

(8.4)

(1.40)

3.0

(3.9)

06/23

10.8

(5.1)

(6.1)

(0.91)

2.5

2.6

06/24e

13.4

2.6

1.9

0.21

2.0

(2.5)

Note: *Adjusted EBITDA excludes non-cash share-based payments. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, other income and exceptional items. ***Net debt includes leases.

Forecasting a tipping point in scalability, profitability

SenSen’s revenue grew 18% y-o-y to A$10.8m in FY23 and we forecast growth accelerating to 25% in FY24. FY24 lead indicators are strong following 18% y-o-y growth in Q1 customer receipts to A$3.1m and a potentially transformational multi-year deal with an Australian government customer, delivery of which is supported by a fully underwritten rights issue of A$2.09m. Management sees North America as a pivotal market, where momentum was strong at end-FY23. In Q1, progress was also made in Canada, where SenSen added its 11th Canadian smart city customer. Supported by cost efficiencies generated from its smart cities focus, we forecast a swing into profitability and positive cash generation in FY24.

Pureplay smart cities operator

In FY23, SenSen began shifting from a multi-vertical focus to a streamlined, single platform strategy centred around smart cities. On 27 October, SenSen exited the gaming market by settling its patent dispute with Angel Group and is now solely focused on smart cities. The case had minimal financial impact, with litigation costs insured and settled without admission. SenSen will transfer its gaming contracts and IP to Angel while raising A$1.8m from Angel’s 45m share subscription, enabling investment in its larger and faster growing smart cities operations.

Valuation: Delivering on a pureplay strategy now key

If SenSen can execute on its focused smart cities strategy and deliver scalable growth in line with our forecasts, a substantial re-rating upwards would be justified in our view. Given our basket of peers is forecast to be loss-making, we value SenSen on EV/sales, where it trades at a 41% discount across FY1e and FY2e, despite expected profitability and higher growth.

Q124 results confirm smart cities focus

FY23 was a pivotal year for SenSen, marked by its move from a multi-sector focus to a refined single platform strategy focused on smart cities.

Smart cities has been the main contributor to performance, making up 66% of FY23 revenue and growing 21% y-o-y. Group revenue increased 18% y-o-y in FY23 to A$10.8m and Q1 customer receipts grew 18% y-o-y to A$3.1m. In FY23, growth was particularly strong in Asia, exceeding 100% y-o-y. SenSen now has contracts within many key government bodies in Singapore following its Sea Ports AI trial.

Despite a minor decline in North America in FY23, momentum has been strong in FY24. SenSen renewed and expanded two Las Vegas contracts and won multiple new surveillance deals. Its ‘cluster effect’ strategy in Canada is seeing similar success to when it was implemented in Southeast Queensland, rapidly increasing Canadian customers from two to nine in FY23, followed by a further two in Q1.

At the start of Q2, management announced a fully underwritten A$2.09m entitlement offer (52.5m shares at A$0.04 per share), where A$900k will be deployed to support the delivery of a significant, multi-year contract with an Australian government customer. We expect details of the deal to be announced soon, but management has stated that this could be one of SenSen’s most significant deals to date and will have multiple upsell opportunities, further validating its strengthening smart cities market positioning.

Unified strategy to drive profitability and cash flow

In FY23, SenSen announced that it was consolidating its Scancam (Retail) operations under a single platform strategy to remove internal silos and align the group under a more unified, efficient strategy. Management is expecting this move to generate annualised savings of more than A$0.8m in FY24, adding to the A$500k achieved in Q323.

On 27 October, the group announced that it had settled its patent infringement legal proceedings with Angel on a no admissions basis, avoiding further litigation costs, which have so far been covered under insurance. Under the terms, SenSen will transfer its minor gaming customer contracts, IP and table monitoring business to Angel, exiting the gaming sector and allowing the company to solely focus on scaling its core smart cities operations. SenSen will continue providing parking and smart surveillance solutions (not gaming table monitoring) to casino properties and SenSen and Angel will release each other in relation to claims and possible claims.

In addition, the company raised A$1.8m through Angel’s subscription for 45m shares at A$0.04 each, providing additional growth capital to invest in the global smart cities opportunity, alongside the A$2.09m entitlement offer. We believe the combined equity raisings will also enable the company to pay down some of its drawn debt, which we reflect in our FY24 forecasts.

Updated forecasts show no profit impact from gaming exit

SenSen has made a strong start to FY24, and we believe the group’s Australian government contract could be a main driver for the year. We expect its exit from gaming will have a small impact on FY24 revenue given the segment’s relative size (8% of FY23 revenue), leading to a marginal reduction in our forecasts.

In Q1, SenSen delivered on a key milestone with customer cash receipts exceeding operating costs on a 12-month rolling basis, see Exhibit 1. This key inflection point shows early signs of success of its refined strategy, where management expects the benefits of the Scancam integration to accelerate in the coming months. We reflect this in our raised EBITDA and margin forecasts, which also include cost reductions from its gaming exit.

As indicated by Exhibit 1, SenSen’s customer receipts will also have to cover COGs to reach break-even and move closer to our forecasts. The group’s shift to selling higher-margin software-only contracts could continue improving the revenue mix and support its trajectory, as seen in the 7.7pp gross margin uplift in FY23.

Exhibit 1: Quarterly collections versus operating costs on a 12-month rolling average

Source: SenSen Networks

Additionally, as part of the cost-saving measures, the company also moved offices in Melbourne and Hyderabad to less costly premises where it took out new leases and closed its Perth office, with the objective of reducing ongoing lease payments.

Exhibit 2: Summary of results and changes to forecasts

FY23

FY24e

A$m

Forecast

Actual

difference

y-o-y

old

new

change

y-o-y

Revenue

10.8

10.8

(0.0)%

18.1%

14.3

13.4

(6.2)%

24.5%

Gross profit

7.5

7.5

(0.2)%

32.8%

11.1

10.4

(6.2)%

39.3%

Gross margin

69.4%

69.3%

(0.1)%

7.7%

73.2%

77.5%

4.3%

8.2%

Adjusted EBITDA

(5.0)

(5.1)

(2.0)%

34.3%

2.5

2.6

3.2%

N/A

Adjusted EBITDA margin

-46%

-47%

(0.9)%

37.6%

17%

19%

1.7%

(18.4)%

EBIT, normalised

(5.5)

(5.6)

(2.1)%

53.4%

2.0

2.0

1.8%

N/A

PBT, normalised

(6.0)

(6.1)

(1.9)%

50.6%

1.9

1.9

(1.4)%

N/A

EPS - normalised, diluted (c)

(0.90)

(0.91)

(1.9)%

54.7%

0.21

0.21

(1.2)%

N/A

Cash flow from operations

(4.8)

(4.8)

-

37.3%

1.9

1.8

(6.1)%

N/A

Net debt/(cash) including leases

2.6

2.6

-

N/A

1.3

(2.5)

N/A

N/A

Source: SenSen Networks, Edison Investment Research

As shown above, our forecasts factor in a move to positive cash flow in FY24 and a net cash position of A$2.5m by year-end. The combined total of c A$3.9m from the entitlement offer and issue to Angel is the primary driver of the change in our end-FY24 net cash forecast.

Exhibit 3: Financial summary

A$’000s

2021

2022

2023

2024e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

5,533

9,145

10,797

13,447

Cost of Sales

(2,030)

(3,513)

(3,314)

(3,026)

Gross Profit

3,503

5,633

7,483

10,421

Other income

2,807

2,978

2,529

2,529

Oper. expense (not incl. share-based payments)

(8,524)

(8,524)

(16,217)

(15,102)

Adjusted EBITDA

 

 

(2,214)

(7,606)

(5,090)

2,579

Normalised operating profit

 

 

(2,685)

(8,183)

(5,605)

2,037

Amortisation of acquired intangibles

(83)

(536)

(960)

(960)

Exceptionals

0

0

0

0

Share-based payments

(72)

(3,173)

(208)

(1,000)

Reported operating profit

(2,840)

(11,893)

(6,773)

77

Net Interest

(176)

(254)

(463)

(163)

Joint ventures & associates (post tax)

0

0

0

0

Exceptionals

0

(154)

(148)

0

Profit Before Tax (norm)

 

 

(2,861)

(8,437)

(6,068)

1,874

Profit Before Tax (reported)

 

 

(3,016)

(12,300)

(7,384)

(86)

Reported tax

(6)

225

(26)

(1)

Profit After Tax (norm)

(2,878)

(8,488)

(6,105)

1,499

Profit After Tax (reported)

(3,022)

(12,075)

(7,409)

(86)

Minority interests

0

0

0

0

Discontinued operations

0

0

0

0

Net income (normalised)

(2,878)

(8,488)

(6,105)

1,499

Net income (reported)

(3,022)

(12,075)

(7,409)

(86)

Basic average number of shares outstanding (m)

484

484

608

667

EPS - basic normalised (c)

 

 

(0.59)

(1.40)

(0.91)

0.21

EPS - diluted normalised (c)

 

 

(0.59)

(1.40)

(0.91)

0.21

EPS - basic reported (c)

 

 

(0.62)

(1.99)

(1.11)

(0.01)

Dividend (c)

0.00

0.00

0.00

0.00

Revenue growth (%)

47.0

65.3

18.1

24.5

Gross Margin (%)

63.3

61.6

69.3

77.5

EBITDA Margin (%)

-40.0

-83.2

-47.1

19.2

Normalised Operating Margin

-48.5

-89.5

-51.9

15.1

BALANCE SHEET

Fixed Assets

 

 

2,168

9,127

9,052

8,054

Intangible Assets

1,300

8,281

7,322

6,362

Tangible Assets

800

770

1,692

1,653

Investments & other

68

75

39

39

Current Assets

 

 

8,022

11,391

7,286

9,366

Stocks

241

232

486

315

Debtors

979

1,943

1,467

1,253

Cash & cash equivalents

5,176

6,214

1,898

4,363

Other

1,625

3,002

3,435

3,435

Current Liabilities

 

 

3,946

8,185

9,549

6,899

Creditors

750

1,239

1,714

1,714

Tax and social security

0

0

0

0

Short term borrowings

861

1,954

3,101

451

Lease liabilities

306

185

287

287

Other

2,028

4,806

4,447

4,447

Long Term Liabilities

 

 

244

201

1,198

1,198

Long term borrowings

0

0

0

0

Lease liabilities

138

183

1,091

1,091

Other long term liabilities

106

19

107

107

Net Assets

 

 

6,000

12,132

5,591

9,322

Minority interests

0

0

0

0

Shareholders’ equity

 

 

6,000

12,132

5,591

9,322

CASH FLOW

Op Cash Flow before interest and tax

(3,250)

(7,770)

(4,449)

1,963

Net interest

(127)

(117)

(335)

(163)

Tax

(31)

0

0

(1)

Net operating cash flow

 

 

(3,409)

(7,887)

(4,784)

1,799

Capex

(253)

(254)

(151)

(151)

Acquisitions/disposals

0

(1,080)

0

0

Equity financing

7,043

9,644

0

3,754

Borrowings

(414)

1,120

909

(2,650)

Dividends

0

0

0

0

Other

(253)

(506)

(290)

(287)

Net Cash Flow

2,714

1,037

(4,316)

2,465

Opening net debt/(cash)

 

 

(1,150)

(4,315)

(4,259)

1,204

FX

0

0

0

0

Movement in borrowings

451

(1,093)

(1,147)

2,650

Closing net debt/(cash)

 

 

(4,315)

(4,259)

1,204

(3,911)

Closing net debt/(cash) w/ leases

 

 

(3,871)

(3,891)

2,581

(2,534)

Source: Edison Investment Research, company accounts

General disclaimer and copyright

This report has been commissioned by SenSen Networks and prepared and issued by Edison, in consideration of a fee payable by SenSen Networks. 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by SenSen Networks and prepared and issued by Edison, in consideration of a fee payable by SenSen Networks. 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Research: Healthcare

Ultimovacs — Line of sight on INITIUM top-line readout

Ultimovacs has announced an amendment to the Phase II INITIUM trial, assessing lead cancer vaccine UV1 in combination with PD-1 checkpoint inhibitor nivolumab and CTLA-4 checkpoint inhibitor ipilimumab for the first-line treatment of malignant melanoma. The amendment allows the company to commence data analysis from mid-January 2024 and share top-line results in March or April 2024. This practical and proactive approach assists in unlocking the value of the programme (out-licensing) or progressing to pivotal studies if the data are positive. Top-line results were initially expected in H123, but the timeline was pushed back twice to H223 and H124 as patients were taking longer than expected to experience disease progression. We view this as a possible positive indicator for trial success (although not definitive as it is possible that the control arm may be experiencing slower than expected progression).

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