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Research: Healthcare
The US FDA has approved Acacia Pharma’s lead asset, BARHEMSYS (reformulated amisulpride), for the management of post-operative nausea and vomiting (PONV). Rescue treatment for PONV is an unmet need. Acacia plans to launch BARHEMSYS in H220 and management has been slowly building up its US commercial operations. It now has 30 personnel in the US spanning six regional teams. With short-term funding secured through the ByFavo in-licence deal with Cosmo Pharmaceuticals, Acacia plans to recruit further key personnel required to support the product’s launch in H220. Importantly, the FDA has granted BARHEMSYS a broad label in PONV. Combined with economic saving data, this should support broad hospital formulary access. Our increased valuation is €15.2/share.
Written by
Acacia Pharma |
FDA approves BARHEMSYS for PONV |
Corporate update |
Pharma & biotech |
27 February 2020 |
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Acacia Pharma is a research client of Edison Investment Research Limited |
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The US FDA has approved Acacia Pharma’s lead asset, BARHEMSYS (reformulated amisulpride), for the management of post-operative nausea and vomiting (PONV). Rescue treatment for PONV is an unmet need. Acacia plans to launch BARHEMSYS in H220 and management has been slowly building up its US commercial operations. It now has 30 personnel in the US spanning six regional teams. With short-term funding secured through the ByFavo in-licence deal with Cosmo Pharmaceuticals, Acacia plans to recruit further key personnel required to support the product’s launch in H220. Importantly, the FDA has granted BARHEMSYS a broad label in PONV. Combined with economic saving data, this should support broad hospital formulary access. Our increased valuation is €15.2/share.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.0 |
(6.5) |
(2.32) |
0.00 |
N/A |
N/A |
12/18 |
0.0 |
(16.2) |
(0.35) |
0.00 |
N/A |
N/A |
12/19e |
0.0 |
(23.1) |
(0.44) |
0.00 |
N/A |
N/A |
12/20e |
1.8 |
(27.3) |
(0.40) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
BARHEMSYS US launch expected in H220
The FDA has granted a broad label for BARHEMSYS (intravenous amisulpride). It is indicated for ‘rescue treatment’ (patients who are uncontrolled following prophylactic treatment with standard-of care-antiemetics) and prophylaxis of PONV as monotherapy and in combination with standard-of-care antiemetics including a 5-HT3 antagonist. Initial detailing will focus on rescue treatment and we note the total addressable US patient population is c 30 million patients, a sizable opportunity. We forecast $386.7m peak sales for BARHEMSYS in PONV.
ByFavo up next; PDUFA date 5 April
In January, Acacia in-licensed ByFavo (remimazolam), an ultra-short-acting and reversible intravenous benzodiazepine sedative/anaesthetic for use during procedural sedation (PS). ByFavo broadens Acacia’s US commercial pipeline and will enable significant leverage of its US commercial infrastructure on launch.
Near-term funding secured
Acacia now has the funding in place, through the Cosmo Pharma deal, to expand its commercial team by ~30 new hires, in addition to the 30 personnel currently focusing on six regions (medical science liaisons, national account directors and regional business directors) and the back office support staff in the US. Further expansion will depend on the sales opportunity and funding requirements.
Valuation: €970.5m or €15.2/share
We increase our valuation to €970.5m or €15.2/share vs (vs €881.6m or €13.8/share previously). We remove risk adjustment for BARHEMSYS but maintain our peak sales forecast. Acacia has changed its reporting currency from GBP to US$. We retain our sterling-denominated forecasts for now, but will change to US dollars in the near future.
Exhibit 1: Financial summary
Accounts: IFRS; year-end 31 December (£m) |
|
|
2015 |
2016 |
2017 |
2018 |
2019e |
2020e |
PROFIT & LOSS |
||||||||
Revenue |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
1.8 |
Operating revenues |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
1.8 |
Cost of sales |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(0.2) |
Gross profit |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
1.5 |
Gross margin % |
|
|
N/A |
N/A |
N/A |
N/A |
n/a |
0.9 |
SG&A (expenses) |
|
|
(2.4) |
(0.8) |
(1.5) |
(11.3) |
(18.5) |
(24.3) |
R&D costs |
|
|
(10.1) |
(13.6) |
(1.5) |
(3.8) |
(4.7) |
(2.2) |
Other income/(expense) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
EBITDA (reported) |
|
|
(12.5) |
(14.4) |
(3.0) |
(15.0) |
(23.2) |
(24.9) |
Depreciation and amortisation |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Reported Operating Income |
|
|
(12.5) |
(14.4) |
(3.0) |
(15.0) |
(23.2) |
(24.9) |
Operating Margin % |
|
|
N/A |
N/A |
N/A |
N/A |
n/a |
n/a |
Finance income/(expense) |
|
|
(2.6) |
(1.8) |
(3.5) |
(1.1) |
0.1 |
(2.4) |
Exceptionals and adjustments |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Reported PBT |
|
|
(15.1) |
(16.3) |
(6.5) |
(16.2) |
(23.1) |
(27.3) |
Income tax expense (includes exceptionals) |
|
|
2.2 |
2.8 |
0.3 |
0.7 |
(0.5) |
(0.7) |
Reported net income |
|
|
(12.9) |
(13.5) |
(6.2) |
(15.5) |
(23.6) |
(28.0) |
Basic average number of shares, m |
|
|
2.7 |
2.7 |
2.7 |
44.1 |
53.3 |
69.7 |
Year-end number of shares, m |
|
|
2.7 |
2.7 |
2.7 |
53.3 |
53.3 |
69.7 |
Basic EPS (p) |
|
|
(4.83) |
(5.06) |
(2.32) |
(0.35) |
(0.44) |
(0.40) |
Adjusted EPS (p) |
|
|
(4.83) |
(5.06) |
(2.32) |
(0.35) |
(0.44) |
(0.40) |
Dividend per share (p) |
|
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
BALANCE SHEET |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
1.8 |
Goodwill |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Intangible assets |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other non-current assets |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
38.5 |
Total non-current assets |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
40.3 |
Cash and equivalents |
|
|
5.5 |
6.9 |
3.1 |
29.4 |
12.2 |
23.8 |
Inventories |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Trade and other receivables |
|
|
0.3 |
0.5 |
0.2 |
0.3 |
0.0 |
0.3 |
Other current assets |
|
|
2.1 |
2.8 |
0.3 |
0.7 |
0.7 |
0.7 |
Total current assets |
|
|
7.9 |
10.2 |
3.6 |
30.4 |
12.8 |
24.8 |
Non-current loans and borrowings |
|
|
0.0 |
5.0 |
0.0 |
7.0 |
7.0 |
59.8 |
Other non-current liabilities |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Total non-current liabilities |
|
|
0.0 |
5.0 |
0.0 |
7.0 |
7.0 |
59.8 |
Trade and other payables |
|
|
2.9 |
5.1 |
1.0 |
3.7 |
10.1 |
3.3 |
Current loans and borrowings |
|
|
0.0 |
2.7 |
5.2 |
0.3 |
0.0 |
0.0 |
Other current liabilities |
|
|
7.8 |
9.1 |
15.2 |
0.0 |
0.0 |
0.0 |
Total current liabilities |
|
|
10.8 |
17.0 |
21.4 |
4.1 |
10.1 |
3.3 |
Equity attributable to company |
|
|
(2.8) |
(11.7) |
(17.8) |
19.3 |
(4.3) |
2.0 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
Operating Profit |
|
|
(15.1) |
(16.3) |
(6.5) |
(16.2) |
(23.1) |
(27.3) |
Depreciation and amortisation |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Share based payments |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other adjustments |
|
|
2.7 |
1.9 |
3.7 |
1.6 |
(0.1) |
2.4 |
Movements in working capital |
|
|
1.6 |
2.0 |
(3.8) |
2.6 |
6.7 |
(7.1) |
Interest paid/received |
|
|
0.0 |
0.0 |
0.0 |
0.2 |
0.1 |
(2.4) |
Income taxes paid |
|
|
1.1 |
2.2 |
2.8 |
0.3 |
(0.5) |
(0.7) |
Cash from operations (CFO) |
|
|
(9.7) |
(10.2) |
(3.7) |
(11.6) |
(18.7) |
(35.3) |
Capex |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(1.8) |
Acquisitions & disposals net |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other investing activities |
|
|
0.0 |
0.0 |
0.0 |
0.2 |
1.8 |
0.2 |
Cash used in investing activities (CFIA) |
|
|
0.0 |
0.0 |
0.0 |
0.2 |
1.8 |
(14.4) |
Net proceeds from issue of shares |
|
|
12.5 |
4.5 |
3.4 |
34.2 |
0.0 |
8.5 |
Movements in debt |
|
|
0.0 |
7.1 |
(3.4) |
1.5 |
(0.3) |
52.8 |
Other financing activities |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Cash from financing activities (CFF) |
|
|
12.5 |
11.7 |
0.0 |
35.7 |
(0.3) |
61.4 |
Cash and equivalents at beginning of period |
|
|
2.6 |
5.5 |
6.9 |
3.1 |
29.4 |
12.2 |
Increase/(decrease) in cash and equivalents |
|
|
2.8 |
1.4 |
(3.8) |
26.3 |
(17.2) |
11.6 |
Cash and equivalents at end of period |
|
|
5.5 |
6.9 |
3.1 |
29.4 |
12.2 |
23.8 |
Net (debt)/cash |
|
|
5.5 |
(0.8) |
(2.1) |
22.1 |
5.2 |
(36.0) |
Source: Acacia Pharma, Edison Investment Research
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Research: Industrials
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