Hybrigenics has raised €6.8m in gross proceeds through preferential subscription rights with new and existing investors. We believe the proceeds will provide funding into 2019 and enable Hybrigenics to expand the ongoing Phase II studies with inecalcitol in acute myeloid leukaemia (AML) and chronic myeloid leukaemia (CML). Additionally, the company will use the cash to continue the research in the field of inhibitors of ubiquitin-specific protease 7 (USP7) or 8 (USP8). Our valuation, which does not yet include the offering, stands at €141m.
Written by
Hybrigenics |
Fresh funds to expand clinical studies and R&D |
Fund-raise update |
Pharma & biotech |
29 August 2017 |
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Business description
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Hybrigenics is a research client of Edison Investment Research Limited |
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Hybrigenics has raised €6.8m in gross proceeds through preferential subscription rights with new and existing investors. We believe the proceeds will provide funding into 2019 and enable Hybrigenics to expand the ongoing Phase II studies with inecalcitol in acute myeloid leukaemia (AML) and chronic myeloid leukaemia (CML). Additionally, the company will use the cash to continue the research in the field of inhibitors of ubiquitin-specific protease 7 (USP7) or 8 (USP8). Our valuation, which does not yet include the offering, stands at €141m.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
2.2 |
(4.5) |
(13.2) |
0.0 |
N/A |
N/A |
12/16 |
3.6 |
(3.9) |
(10.8) |
0.0 |
N/A |
N/A |
12/17e |
3.7 |
(4.9) |
(13.8) |
0.0 |
N/A |
N/A |
12/18e |
5.6 |
(3.6) |
(9.9) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items and share-based payments.
Inecalcitol Phase II studies to be expanded
The fund-raising will enable Hybrigenics to expand the ongoing Phase II study with inecalcitol in AML beyond the US and France. It will strengthen its Phase II study in CML by combining inecalcitol with other kinase inhibitors in France and will allow the launch of a new Phase II clinical trial in collaboration with the American consortium, Cure CML. The ongoing AML study will read out in H119 and the CML study will complete in H218. We project $118.9m peak sales in AML and $257m in CML, in the US and EU.
Preclinical USP inhibitors programme advances
These funds will allow Hybrigenics to advance its preclinical programme on ubiquitin-specific proteases (USPs). The company’s USP7 inhibitor HBX 19,818 has demonstrated cytotoxic activity on human chronic lymphocytic leukaemia (CLL) cells in vitro and in vivo, as published in the journal Blood. Importantly, HBX 19,818 induced tumour killing independently of resistance mechanisms, making it an interesting product to address chemotherapy-resistant tumours. The company has reinforced its IP position with the grant of a European patent covering a series of small molecules that inhibit USP8. It now has six patents granted in the world’s major markets with protection until 2032. Lead USP8 inhibitor HBX 96,819 has shown potential in EGFR-resistant lung cancer and Cushing’s disease. Hybrigenics has an ongoing R&D collaboration with Servier focused on USP inhibitors in oncology. Up to €12m in potential payments is associated with this programme until registration.
Valuation: rNPV of €141m or €3.9/share maintained
In July 2017 Hybrigenics raised €6.8m in gross proceeds by issuing c 10.9m new shares at €0.62/share (23% dilution). We had a funding gap of €2m in 2018 and now with end-2016 net cash of €8.5m and the recent raise we believe Hybrigenics has some flexibility into 2019. We will update the financials and valuation after the H117 results are published in October 2017. Our valuation is €141m or €3.9/share.
Exhibit 1: Financial summary
€'000s |
2015 |
2016 |
2017e |
2018e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
2,172 |
3,607 |
3,670 |
5,598 |
Cost of sales |
(1,104) |
(842) |
(1,211) |
(1,575) |
||
Gross profit |
1,068 |
2,765 |
2,459 |
4,023 |
||
EBITDA |
|
|
(4,413) |
(3,789) |
(4,964) |
(3,492) |
Operating profit (before GW and except) |
|
(4,563) |
(3,908) |
(5,083) |
(3,611) |
|
Intangible amortisation |
(150) |
(119) |
(119) |
(119) |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Share-based payments |
(225) |
(166) |
(174) |
(183) |
||
Operating profit |
(5,016) |
(4,319) |
(5,502) |
(4,039) |
||
Net interest and other financial items |
37 |
30 |
152 |
58 |
||
Profit before tax (norm) |
|
|
(4,526) |
(3,878) |
(4,932) |
(3,553) |
Profit before tax (reported) |
|
|
(4,979) |
(4,290) |
(5,351) |
(3,981) |
Tax |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(4,526) |
(3,878) |
(4,932) |
(3,552) |
||
Profit after tax (reported) |
(4,979) |
(4,290) |
(5,351) |
(3,981) |
||
Discontinued operations |
639 |
(963) |
0 |
0 |
||
Net income (norm) |
(4,526) |
(3,878) |
(4,932) |
(3,552) |
||
Net income (reported) |
(4,340) |
(5,254) |
(5,351) |
(3,981) |
||
Average number of shares outstanding (m) |
34.2 |
35.8 |
35.8 |
35.8 |
||
EPS - normalised (c) |
|
|
(13.2) |
(10.8) |
(13.8) |
(9.9) |
EPS - FRS 3 (c) |
|
|
(12.7) |
(14.7) |
(14.9) |
(11.1) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
1.0 |
||
Gross margin (%) |
49% |
77% |
67% |
72% |
||
EBITDA margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating margin (before GW and except) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
1,718 |
1,133 |
923 |
707 |
Intangible assets |
820 |
524 |
405 |
286 |
||
Tangible assets |
585 |
326 |
228 |
130 |
||
Investments |
313 |
283 |
290 |
291 |
||
Current assets |
|
|
19,584 |
15,048 |
8,217 |
6,725 |
Stocks |
150 |
55 |
33 |
22 |
||
Debtors |
1,513 |
546 |
556 |
847 |
||
Cash |
11,716 |
8,489 |
3,795 |
2,024 |
||
Other |
6,205 |
3,833 |
3,833 |
3,833 |
||
Assets held for sale |
0 |
2,125 |
0 |
0 |
||
Current liabilities |
|
|
(4,698) |
(4,955) |
(2,965) |
(2,967) |
Creditors |
(1,727) |
(1,565) |
(1,727) |
(1,726) |
||
Short-term borrowings |
(288) |
(91) |
(91) |
(91) |
||
Other |
(2,683) |
(1,145) |
(1,147) |
(1,150) |
||
Liabilities associated with assets held for sale |
0 |
(2,154) |
0 |
0 |
||
Non-current liabilities |
|
|
(629) |
(346) |
(346) |
(2,346) |
Long-term borrowings |
(114) |
0 |
0 |
(2,000) |
||
Other |
(515) |
(346) |
(346) |
(346) |
||
Net assets |
|
|
15,976 |
10,881 |
5,828 |
2,120 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(5,304) |
(2,593) |
(4,790) |
(3,773) |
Net interest |
56 |
34 |
152 |
58 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(548) |
(274) |
(147) |
(147) |
||
Payment of deferred consideration |
0 |
0 |
0 |
0 |
||
Capitalisation of development costs |
0 |
0 |
0 |
0 |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
8,457 |
0 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Net cash flow |
2,661 |
(2,833) |
(4,785) |
(3,862) |
||
Opening net debt/(cash) |
|
|
(9,644) |
(11,602) |
(8,489) |
(3,795) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
(703) |
(280) |
91 |
91 |
||
Closing net debt/(cash) |
|
|
(11,602) |
(8,489) |
(3,795) |
(24) |
Source: Edison Investment Research, Hybrigenics accounts
|
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Research: Financials
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