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Research: Healthcare
BerGenBio (BGBIO), a pioneer in AXL biology and the development of AXL inhibitors, has two clinical-stage assets: selective tyrosine kinase inhibitor bemcentinib and functional blocking monoclonal antibody tilvestamab. FDA has granted bemcentinib fast track designation in combination with an anti-PD-L1 agent for the treatment of AXL-positive advanced/metastatic NSCLC patients (without driver mutations) who have progressed following first-line treatment. BGBIO has also presented data from the ongoing BGBC003 Phase II trial (in combination with LDAC) at EHA, which supports the safety and efficacy profile seen to date in elderly relapsed AML patients. Notably durable responses were observed in the relapsed AML setting (ORR of 31%; 5/16) and median overall survival of 13.3 months (data still immature). We value BGBIO at NOK4.72bn or NOK53.8/share.
Written by
BerGenBio |
FDA grants fast track designation |
Pipeline update |
Pharma & biotech |
15 June 2021 |
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BerGenBio is a research client of Edison Investment Research Limited |
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BerGenBio (BGBIO), a pioneer in AXL biology and the development of AXL inhibitors, has two clinical-stage assets: selective tyrosine kinase inhibitor bemcentinib and functional blocking monoclonal antibody tilvestamab. FDA has granted bemcentinib fast track designation in combination with an anti-PD-L1 agent for the treatment of AXL-positive advanced/metastatic NSCLC patients (without driver mutations) who have progressed following first-line treatment. BGBIO has also presented data from the ongoing BGBC003 Phase II trial (in combination with LDAC) at EHA, which supports the safety and efficacy profile seen to date in elderly relapsed AML patients. Notably durable responses were observed in the relapsed AML setting (ORR of 31%; 5/16) and median overall survival of 13.3 months (data still immature). We value BGBIO at NOK4.72bn or NOK53.8/share.
Year end |
Revenue (NOKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
8.9 |
(199.3) |
(3.43) |
0.0 |
N/A |
N/A |
12/20 |
0.6 |
(257.0) |
(3.43) |
0.0 |
N/A |
N/A |
12/21e |
0.0 |
(300.3) |
(3.43) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(317.6) |
(3.62) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Fast track designation for NSCLC combination
Fast track designation highlights the regulator’s recognition of AXL-positive patients as a molecular targetable patient population and provides strong validation of AXL as a negative prognostic marker in NSCLC. It also opens up the possibility for accelerated approval, which could expedite the drug’s route to market. NSCLC represents a significant opportunity and the combination could enable a treatment paradigm shift by addressing PD-L1 resistance. Cohort C from the ongoing Phase II study will be critical to defining bemcentinib’s utility in the second-line in combination with Keytruda (PD-1 inhibitor). First efficacy data are expected in H221. We forecast approval and launch in 2025.
COVID-19 next step under discussion with regulators
BGBIO also recently reported top-line data from two Phase II studies (ACCORD-2 and BGBC020) investigating bemcentinib as an add-on therapy to current standard of care (SOC, remdesivir and dexamethasone) for hospitalised COVID-19 patients. Post hoc analysis showed a trend towards an increased rate of ventilator-free survival with bemcentinib versus SOC (90% vs 72%) in a subgroup of patients who had a higher baseline disease severity and represented more than 50% of evaluable patients. Treatment with bemcentinib also led to numerically fewer deaths and a faster time (observational) to reducing viral load. We expect an additional global Phase III study will be required for approval.
Valuation: NOK4.72bn or NOK53.8 per share
We value BerGenBio at NOK4.72bn or NOK 53.8/share. Our forecasts remain unchanged. The drivers are bemcentinib in second-line NSCLC (peak sales $1.2bn, NOK37.2/share) and AML (peak sales $598m, NOK12.2/share) plus the COVID-19 opportunity (peak sales $300m, NOK5.4/share), offset by payments due to Rigel.
Exhibit 1: Financial summary
Accounts: IFRS, Year end 31 December, NOK:000s |
|
2018 |
2019 |
2020 |
2021e |
2022e |
PROFIT & LOSS |
|
|
|
|
|
|
Operating revenues |
|
2,335 |
8,900 |
601 |
0 |
0 |
Licensing revenues |
|
2,335 |
8,900 |
601 |
0 |
0 |
Other revenues |
|
0 |
0 |
0 |
0 |
0 |
Total operating expenses |
|
(196,874) |
(213,274) |
(261,692) |
(305,499) |
(319,862) |
Other operating expenses (R&D) |
|
(133,699) |
(141,630) |
(163,442) |
(205,937) |
(216,234) |
EBITDA (reported) |
|
(194,335) |
(203,589) |
(260,365) |
(305,120) |
(319,562) |
Depreciation and amortisation |
|
(204) |
(785) |
(726) |
(379) |
(299) |
Reported operating income |
|
(194,539) |
(204,374) |
(261,091) |
(305,499) |
(319,862) |
Operating margin % |
|
N/A |
N/A |
N/A |
N/A |
N/A |
Finance income/(expense) |
|
2,793 |
5,096 |
4,062 |
5,166 |
2,277 |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
Profit before tax (reported) |
|
(191,746) |
(199,278) |
(257,029) |
(300,333) |
(317,585) |
Income tax expense |
|
0 |
0 |
0 |
0 |
0 |
Net income (reported) |
|
(191,746) |
(199,278) |
(257,029) |
(300,333) |
(317,585) |
Basic average number of shares (m) |
|
53.3 |
58.0 |
74.9 |
87.7 |
87.8 |
Year-end number of shares (m) |
|
54.7 |
61.1 |
87.3 |
87.8 |
87.8 |
Basic EPS (NOK) |
|
(3.60) |
(3.43) |
(3.43) |
(3.43) |
(3.62) |
Adjusted EPS (NOK) |
|
(3.60) |
(3.43) |
(3.43) |
(3.43) |
(3.62) |
Dividend per share (NOK) |
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
BALANCE SHEET |
|
|
|
|
|
|
Property, plant and equipment |
|
581 |
974 |
2,332 |
2,020 |
1,787 |
Intangible assets |
|
0 |
0 |
0 |
0 |
0 |
Total non-current assets |
|
581 |
974 |
2,332 |
2,020 |
1,787 |
Cash and equivalents |
|
360,414 |
253,586 |
721,641 |
432,656 |
118,128 |
Other current assets |
|
17,831 |
15,818 |
14,228 |
15,023 |
14,626 |
Total current assets |
|
378,245 |
269,404 |
735,869 |
447,679 |
132,753 |
Total non-current liabilities |
|
0 |
0 |
1,367 |
1,367 |
1,367 |
Trade and other payables |
|
23,939 |
26,746 |
22,550 |
33,841 |
35,668 |
Other current liabilities |
|
12,875 |
21,803 |
38,046 |
38,585 |
39,185 |
Provisions |
|
4,732 |
2,074 |
6,008 |
6,008 |
6,008 |
Total current liabilities |
|
41,546 |
50,623 |
66,604 |
78,434 |
80,861 |
Equity attributable to company |
|
337,280 |
219,754 |
670,229 |
369,896 |
52,311 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
Profit before taxes |
|
(191,746) |
(199,278) |
(257,029) |
(300,333) |
(317,585) |
Depreciation and amortisation |
|
204 |
785 |
726 |
379 |
299 |
Share based payments |
|
1,678 |
3,842 |
7,412 |
0 |
0 |
Other adjustments |
|
1,712 |
(2,990) |
4,644 |
0 |
0 |
Movements in working capital |
|
1,446 |
13,164 |
13,572 |
11,620 |
3,410 |
Interest paid/received |
|
0 |
(2,206) |
(3,614) |
0 |
0 |
Income taxes paid |
|
0 |
0 |
0 |
0 |
0 |
Cash from operations (CFO) |
|
(186,706) |
(186,683) |
(234,290) |
(288,333) |
(313,876) |
Capex |
|
(228) |
0 |
(67) |
(67) |
(67) |
Acquisitions & disposals net |
|
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
0 |
2,206 |
3,614 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
(228) |
2,206 |
3,548 |
(67) |
(67) |
Net proceeds from issue of shares |
|
176,998 |
77,910 |
700,092 |
0 |
0 |
Movements in debt |
|
0 |
0 |
0 |
0 |
0 |
Other financing activities |
|
0 |
(593) |
(585) |
(585) |
(585) |
Cash from financing activities (CFF) |
|
176,998 |
77,317 |
699,507 |
(585) |
(585) |
Cash and equivalents at beginning of period |
|
370,350 |
360,414 |
253,586 |
721,641 |
432,656 |
Increase/(decrease) in cash and equivalents |
|
(9,936) |
(107,160) |
468,765 |
(288,985) |
(314,528) |
Effect of FX on cash and equivalents |
|
0 |
332 |
(710) |
0 |
0 |
Cash and equivalents at end of period |
|
360,414 |
253,586 |
721,641 |
432,656 |
118,128 |
Net (debt)/cash |
|
360,414 |
253,586 |
720,274 |
431,289 |
116,761 |
Source: Company accounts, Edison Investment Research
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Research: Consumer
OPAP is Europe’s only listed gaming operator with 100% pre-paid exclusive retail licences, which provide significant barriers to entry and relatively secure recurring cash flow. Prior to COVID-19, management delivered consistent revenue growth from product enhancements and profit growth was further helped by managing operating costs. The company looks well placed to deliver strong revenue growth as it recovers post COVID-19, and its exposure to faster growing businesses, including online, increases. The new CEO’s strategy, Fast Forward, aims to grow the brands and customer interactions while maintaining OPAP’s leading corporate and social responsibility credentials. We expect OPAP to continue its dividend policy of paying out the bulk of free cash flow and estimate a dividend yield of 5.8% in FY21 and 9.1% in FY22.