Oasmia Pharmaceutical — Focused on pillars of growth

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Research: Healthcare

Oasmia Pharmaceutical — Focused on pillars of growth

Oasmia Pharmaceutical has made steady progress in its ongoing transition into an R&D-driven, speciality pharma company with commercially available assets. The in-licensing of Cantrixil from Kazia Therapeutics in March is the first of its ‘string of pearls’ strategy to bolster the pipeline. Oasmia now has three oncology assets under its belt. Partner Elevar Therapeutics now expects to initiate the additional trials required by the FDA to enable the NDA submission for Apealea (Cremophor-free paclitaxel) in ovarian cancer in 2022 (we forecast US launch in 2025). Over the next 12 months, we expect divestment of the animal health business, further in-licensing deals and optimisation of its platform technologies, which represent value drivers beyond Apealea. Our revised valuation is SEK2.89bn or SEK6.45/share.

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Written by

Healthcare

Oasmia Pharmaceutical

Focused on pillars of growth

Outlook for 2021/22

Pharma & biotech

7 October 2021

Price

SEK2.22

Market cap

SEK995m

$0.12/SEK

Net cash (SEKm) at 30 June 2021 (including short-term investments)

176.3

Shares in issue

448.4m

Free float

75%

Code

OASM

Primary exchange

Stockholm

Secondary exchange

Frankfurt

Share price performance

%

1m

3m

12m

Abs

(22.2)

(24.9)

(51.9)

Rel (local)

(14.6)

(23.1)

(61.4)

52-week high/low

SEK4.90

SEK2.16

Business description

Oasmia Pharmaceutical is a Swedish speciality pharma company focusing on its proprietary XR-17 technology platform to develop novel formulations of well-established cytostatic oncology treatments for human and animal health. Key assets include Apealea (partnered with Elevar), docetaxel micellar and Cantrixil.

Next events

Potential divestment of animal health business

Late 2021/ early 2022

Oncology in-licensing/M&A deals

2021/22

Start of Apealea US studies (PK and Phase III in ovarian cancer)

2022

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Dr John Priestner

+44 (0)20 3077 5700

Oasmia Pharmaceutical is a research client of Edison Investment Research Limited

Oasmia Pharmaceutical has made steady progress in its ongoing transition into an R&D-driven, speciality pharma company with commercially available assets. The in-licensing of Cantrixil from Kazia Therapeutics in March is the first of its ‘string of pearls’ strategy to bolster the pipeline. Oasmia now has three oncology assets under its belt. Partner Elevar Therapeutics now expects to initiate the additional trials required by the FDA to enable the NDA submission for Apealea (Cremophor-free paclitaxel) in ovarian cancer in 2022 (we forecast US launch in 2025). Over the next 12 months, we expect divestment of the animal health business, further in-licensing deals and optimisation of its platform technologies, which represent value drivers beyond Apealea. Our revised valuation is SEK2.89bn or SEK6.45/share.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

04/19

2.0

(168.5)

(0.7)

0.00

N/A

N/A

04/20

201.8

(43.4)

0.0

0.00

N/A

N/A

12/21e**

15.5

(166.1)

(0.3)

0.00

N/A

N/A

12/22e**

46.8

(139.1)

(0.3)

0.00

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **New reporting period from 1 January 2021.

Focus on expanding the oncology portfolio

Lead asset Apealea, approved in Europe for ovarian cancer in 2018, has now been fully out-licensed, with US-based Elevar responsible for its global development and commercialisation. The main strategic focus for Oasmia is threefold; the development of its early to mid-stage clinical stage assets Cantrixil and docetaxel micellar, expansion of the oncology pipeline by in-licensing deals and leveraging the proprietary XR-17 solubility-enhancing platform technology internally and externally. Oasmia plans to initiate a Phase IIa trial evaluating in-licensed asset Cantrixil in ovarian cancer in 2022. Furthermore, the Phase Ib docetaxel micellar trial in prostate cancer has initiated in partnership with Swiss Group for Clinical Cancer Research (SAKK).

Financials: Optimising the cost base

Oasmia has significantly optimised its cost base such that the monthly cash burn run rate is now SEK12m. However, as the business progresses and in-licensing opportunities are identified, we would expect costs, particularly R&D, to increase to support pipeline development. Divestiture of the animal health business could free up significant funds for reinvestment. Apealea US sales and royalty contributions are key to reaching maiden profitability, which we forecast for FY25. This is predicated on timely completion of the required additional Phase III US trial.

Valuation: SEK2.89bn or SEK6.45/share

Our updated valuation is SEK2.89bn or SEK6.45/share versus SEK2.84bn or SEK6.34/share previously. Our valuation includes net cash of SEK176.3m plus rNPVs for Apealea (ovarian cancer), Cantrixil (ovarian cancer), docetaxel micellar (prostate cancer) and an indicative value for the animal health business. We do not include the XR-17 platform or other cancer indications in our valuation.

Investment summary

Company description: En route to sustainable profitability

Oasmia Pharmaceutical’s R&D innovation capabilities are centred on its XR-17 and XR-19 technology platform, which enables nano-sized particle formulations of active pharmaceutical ingredients (APIs) to be water soluble. Management has outlined the four pillars of its growth strategy for investors to focus on and benchmark the company’s progress into Oasmia 2.0 against, as it focuses on building a sustainable oncology business. Key to this is expansion of the pipeline through in-licensing, leveraging its promising technology platform capabilities (internal development and out-licensing) and successful development of its trio of oncology assets (Apealea, Cantrixil and docetaxel micellar). Oasmia is thus at a major inflection point as it transforms towards its vision of becoming a profitable company, which we forecast from FY25 onwards, contingent on achieving milestone payments from Elevar.

Valuation: SEK2.89bn or SEK6.45/share

Assigning a fundamental valuation to Oasmia requires consideration of the inherent value of its technology platform, potential clinical pipeline candidates and future partnership deals. However, our valuation of SEK2.89bn or SEK6.45/share including net cash (plus short-term investments) of SEK176.3m (at 30 June 2021) is exclusively based on a risk-adjusted model of the future royalties and milestones we expect from the Elevar deal for Apealea in ovarian cancer only (SEK1.53bn), Cantrixil in ovarian cancer (SEK320.9m) and docetaxel micellar in prostate cancer (SEK377.5m), plus an indicative value of the animal health business (SEK488.2m), which is in late clinical stage and which we expect to be divested. We have not ascribed value at this point to the technology platform and unconfirmed candidates at early stages of preclinical development. Consequently, we see upside potential as the pipeline progresses with potential out-licensing deals, and as Apealea moves into additional indications.

Sensitivities: Lower development risk, higher execution risk

Oasmia is subject to various sensitivities common to speciality pharmaceutical companies, including commercialisation (pricing, reimbursement, uptake and competition) and financing risks. The key sensitivities for Oasmia relate to successful commercialisation of Apealea by partner Elevar (Apealea represents 53% of our valuation) plus crystallising value from its earlier-stage pipeline. Oasmia is a turnaround story, thus successful execution and delivery of strategic objectives by the new management is key. Our forecast profitability is dependent on royalties on sales and, more importantly, milestone revenues from existing partners. Delay or failure to receive future milestones would compromise our premise that profitability is achievable in FY25.

Financials: Lower cost base reinforces cash runway

In H121, reported net sales were SEK4.6m versus SEK201.2m in H120 as the prior period benefited from the upfront payment of SEK201.0m ($20m) from Elevar. The operating loss for the period was SEK97.0m versus an operating profit of SEK50.3m in H120. Net cash at 30 June 2021 was SEK176.3m ($20.6m). We forecast total revenues of SEK15.5m in FY21 and SEK46.8m in FY22. With the tightening of the cost base post restructuring, we expect that Oasmia can reach break-even in FY25. We forecast an operating loss of SEK158.5m in FY21 and SEK129.4m FY22. Oasmia has guided to a cash burn of SEK12m per month, which implies a cash runway through to FY22.

Oncology portfolio expanded to three assets

During 2021 Oasmia successfully expanded its R&D oncology pipeline to three clinical-stage assets with the in-licensing of Cantrixil (all indications) from Kazia Therapeutics. Lead asset Apealea is approved in Europe, with its European launch in the hands of partner Inceptua, while its US development is being progressed by global partner Elevar Therapeutics. This means Oasmia can focus on building critical mass in oncology and, as such, it is seeking further in-licensing opportunities. Management is currently evaluating products in development for resistant cancer types and is not limiting its search to any specific modality. Importantly, Oasmia is focusing on the clinical development of Cantrixil and docetaxel micellar, leveraging its proprietary XR-17 platform technology as it continues to look to add to its ‘string of pearls’ strategy. Management expects royalties on sales of Apealea will contribute to funding the development of the R&D pipeline and proprietary platform.

Cantrixil targets resistant ovarian cancer

In March 2021, Oasmia acquired global development rights for Cantrixil (in all indications) from Kazia Therapeutics for $4m upfront, with $42m worth of development milestones and double-digit royalties on sales. Cantrixil consists of the pharmaceutically active ingredient TRXE-002-01, a third-generation benzopyran SMETI inhibitor, encapsulated in a cyclodextrin excipient to improve its solubility. Cantrixil is a potential first-in-class antineoplastic agent (inhibits the development of tumours) and, while its novel mechanism is still poorly defined, it is believed to target an array of cancer cells, including tumour-initiating cells (cancer stem cells) that are thought to play a key role in metastasis and disease relapse.

Cantrixil’s proof-of-concept was successfully established in 16 relapsed and refractory ovarian cancer patients in an open-label Phase I study in the US and Australia (19% ORR, Exhibit 4). Notably, one patient treated with a combination of Cantrixil and paclitaxel achieved a complete response and remained in remission three years after the final dose. Complete data from the Phase I study were published in a scientific journal earlier this year. Cantrixil was granted orphan drug designation for ovarian cancer by the US FDA in 2015.

Exhibit 4: Patient response in Cantrixil Phase I study

Oasmia expects to initiate a Phase II study in relapsed and refractory ovarian cancer in H222 with Cantrixil in its original formulation and has begun regulatory interactions with the EMA and FDA. While initial development will focus on ovarian cancer, Cantrixil also has the potential to find utility in other cancers that have spread to the abdominal cavity (bladder and colorectal cancer), as well as potential use as a first-line treatment (it may complement the use of standard-of-care, platinum-based chemotherapy). Oasmia will also investigate potential synergies with lead asset Apealea and its XR-17 technology platform, which could enable different methods of administration (currently administered via intraperitoneal injection), such as an intravenous formulation (subject to feasibility studies).

Peak sales potential of more than $300m

For Cantrixil, we assume a 40% blended royalty rate on sales to capture both sales milestones and royalties from a potential partnership deal for valuation purposes and include a 10% pay away to Kazia Therapeutics for royalties on sales. We have assigned a preliminarily priced to the product of $4,000 per cycle in the US and $2,000 per cycle in the EU and assume eight cycles per treatment. We note this pricing could be conservative if the asset can demonstrate a significant improvement in patient outcomes. We will revisit our initial assumptions as clinical trial data evolve. With a Phase II study in relapsed and refractory ovarian cancer expected to initiate in 2022, we forecast potential approval and launch in 2027, with peak sales of $302m in 2032 (our assumptions include both intraperitoneal and iv administration). Our US analysts have used different assumptions for Kazia Therapeutics. We do not value Cantrixil in any additional indications that have not yet been announced, in earlier lines of treatment or in combination with Apealea. All of these possibilities represent upside to our valuation and we will revisit our assumptions as Cantrixil progresses through clinical development.

Ovarian cancer

The American Cancer Society estimates that 21,410 new cases of ovarian cancer will be diagnosed in 2021 and c 13,770 women will die from the disease. In key European markets, c 33,400 women were diagnosed in 2020 (source: Globocan). Ovarian cancer is characterised by minimal, non-specific or no symptoms at all, therefore most cases are diagnosed in an advanced stage. Prognosis in ovarian cancer is closely related to the stage at diagnosis, thus survival rates for these patients remain poor (OS across all stages is 46%).

Treatment involves aggressive debulking surgery followed by chemotherapy and novel targeted therapies. Surgery is considered curative for a small percentage of patients (certain histology-type tumours in stage I), so most patients receive some form of chemotherapy after the surgery (neoadjuvant chemotherapy is also used). The standard-of-care, first-line chemotherapy for epithelial ovarian cancer is a combination of paclitaxel and carboplatin.

Despite optimal surgery and appropriate first-line chemotherapy, 70–80% of patients will relapse, with around 25% of patients relapsing within six months of completing primary chemotherapy and 60% relapsing after six months, therefore a maintenance therapy is considered following standard-of-care, platinum-based chemotherapy. Exhibit 5 outlines the current 2020 National Comprehensive Cancer Network (NCCN) guidelines for the treatment of ovarian cancer in the US.

Exhibit 5: NCCN guidelines for the treatment of ovarian cancer

Source: Oasmia Pharmaceutical corporate presentation

Docetaxel micellar

Docetaxel micellar is a nanoparticulate formulation (using Oasmia’s XR-17 platform technology) of docetaxel, the pharmaceutically active ingredient of Sanofi’s Taxotere, one of the most commercially successful and widely used chemotherapies (it generated global sales in excess of €2.2bn in 2009, before the expiration of the patent in 2010). In June 2020, Oasmia signed a partnership agreement with the SAKK to conduct the first clinical trial of docetaxel micellar in patients with advanced prostate cancer in Switzerland. SAKK will be responsible for management of the Phase Ib trial (n=18), while Oasmia will supply docetaxel micellar and fund the costs of the trial, which are not deemed material. The first patient was dosed in June and top-line results, expected within the next 12–18 months, will determine the future development path. The dossier prepared from the Phase Ib Switzerland trial will be US compatible, allowing Oasmia to launch into a global Phase II study if the results are positive.

Prostate cancer is a growing opportunity

Prostate cancer is the second most common cancer and Globocan estimates that more than 1.4 million new patients were diagnosed with the disease in 2020. This is expected to increase to more than 2.2 million by 2040 with an ageing population and improving screening capabilities. Prostate cancer is a slow growing disease with a five-year survival rate of more than 97%. Treatment options are determined by the stage of disease and patients with localised tumours and early-stage disease are placed under active surveillance. While these patients do not receive any treatment for their existing tumours, they undergo regular testing (prostate-specific antigen blood tests, biopsy, imaging and examinations) to monitor disease progression. Patients with progressive disease and growing tumours receive definitive therapies such as surgery, whole gland radiation and hormone therapy, which have well-known debilitating side effects (including incontinence and infertility). Patients with cancer that does not respond to these so-called androgen deprivation therapies are referred to as castrate resistant.

Oasmia’s Phase Ib study is focusing on patients with metastatic castrate-resistant prostate cancer that has spread outside the prostate gland. Docetaxel is the first choice of chemotherapy for these patients, although it has an inherently low aqueous solubility. To enable iv administration, docetaxel is solubilised through micelle formation with polysorbate 80 and ethanol, under the brand name Taxotere. Premedication with prednisone corticosteroid is always required to manage the severe side effects of these solubilising agents, which can have a detrimental impact on the therapeutic performance of the chemotherapy. Oasmia’s solubility-enhancing XR-17 technology enables the iv administration of docetaxel without the need for the solubilising agents, and thus no mandatory requirement for steroid premedication.

Partners driving Apealea commercialisation

Apealea, a water-soluble, iv formulation of paclitaxel that is solvent free (no Cremophor EL solubilising agent used in Taxol), can be viewed as a bioequivalent, cost-effective alternative to Abraxane (albumin-bound paclitaxel formulation), which is approved for multiple cancer indications but not ovarian cancer. The worldwide commercialisation of Apealea is now mainly in the hands of partner Elevar Therapeutics (deal terms included $20m upfront plus up to $678m in milestones and double-digit royalties on sales). Elevar has subsequently achieved sub-licence agreements for Apealea’s commercialisation with Inceptua Group covering Europe and Taiba Middle East in the Middle East and North Africa region, Exhibit 1. Oasmia also recently signed a licence agreement with Switzerland-based FarmaMondo Group for commercialisation in Russia and the Commonwealth of Independent States (CIS).

Inceptua is a privately held managed care company that will focus on expanding its sales and marketing infrastructure to support Apealea relaunch (minimal treatment sales since approval in 2018), now expected in 2022 (versus late 2021 previously). The UK and Germany launches are expected in H122, followed by Switzerland in H222. Further market launches are under evaluation, and pricing and reimbursement submissions will be made throughout 2022.

Exhibit 1: Apealea out-licensed to Elevar and its partners

Source: Oasmia Pharmaceutical presentation

Apealea US trials expected to initiate in 2022

In the US, two additional studies are required by the FDA to enable the NDA filing. These include a pharmacokinetic (PK) study that will take around 12 months to complete and a pivotal Phase III superiority study to demonstrate Apealea safety and efficacy in second-line epithelial ovarian cancer (expected to take 24–36 months to complete). Elevar will fund both studies and plans to seek FDA feedback by Q122 before initiating either study, and intends to file the IND for Apealea in Q122. Elevar will work closely with the GOG Foundation to plan and execute the Phase III study. Elevar is still finalising the trial design, but it will likely compare Apealea to paclitaxel in combination with platinum chemotherapy (potentially with/without Avastin), which is the current standard of care in second-line platinum-sensitive ovarian cancer. Establishing superiority is a higher-risk strategy than non-inferiority but, if confirmed, it could lead to improved reimbursement and higher uptake in the US and other key territories. We expect royalties on sales to start trickling in from 2022 (versus 2021 previously) and further sublicensing deals covering Latin America and Asia through the year. Our valuation of the Elevar deal largely focuses on potential milestone payments in the near term, with tiered royalties on sales (15–18%) for Apealea in ovarian cancer. We forecast US launch in 2025 and global peak sales of $282m in this indication alone.

Exhibit 2: Apealea (non-Cremophor EL formulation of paclitaxel)

Exhibit 3: Apealea development timeline

Source: Oasmia Pharmaceutical presentation

Source: Oasmia Pharmaceutical presentation

Exhibit 2: Apealea (non-Cremophor EL formulation of paclitaxel)

Source: Oasmia Pharmaceutical presentation

Exhibit 3: Apealea development timeline

Source: Oasmia Pharmaceutical presentation

Enhancing and partnering technology platforms

Apealea was developed through Oasmia’s proprietary XR-17 solubility-enhancing platform technology, which enables water-soluble nanoparticulate formulations of previously insoluble APIs that can be intravenously administered to patients. De novo drug development is both costly and time consuming. This is magnified by the high rates of attrition during clinical trials and the difficulty of meeting rising safety standards while maintaining clinical efficacy and an overall disease benefit. Oasmia is able to significantly de-risk this development process by using its proprietary XR-17 platform technology to reformulate approved drugs that are off patent and already have proven safety and efficacy. These reformulated drugs are in principle patentable. The XR-17 technology is compatible with a wide range of compounds (including established drugs such as paclitaxel) and Oasmia is currently assessing a number of in-licensing opportunities to leverage potential synergies. Oasmia also has the opportunity to out-license its XR-17 technology and forge partnerships with companies that have promising APIs that could benefit from its proven solubility-enhancing technology.

The XR-17 solubility-enhancing technology offers a number of potential advantages that include:

Shorter infusion times, enhancing convenience for patients and hospital throughput.

Easily administrable and more predictable dosing with XR-17.

Removes the risk of severe hypersensitivity, allowing for a larger therapeutic dosing window with potentially higher doses.

Removes the need for pre/post-medication.

Increased drug load capacity due to a higher API to cosolvent ratio (higher dosing potential).

Improved dosing profiles of combination therapies by dual encapsulation of both water soluble and insoluble APIs in one micelle.

Oasmia is also developing a next-generation solubility-enhancing technology platform, XR-18, and a dual encapsulation solubilisation platform, XR-19, which could have the potential to enable combination therapies to be delivered in a single intravenous administration, Exhibit 6. The next-generation XR-18 platform looks to provide technical improvements (stability and storage) and longer-term IP protection, while the XR-19 platform looks to exploit the increasing trend towards the use of combination treatments in oncology.

In March 2021 Oasmia announced a collaboration with the Karolinska Institute in Sweden aiming to develop new APIs. It will also work to gain a deeper understanding of the biological properties of the XR-17 platform, which could enable new study protocols and the development of new therapeutics.

Exhibit 6: XR platform technologies

Source: Oasmia Pharmaceutical company presentation

Valuation

Our updated valuation of Oasmia is SEK2.89bn or SEK6.45/share (Exhibit 7), versus SEK2.84bn or SEK6.34/share previously, and is based on a risk-adjusted net present valuation (NPV) model of Apealea for the treatment of ovarian cancer (US, EU5 and the rest of the world; RoW), Cantrixil for resistant ovarian cancer and docetaxel micellar in prostate cancer plus an indicative value of the animal health business.

We have rolled our model forward and include net cash of SEK176.3m (at 30 June 2021). Our valuation does not include Oasmia’s proprietary technology platform and unconfirmed candidates at an early stage in preclinical development; consequently, additional indications for Apealea and docetaxel micellar, plus advancing new candidates into the clinic would provide further upside. Oasmia’s valuation is sensitive to the contribution from Apealea. Given Elevar’s intention to fund and conduct additional clinical trials (Phase II/III required for other indications) we have previously illustrated the potential value of an additional indication to Oasmia shareholders.

Exhibit 7: Oasmia SOTP NPV

Product

Indication

Launch

Peak sales ($m)

Value (SEKm)

Probability of success

rNPV (SEKm)

NPV/share (SEK/share)

Apealea US

Ovarian cancer

2025

128

686.6

75%

514.9

1.15

Apealea EU5

Ovarian cancer

2020/22

62

581.4

100%

581.4

1.30

Apealea RoW

Ovarian cancer

2020

92

479.6

90%

431.7

0.96

Docetaxel micellar Global

Prostate cancer

2025

239

1,468.1

25%

377.5

0.84

Cantrixil Global

Ovarian cancer

2027

302

1,109.6

35%

320.9

0.72

Animal health

Multiple cancers

2024

163

976.4

50%

488.2

1.09

Net cash at 30 June 2021 

 

176.3

100%

176.3

0.39

Valuation

 

 

5,478.0

2,891.0

6.45

Source: Edison Investment Research

Financials

From 1 January 2021, Oasmia started using the calendar year as its financial year (previously 1 May to 30 April). In H121 Oasmia reported consolidated net sales of SEK4.6m in H121 (vs SEK201.2m in H120), which comprised primarily sales of supplies (SEK4.6m vs SEK0.3m in H120). The significant decrease in net sales is a result of the prior year benefiting from the upfront licence payment of SEK201.0m ($20m) from Elevar relating to the global licensing of Apealea.

The operating loss for the period amounted to SEK97.0m (vs profit of SEK50.3m in H120). Other operating expenses saw a significant decrease (SEK43.9m vs SEK103.8m) due to lower consulting, subcontracting and legal costs in relation to the Elevar deal and required inventory building. Changes in inventories of products saw a decrease of SEK22.7m (vs an increase of SEK11.2m) owing to the write-down of inventory due to expired or soon to be expired finished products (SEK17.4m) intended for the Nordic market where marketing activities have been delayed due to the COVID-19 pandemic. Additionally, employee benefit expenses decreased (SEK22.6m vs SEK39.7m) due to a significant decrease in the number of employees (25 vs 62) following the strategic cost-reduction programme. Oasmia confirmed it will achieve its goal of annualised cost savings of SEK100m with a monthly cash burn in line with its SEK12m target.

Oasmia had a net cash position of SEK176.3m at 30 June 2021. We do not include the short-term liability relating to the MGC Capital claim (SEK80m) in our net cash calculation and note that this contingent liability is largely offset by a counter claim held by Oasmia that has a face value of SEK60m (book value SEK40m).

We now forecast total revenues of SEK15.5m in FY21 based on European relaunch by Inceptua in 2022 (vs later 2021 previously) and continue to forecast SEK46.8m in FY22 due to increased contributions from supply of XR-17 to Elevar and other distribution partners plus milestone payments based on company guidance. We now expect royalties on sales of Apealea in Europe to start contributing from FY22. We expect the tightening of the cost base after restructuring to be somewhat offset by an increase in R&D expenses as docetaxel micellar and Cantrixil enter the next stage of clinical development. We continue to forecast R&D expenses of SEK17.1m in FY21 and SEK34.2m in FY22; this includes the docetaxel micellar Phase Ib prostate cancer trial and preparatory costs for Cantrixil in FY21, ahead of the expected start of the Phase II Cantrixil study in FY22. We forecast an operating loss of SEK158.5m in FY21 and SEK129.4m FY22. As the business evolves and Oasmia looks to expand its clinical pipeline, R&D and capex costs (in-licensing/M&A) could increase. Under our current assumptions, Oasmia has sufficient capital to fund operations through FY22. Additionally, divestment of the animal health business, Apealea royalties and revenues from potential out-licensing/partnering of the XR-17 platform could extend the cash reach further. Given Oasmia’s current cash burn rate and our forecast Apealea revenues in Europe and RoW, we forecast maiden profitability in FY25, contingent on timely US launch in 2025.

Exhibit 8: Financial summary

Accounts: IFRS, year-end: 31 December, SEK000s

2019

2020

2019 (8M)

2020 (8M)

2021e

2022e

 

01/05/18– 30/04/19

01/05/19– 30/04/20

01/05/19– 31/12/19

01/05/20– 31/12/20

01/01/21– 31/12/21

01/01/22– 31/12/22

PROFIT & LOSS

 

 

 

 

 

 

Operating revenues

1,980

201,843

565

482

15,500

46,780

Total operating expenses*

(121,211)

(211,897)

(109,629)

(103,047)

(150,644)

(153,238)

EBITDA (reported)

(119,231)

(10,054)

(109,064)

(102,565)

(135,144)

(106,458)

Depreciation and amortisation

(31,005)

(20,032)

(8,193)

(28,930)

(23,336)

(22,953)

Reported operating Income

(150,236)

(30,086)

(117,257)

(131,495)

(158,480)

(129,411)

Operating margin %

N/A

N/A

N/A

N/A

N/A

N/A

Finance income/(expense) excluding lease expense

(18,240)

(12,267)

(8,829)

(8,777)

(7,120)

(9,151)

Leasing expense

0

(1,003)

0

0

(502)

(502)

Exceptionals and adjustments

0

0

0

0

0

0

Reported PBT

(168,476)

(43,356)

(126,086)

(140,272)

(166,101)

(139,064)

Income tax expense (includes exceptionals)

(32,822)

32,822

32,822

0

0

0

Reported net income

(201,298)

(10,534)

(93,264)

(140,272)

(166,101)

(139,064)

Basic average number of shares, m

253.3

398.4

260.4

448.4

448.4

448.4

Year-end number of shares, m

294.6

448.4

447.4

448.4

448.4

448.4

Basic EPS (SEK)

(0.8)

(0.0)

(0.4)

(0.3)

(0.4)

(0.3)

Adjusted EPS (SEK)

(0.7)

0.0

(0.3)

(0.2)

(0.3)

(0.3)

Dividend per share (SEK)

0

0

0

0

0

0

BALANCE SHEET

 

 

 

 

 

 

Property, plant and equipment

14,701

28,014

36,322

17,630

16,067

14,887

Intangible assets

10,497

9,759

10,040

9,197

47,545

51,705

Capitalised development costs

433,130

433,357

433,507

420,334

400,901

381,468

Other non-current assets

2,002

2,002

2,002

302

302

302

Total non-current assets

460,330

473,132

481,871

447,463

464,815

448,362

Cash and equivalents

116,272

201,018

325,658

40,128

32,569

765

Short-term investments

0

234,080

0

247,277

97,277

2,277

Inventories

7,420

28,837

15,833

51,496

16,850

17,535

Trade and other receivables

6,545

43,907

50,634

44,552

50,738

54,576

Other current assets

14,472

24,372

19,863

32,628

32,628

32,628

Total current assets

144,709

532,214

411,988

416,081

230,062

107,780

Non-current loans and borrowings

0

0

0

0

0

0

Long-term leasing liabilities

0

8,845

10,183

6,545

6,545

6,545

Other non-current liabilities

32,822

0

0

0

0

0

Total non-current liabilities

32,822

8,845

10,183

6,545

6,545

6,545

Trade and other payables

17,666

22,524

22,570

10,678

8,111

8,440

Current loans and borrowings

139,568

80,000

80,000

80,000

80,000

80,000

Short-term leasing liabilities

0

5,320

5,296

4,204

4,204

4,204

Other current liabilities

31,485

69,268

37,321

81,919

81,919

81,919

Total current liabilities

188,719

177,112

145,187

176,801

174,234

174,563

Equity attributable to company

383,498

819,390

738,491

680,197

514,096

375,032

CASH FLOW STATEMENT

 

 

 

 

 

 

Operating Profit/(loss)

(150,236)

(30,086)

(117,257)

(131,495)

(158,480)

(129,411)

Depreciation and amortisation

6,005

13,651

0

0

23,336

22,953

Share based payments

0

120

0

0

0

0

Other adjustments

32,086

12,738

0

0

0

0

Movements in working capital

(3,657)

1,065

(10,176)

(33,817)

25,893

(4,193)

Interest paid/received

(3,037)

(4,354)

(4,125)

(677)

(5,120)

(7,151)

Income taxes paid

0

0

0

0

0

0

Other financing charges

0

0

0

0

(2,502)

(2,502)

Cash from operations (CFO)

(118,839)

(6,866)

(131,558)

(165,989)

(116,872)

(120,304)

Capex**

(12,031)

(12,873)

(9,749)

(4,366)

(6,500)

(6,500)

Acquisitions & disposals net

0

0

0

0

(34,188)

0

Other investing activities

(2,000)

(275,251)

(40,251)

(10,000)

150,000

95,000

Cash used in investing activities (CFIA)

(14,031)

(288,124)

(50,000)

(14,366)

109,312

88,500

Net proceeds from issue of shares

151,852

401,863

402,951

0

0

0

Movements in debt

81,648

0

0

0

0

0

Other financing activities

0

(22,141)

(20,616)

(4,010)

0

0

Cash from financing activities (CFF)

233,500

379,722

382,335

(4,010)

0

0

Cash and equivalents at beginning of period

15,580

116,272

116,272

201,018

40,129

32,569

Increase/(decrease) in cash and equivalents

100,630

84,732

200,777

(184,365)

(7,560)

(31,804)

Effect of FX on cash and equivalents

62

15

8

(5,938)

0

0

Cash and equivalents at end of period

116,272

201,019

317,057

10,715

32,569

765

Net (debt)/cash

56,704

435,098

325,658

287,405

129,846

3,042

Source: Company accounts, Edison Investment Research. Note: From 1 January 2021, Oasmia will use the calendar year as its financial year. *Includes non-capitalised R&D costs. **Includes capitalised development costs.

Contact details

Revenue by geography

Vallongatan 1
752 28 Uppsala
Sweden
+46 018-50 54 40
www.oasmia.com

N/A

Contact details

Vallongatan 1
752 28 Uppsala
Sweden
+46 018-50 54 40
www.oasmia.com

Revenue by geography

N/A

Management team

CEO: Dr Francois Martelet

CFO: Fredrik Järrsten

Dr Francois Martelet was appointed as CEO of Oasmia Pharmaceutical in 2020. Prior to this he was CEO of Avax and Topotarget. He has held executive roles at senior level at Roche, Eli Lilly, Novartis and MSD. He has been based in six countries in Europe (including Sweden) and in the United States. Dr Martelet is a French medical doctor, with a master’s degree in business. He speaks four languages, among them Swedish.

Fredrik Järrsten has over 25 years of experience across the financial, medical technology and life sciences sectors in the Nordic region and internationally. He serves as CFO and deputy CEO at Karolinska Development and previously held executive roles at Bactiguard and Aleris. He holds a degree in accounting and finance from the Stockholm School of Economics and an international business degree from the University of Michigan.

CSO: Reinhard Koenig

CMO: Heidi B Ramstad

Reinhard Koenig has more than 30 years of pharma and biotechnology experience. He has extensive experience of leading positions within global pharmaceutical companies. Previous companies he has worked at include Genentech, Boehringer Mannheim and Piramal Critical Care.

Heidi B Ramstad has more than 20 years’ experience as a medical doctor and biopharmaceutical executive in the healthcare sector. Recent positions include working for Nisonic as chief medical officer and as managing director of NorMed Consulting. Previous companies she has worked at include Roche, GSK and Pfizer.

Management team

CEO: Dr Francois Martelet

Dr Francois Martelet was appointed as CEO of Oasmia Pharmaceutical in 2020. Prior to this he was CEO of Avax and Topotarget. He has held executive roles at senior level at Roche, Eli Lilly, Novartis and MSD. He has been based in six countries in Europe (including Sweden) and in the United States. Dr Martelet is a French medical doctor, with a master’s degree in business. He speaks four languages, among them Swedish.

CFO: Fredrik Järrsten

Fredrik Järrsten has over 25 years of experience across the financial, medical technology and life sciences sectors in the Nordic region and internationally. He serves as CFO and deputy CEO at Karolinska Development and previously held executive roles at Bactiguard and Aleris. He holds a degree in accounting and finance from the Stockholm School of Economics and an international business degree from the University of Michigan.

CSO: Reinhard Koenig

Reinhard Koenig has more than 30 years of pharma and biotechnology experience. He has extensive experience of leading positions within global pharmaceutical companies. Previous companies he has worked at include Genentech, Boehringer Mannheim and Piramal Critical Care.

CMO: Heidi B Ramstad

Heidi B Ramstad has more than 20 years’ experience as a medical doctor and biopharmaceutical executive in the healthcare sector. Recent positions include working for Nisonic as chief medical officer and as managing director of NorMed Consulting. Previous companies she has worked at include Roche, GSK and Pfizer.

Principal shareholders

(%)

Per Arwidsson with related parties

24.8

Avanza Pension

5.9

Nordnet Pension Insurance

2.8

Mastan AB (Håkan Lagerberg)

2.0

Swedbank Insurance

1.6


General disclaimer and copyright

This report has been commissioned by Oasmia Pharmaceutical and prepared and issued by Edison, in consideration of a fee payable by Oasmia Pharmaceutical. Edison Investment Research standard fees are £49,500 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 2021 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

General disclaimer and copyright

This report has been commissioned by Oasmia Pharmaceutical and prepared and issued by Edison, in consideration of a fee payable by Oasmia Pharmaceutical. Edison Investment Research standard fees are £49,500 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 2021 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

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