Medigene recently announced a placing of €20.7m gross (issuing 1.96m new shares at €10.55) to intensify its R&D through the expansion of its planned T-cell receptor (TCR) modified T-cells clinical programme. This leaves it well funded (pro forma cash €67.7m) to advance both its DC vaccine programmes and TCR programme. We expect 2017 to be a year of important progress for Medigene, in particular the start of its first company-initiated TCR clinical study. We have increased our rNPV-based valuation to €315m (vs €293m), as we now include the cash from the fund-raising and have rolled the model forward.
Written by
Medigene |
Funded to execute clinical development strategy |
Q1 results and fund-raising |
Pharma & biotech |
12 May 2017 |
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Medigene is a research client of Edison Investment Research Limited |
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Medigene recently announced a placing of €20.7m gross (issuing 1.96m new shares at €10.55) to intensify its R&D through the expansion of its planned T-cell receptor (TCR) modified T-cells clinical programme. This leaves it well funded (pro forma cash €67.7m) to advance both its DC vaccine programmes and TCR programme. We expect 2017 to be a year of important progress for Medigene, in particular the start of its first company-initiated TCR clinical study. We have increased our rNPV-based valuation to €315m (vs €293m), as we now include the cash from the fund-raising and have rolled the model forward.
Year |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
6.8 |
(12.8) |
(0.74) |
0.0 |
N/A |
N/A |
12/16 |
9.7 |
(11.3) |
(0.56) |
0.0 |
N/A |
N/A |
12/17e |
9.0 |
(18.6) |
(0.89) |
0.0 |
N/A |
N/A |
12/18e |
9.3 |
(20.2) |
(0.91) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Fund-raising provides option to expand TCR CIT
Medigene recently announced a €20.7m gross fund-raising through a placing of 1.96m shares at a price of €10.55 each. It was achieved via an accelerated book build and has strengthened the company’s institutional shareholder base. According to the company, the funds will provide the option to expand and/or accelerate its TCR clinical programme into additional indications and geographic regions, such as the US. For further details regarding the TCR trials planned and for an overview of preclinical data on its selected TCR trial candidate (HLA-A2:01-restricted TCR) targeting PRAME (tumour antigen) see our recent outlook note.
Strong outlook in 2017 and beyond
We believe Medigene will take significant steps in 2017. For example, we expect it to initiate its own TCR clinical study as well as an investigator-initiated TCR study. Alongside progressing its TCR programme into the clinic, we also expect it to generate further TCR leads, particularly through its TCR development deal with bluebird bio, a prominent T-cell immunology company. It is worth noting that Medigene operates in an area of significant interest, particularly around CAR-T candidates and technologies and its TCRs could offer efficacy/safety advantages.
Valuation: Increased to €315m
We have increased our rNPV-based valuation to €315m (vs €293m) or €14.2 per share (vs €14.7 per share), as we now use Medigene’s Q1 cash position of €48m and include the net pro forma cash (€19.7m) recently raised. We have also rolled the model forward three months. All other assumptions remain the same, although we now forecast cash reach into FY20. Medigene is well funded, which we believe will enable it to execute its clinical development strategy and should take it to reported data from the ongoing DC trial and 2017 initiated TCR trials. We also note that there is potential for newsflow relating to the progression of TCR leads resulting from its bluebird bio deal and for further TCR R&D collaborations to be made.
Exhibit 1: Financial summary
€'000s |
2014 |
2015 |
2016 |
2017e |
2018e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
13,784 |
6,808 |
9,749 |
8,959 |
9,263 |
of which: Veregen revenues (royalties/milestones/supply) |
5,195 |
3,101 |
3,048 |
3,128 |
3,433 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
6,096 |
1,214 |
3,155 |
0 |
0 |
||
Non-cash income (Eligard) |
2,493 |
2,493 |
2,493 |
2,493 |
2,493 |
||
Bluebird bio partnership |
1,053 |
3,338 |
3,338 |
||||
Cost of sales |
(2,086) |
(1,103) |
(1,402) |
(1,231) |
(1,353) |
||
Gross profit |
11,698 |
5,705 |
8,347 |
7,728 |
7,910 |
||
Selling, general & administrative spending |
(7,081) |
(7,615) |
(7,942) |
(8,286) |
(8,524) |
||
R&D expenditure |
(7,498) |
(8,529) |
(11,538) |
(17,884) |
(19,672) |
||
Other operating spending |
0 |
. |
0 |
0 |
0 |
||
Operating profit |
(2,881) |
(10,439) |
(6,891) |
(18,443) |
(20,286) |
||
Goodwill & intangible amortisation |
(527) |
(526) |
(525) |
(524) |
(523) |
||
Exceptionals |
0 |
0 |
4,242 |
0 |
0 |
||
Share-based payment |
(66) |
(111) |
(50) |
(50) |
(50) |
||
EBITDA |
|
|
(2,005) |
(9,384) |
(10,238) |
(17,644) |
(19,488) |
Operating profit (before GW and except.) |
|
|
(2,288) |
(9,802) |
(10,558) |
(17,869) |
(19,713) |
Net interest |
(1,774) |
(2,914) |
(1,009) |
(1,495) |
(1,928) |
||
Other (forex gains/losses; associate profit/loss) |
(1,257) |
(46) |
263 |
720 |
1,489 |
||
Profit before tax (norm) |
|
|
(5,319) |
(12,762) |
(11,304) |
(18,644) |
(20,152) |
Profit before tax (FRS 3) |
|
|
(5,912) |
(13,399) |
(7,637) |
(19,218) |
(20,725) |
Tax |
155 |
400 |
228 |
0 |
0 |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(5,164) |
(12,362) |
(11,076) |
(18,644) |
(20,152) |
||
Profit after tax (FRS 3) |
(5,757) |
(12,999) |
(7,409) |
(19,218) |
(20,725) |
||
Average number of shares outstanding (m) |
12.2 |
16.8 |
20.0 |
21.0 |
22.1 |
||
EPS - normalised (€) |
|
|
(0.42) |
(0.74) |
(0.56) |
(0.89) |
(0.91) |
EPS - FRS 3 (€) |
|
|
(0.47) |
(0.77) |
(0.37) |
(0.91) |
(0.94) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||
Fixed assets |
|
|
46,617 |
51,552 |
47,742 |
50,012 |
52,282 |
Intangible assets & goodwill |
38,377 |
35,713 |
35,767 |
35,243 |
34,720 |
||
Tangible assets |
951 |
2,502 |
3,323 |
6,117 |
8,910 |
||
Other non-current assets |
7,289 |
13,337 |
8,652 |
8,652 |
8,652 |
||
Current assets |
|
|
24,666 |
59,900 |
63,973 |
61,190 |
36,767 |
Stocks |
4,406 |
6,654 |
7,866 |
7,866 |
7,866 |
||
Debtors |
1,733 |
763 |
1,175 |
1,175 |
1,175 |
||
Cash |
14,976 |
46,759 |
52,630 |
49,847 |
25,424 |
||
Other |
3,551 |
5,724 |
2,302 |
2,302 |
2,302 |
||
Current liabilities |
|
|
(7,755) |
(9,664) |
(11,966) |
(11,966) |
(11,966) |
Trade accounts payable |
(1,785) |
(1,354) |
(973) |
(973) |
(973) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Deferred income |
(57) |
(226) |
(3,575) |
(3,575) |
(3,575) |
||
Other |
(5,913) |
(8,084) |
(7,418) |
(7,418) |
(7,418) |
||
Long-term liabilities |
|
|
(14,457) |
(13,879) |
(21,157) |
(17,820) |
(14,482) |
Pension provisions |
(413) |
(359) |
(408) |
(408) |
(408) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(3,221) |
(2,915) |
(2,395) |
(2,395) |
(2,395) |
||
Deferred revenues (Eligard non-cash income & bluebird bio) |
(10,823) |
(10,605) |
(18,354) |
(15,017) |
(11,679) |
||
Net assets |
|
|
49,071 |
87,909 |
78,592 |
81,416 |
62,601 |
CASH FLOW |
|||||||
Operating cash flow |
|
|
(8,765) |
(10,585) |
(3,611) |
(19,469) |
(20,977) |
Net interest |
9 |
(20) |
(45) |
5 |
(428) |
||
Tax |
0 |
0 |
(102) |
0 |
0 |
||
Capex |
(873) |
(1,328) |
(1,677) |
(3,019) |
(3,019) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
10,537 |
0 |
0 |
||
Equity financing |
14,502 |
43,695 |
(77) |
19,700 |
0 |
||
Other |
(62) |
21 |
846 |
0 |
0 |
||
Net cash flow |
4,811 |
31,783 |
5,871 |
(2,783) |
(24,424) |
||
Opening net debt/(cash) |
|
|
(10,166) |
(14,976) |
(46,759) |
(52,630) |
(49,847) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
(1) |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(14,976) |
(46,759) |
(52,630) |
(49,847) |
(25,424) |
Source: Medigene accounts, Edison Investment Research
|
|
Research: Healthcare
Paion has completed patient recruitment in its pivotal bronchoscopy study of its ultra-fast-acting sedative remimazolam. Results are likely by mid-2017 and, if positive, would put it on track to file for US approval for procedural sedation in mid-2018. Paion is also preparing a dossier for a filing for general anaesthesia (GA) in Japan in a similar time frame. It has also outlined a programme that could see it restart Phase III studies in GA in Europe (estimated cost €20-25m). Paion has sufficient cash to fund operations beyond end 2018, but would need additional funds to complete the Europe development programme. We leave our valuation unchanged at €214m ahead of the key bronchoscopy trial results.