Hybrigenics
Written by
Hybrigenics |
Encouraging initial CML clinical data |
Clinical update |
Pharma & biotech |
17 February 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 presented the first ever clinical data from an interim analysis of a Phase II study of inecalcitol in combination with imatinib in patients with chronic myeloid leukaemia (CML). At interim, 43% of patients who had been on treatment for three months showed improvements to baseline MMR (major molecular response). Furthermore, 33% of patients who had completed one year in the study achieved a deep molecular response (DMR). Achieving and sustaining a DMR may allow patients to discontinue treatment (functional cure). Therefore, we believe these are encouraging preliminary data that provide first clinical insights into inecalcitol’s potential in CML. The study is expected to complete in H218. Our valuation stands at €146.1m.
Year |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
6.8 |
(2.2) |
(8.5) |
0.0 |
N/A |
N/A |
12/15 |
6.5 |
(3.9) |
(11.4) |
0.0 |
N/A |
N/A |
12/16e |
7.5 |
(4.2) |
(11.8) |
0.0 |
N/A |
N/A |
12/17e |
8.0 |
(4.4) |
(12.4) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments, according to IFRS.
Improvements in 43% of patients
The efficacy endpoint in this Phase II study is the proportion of responders, defined as patients achieving DMR within 12 months of inecalcitol treatment. Achieving and sustaining DMR may be considered a functional cure and stopping treatment can be an option. Other studies report that 1-3% of imatinib-treated patients achieve DMR after 12 months of treatment, increasing to 31-33% after five years. Thus, 33% of patients in this trial achieving a DMR with the addition of inecalcitol within 12-months is encouraging.
A potentially meaningful impact
Tyrosine kinase inhibitors (TKIs) are the current treatment paradigm in CML. Since a high percentage of patients achieve response, there are reasonable expectations to not only improve survival, but also to cure the disease. Current guidelines recommend TKI treatment indefinitely in all responding patients. However, drawbacks are side effects and the economic burden for healthcare systems (Gleevec costs $120k/year in the US). Although preliminary, these data show the potential impact of inecalcitol on the CML treatment paradigm due to its benign safety profile and potential to further improve molecular responses leading to discontinuation of treatment and functional cures.
Valuation: No changes to our rNPV of €146.1m
Our valuation stands at €146.1m or €4.1/share. We estimate c 14,250 new CML patients per year in the EU/US and forecast peak sales for inecalcitol of $260m. We maintain the probability of success for inecalcitol in CML at 30%. We look to update our valuation as more clinical data from inecalcitol trials become available.
Exhibit 1: Financial summary
€'000s |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
6,774 |
6,483 |
7,542 |
8,010 |
Cost of sales |
(3,417) |
(3,858) |
(4,244) |
(4,583) |
||
Gross profit |
3,357 |
2,625 |
3,298 |
3,426 |
||
EBITDA |
|
|
(2,081) |
(3,811) |
(4,266) |
(4,380) |
Operating profit (before GW and except) |
|
(2,170) |
(3,961) |
(4,416) |
(4,530) |
|
Intangible amortisation |
(89) |
(150) |
(150) |
(150) |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Share-based payments |
(201) |
(225) |
(236) |
(248) |
||
Operating profit |
(2,539) |
(4,414) |
(4,880) |
(5,006) |
||
Net interest |
(26) |
49 |
177 |
87 |
||
Profit before tax (norm) |
|
|
(2,209) |
(3,874) |
(4,239) |
(4,444) |
Profit before tax (reported) |
|
|
(2,499) |
(4,327) |
(4,703) |
(4,920) |
Tax |
0 |
(14) |
0 |
0 |
||
Profit after tax (norm) |
(2,209) |
(3,888) |
(4,239) |
(4,444) |
||
Profit after tax (reported) |
(2,578) |
(4,341) |
(4,703) |
(4,920) |
||
Average number of shares outstanding (m) |
25.9 |
34.2 |
35.8 |
35.8 |
||
EPS - normalised (c) |
|
|
(8.5) |
(11.4) |
(11.8) |
(12.4) |
EPS - FRS 3 (c) |
|
|
(9.7) |
(12.7) |
(13.1) |
(13.7) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross margin (%) |
50% |
40% |
44% |
43% |
||
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 |
|
|
1,837 |
1,717 |
1,463 |
1,233 |
Intangible assets |
1,023 |
820 |
670 |
520 |
||
Tangible assets |
598 |
585 |
504 |
423 |
||
Investments |
216 |
312 |
289 |
290 |
||
Current assets |
|
|
15,708 |
19,584 |
15,348 |
11,907 |
Stocks |
262 |
150 |
165 |
126 |
||
Debtors |
1,701 |
1,513 |
1,760 |
1,869 |
||
Cash |
9,644 |
11,716 |
7,218 |
3,707 |
||
Other |
4,101 |
6,205 |
6,205 |
6,205 |
||
Current liabilities |
|
|
(3,018) |
(2,135) |
(2,139) |
(2,142) |
Creditors |
(2,116) |
(1,787) |
(1,789) |
(1,791) |
||
Short-term borrowings |
(862) |
(288) |
(288) |
(288) |
||
Other |
(40) |
(60) |
(62) |
(64) |
||
Non-current liabilities |
|
|
0 |
(629) |
(629) |
(1,629) |
Long-term borrowings |
0 |
(114) |
(114) |
(1,114) |
||
Other |
0 |
(515) |
(515) |
(515) |
||
Net assets |
|
|
14,527 |
18,537 |
14,043 |
9,369 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(3,042) |
(5,262) |
(4,528) |
(4,450) |
Net interest |
49 |
28 |
177 |
87 |
||
Tax |
0 |
(14) |
0 |
0 |
||
Capex |
(455) |
(395) |
(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 |
(153) |
0 |
0 |
||
Financing |
11,619 |
8,331 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Net cash flow |
8,171 |
2,535 |
(4,498) |
(4,510) |
||
Opening net debt/(cash) |
|
|
(1,611) |
(8,782) |
(11,314) |
(6,816) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
(1,000) |
(3) |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(8,782) |
(11,314) |
(6,816) |
(2,305) |
Source: Company accounts, Edison Investment Research
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