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Research: Healthcare
Nicox’s Q1 results, reported on 19 April, were largely in line with our expectations. The company continues to make progress with its leading clinical programmes, with lead candidate NCX-470 having reached 50% of its enrolment target in the Phase III Mont Blanc trial assessing the drug candidate’s ability to reduce intraocular pressure (IOP). As NCX-470 expands on an already-established dual IOP-lowering mechanistic approach, we believe, if approved, it could become the most potent single-agent glaucoma drug on the market in terms of IOP-lowering efficacy. Top-line data are expected in Q222. NCX-4251’s Phase IIb study in acute blepharitis is tracking well and results continue to be expected in Q421.
Nicox |
Key programmes continue to advance |
Q121 update |
Pharma & biotech |
23 April 2021 |
Share price performance
Business description
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Nicox’s Q1 results, reported on 19 April, were largely in line with our expectations. The company continues to make progress with its leading clinical programmes, with lead candidate NCX-470 having reached 50% of its enrolment target in the Phase III Mont Blanc trial assessing the drug candidate’s ability to reduce intraocular pressure (IOP). As NCX-470 expands on an already-established dual IOP-lowering mechanistic approach, we believe, if approved, it could become the most potent single-agent glaucoma drug on the market in terms of IOP-lowering efficacy. Top-line data are expected in Q222. NCX-4251’s Phase IIb study in acute blepharitis is tracking well and results continue to be expected in Q421.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
8.3 |
(16.0) |
(0.40) |
0.0 |
N/A |
N/A |
12/20 |
14.4 |
(10.2) |
(0.30) |
0.0 |
N/A |
N/A |
12/21e |
10.2 |
(16.1) |
(0.43) |
0.0 |
N/A |
N/A |
12/22e |
12.0 |
(16.0) |
(0.43) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Normalised 2020 figures differ from reported amounts due primarily to the €6.9m loss reported following the divestment of Nicox’s holdings in VISUfarma.
Vyzulta and Zerviate prescriptions increase
Nicox obtains recurring revenue from two out-licensed commercial assets, Vyzulta (latanoprostene bunod) and Zerviate (topical cetirizine); its royalty rates are no lower than mid-single digits. Nicox reported Q121 net royalties (thus net of payments due to Pfizer) of €0.6m (vs €0.7m in Q120). We believe the timing of royalty payments from Vyzulta licensee Bausch + Lomb (B+L) likely accounted for the year-on-year decline, given that actual Q121 US Vyzulta prescriptions were up 10.6% y-o-y. Our H121 Vyzulta net royalty estimate remains €2.3m and we will review our forecasts when the company reports mid-year results. B+L indicated that it plans to launch Vyzulta in Taiwan in 2021 and South Korea in 2022. This, combined with Vyzulta’s recent regulatory approval in Brazil, should help support continued growth for the product, although we continue to expect that the predominant portion of sales will come from the US market. Zerviate, which was launched in the United States in March 2020, had a robust 29% q-o-q increase in prescriptions from Q420.
Cash utilisation tracking slightly ahead of forecasts
Nicox reported Q121 gross cash of €42.0m and financial debt of €17.8m, resulting in net cash of €24.2m (excluding lease liabilities). This compares with FY20 net cash of €29.3m, suggesting a Q1 burn rate of c €5m, tracking mildly ahead of our 2021 burn estimate of €17m. We continue to estimate Nicox has sufficient funds on hand to operate into H222, and will review once mid-year financials are released.
Valuation: rNPV of €322m unchanged
We maintain our current forecasts and valuation assumptions, resulting in an unchanged rNPV of €322.4m. After adding €24.2m in net cash, we obtain an equity value of €351.7m, or €9.34 per share. We continue to model that Nicox will raise €40m between 2022 and 2024 before launching NCX-470 in 2024.
Exhibit 1: Financial summary
€’000s |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
2024e |
||
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
4,717 |
8,260 |
14,423 |
10,182 |
11,965 |
18,699 |
34,228 |
Cost of Sales |
(690) |
(1,405) |
(1,516) |
(1,881) |
(2,367) |
(4,777) |
(9,111) |
||
Gross Profit |
4,027 |
6,855 |
12,907 |
8,301 |
9,598 |
13,923 |
25,116 |
||
General & Administrative |
(9,506) |
(7,666) |
(6,677) |
(6,777) |
(7,074) |
(10,445) |
(28,693) |
||
Net Research & Development |
(15,491) |
(16,883) |
(11,991) |
(16,700) |
(17,350) |
(12,350) |
(7,350) |
||
Amortisation of intangible assets |
0 |
(659) |
(1,252) |
(1,162) |
(1,141) |
(1,121) |
(1,101) |
||
Operating profit before exceptionals |
(20,970) |
(18,353) |
(7,013) |
(16,338) |
(15,967) |
(9,993) |
(12,027) |
||
EBITDA |
|
|
(20,718) |
(17,230) |
(5,270) |
(14,822) |
(14,476) |
(8,528) |
(10,515) |
Depreciation & other |
(252) |
(464) |
(491) |
(354) |
(351) |
(344) |
(411) |
||
Operating Profit (before amort. and except.) |
(20,970) |
(17,694) |
(5,761) |
(15,176) |
(14,826) |
(8,872) |
(10,926) |
||
Exceptionals including asset impairment |
302 |
(6,115) |
(6,621) |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(20,668) |
(23,809) |
(12,382) |
(15,176) |
(14,826) |
(8,872) |
(10,926) |
||
Net Interest |
2,390 |
1,690 |
(4,436) |
(877) |
(1,152) |
(2,103) |
(2,999) |
||
Profit Before Tax (norm) |
|
|
(18,580) |
(16,004) |
(10,197) |
(16,053) |
(15,978) |
(10,976) |
(13,925) |
Profit Before Tax (FRS 3) |
|
|
(18,278) |
(22,778) |
(18,070) |
(17,215) |
(17,120) |
(12,097) |
(15,026) |
Tax |
(113) |
3,856 |
(28) |
0 |
0 |
0 |
0 |
||
Profit After Tax and minority interests (norm) |
(18,693) |
(12,148) |
(10,225) |
(16,053) |
(15,978) |
(10,976) |
(13,925) |
||
Profit After Tax and minority interests (FRS 3) |
(18,391) |
(18,922) |
(18,098) |
(17,215) |
(17,120) |
(12,097) |
(15,026) |
||
Average Number of Shares Outstanding (m) |
29.6 |
30.3 |
33.7 |
37.2 |
37.5 |
37.8 |
38.1 |
||
EPS - normalised (€) |
|
|
(0.63) |
(0.40) |
(0.30) |
(0.43) |
(0.43) |
(0.29) |
(0.37) |
EPS - normalised and fully diluted (€) |
|
(0.63) |
(0.40) |
(0.30) |
(0.43) |
(0.43) |
(0.29) |
(0.37) |
|
EPS - (IFRS) (€) |
|
|
(0.62) |
(0.62) |
(0.54) |
(0.46) |
(0.46) |
(0.32) |
(0.39) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
112,498 |
110,660 |
89,745 |
88,585 |
87,422 |
86,425 |
85,769 |
Intangible Assets |
71,397 |
72,120 |
64,848 |
63,686 |
62,545 |
61,424 |
60,323 |
||
Tangible Assets |
25,628 |
27,517 |
24,829 |
24,831 |
24,809 |
24,933 |
25,378 |
||
Investments in long-term financial assets |
15,473 |
11,023 |
68 |
68 |
68 |
68 |
68 |
||
Current Assets |
|
|
26,092 |
32,146 |
52,521 |
36,133 |
28,468 |
29,790 |
34,755 |
Short-term investments |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Cash |
22,059 |
28,102 |
47,195 |
30,056 |
21,929 |
20,207 |
23,478 |
||
Other |
4,033 |
4,044 |
5,326 |
6,077 |
6,540 |
9,583 |
11,276 |
||
Current Liabilities |
|
|
(8,069) |
(9,828) |
(15,405) |
(17,232) |
(17,657) |
(20,183) |
(18,095) |
Creditors |
(8,069) |
(7,751) |
(10,116) |
(11,943) |
(12,368) |
(14,894) |
(12,806) |
||
Short term borrowings |
0 |
(2,077) |
(5,289) |
(5,289) |
(5,289) |
(5,289) |
(5,289) |
||
Long Term Liabilities |
|
|
(16,868) |
(23,681) |
(26,051) |
(22,551) |
(29,051) |
(37,551) |
(57,551) |
Long term borrowings |
0 |
(9,045) |
(12,687) |
(12,687) |
(22,687) |
(32,687) |
(52,687) |
||
Other long term liabilities |
(16,868) |
(14,636) |
(13,364) |
(9,864) |
(6,364) |
(4,864) |
(4,864) |
||
Net Assets |
|
|
113,653 |
109,297 |
100,810 |
84,935 |
69,183 |
58,481 |
44,877 |
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
(21,533) |
(17,741) |
(956) |
(15,906) |
(16,647) |
(9,151) |
(12,874) |
Net interest and financing income (expense) |
2,390 |
1,690 |
(4,436) |
(877) |
(1,152) |
(2,103) |
(2,999) |
||
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(268) |
(95) |
(20) |
(356) |
(328) |
(467) |
(856) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Financing |
0 |
11,290 |
13,321 |
0 |
0 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(19,411) |
(4,856) |
7,909 |
(17,139) |
(18,127) |
(11,722) |
(16,728) |
||
Opening net debt/(cash) |
|
|
0 |
(37,532) |
(28,003) |
(29,287) |
(12,148) |
5,979 |
17,701 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
56,943 |
(4,673) |
(6,625) |
0 |
0 |
0 |
(0) |
||
Closing net debt/(cash) |
|
|
(37,532) |
(28,003) |
(29,287) |
(12,148) |
5,979 |
17,701 |
34,430 |
Lease debt |
N/A |
1,527 |
1,099 |
1,099 |
1,099 |
1,099 |
1,099 |
||
Closing net debt/(cash) inclusive of IFRS 16 lease debt |
(37,532) |
(26,476) |
(28,188) |
(11,049) |
7,078 |
18,800 |
35,529 |
||
Source: Company reports, Edison Investment Research
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Research: TMT
Following the strategic shift announced in January 2020, Thinfilm is using its proven printed technology to develop solid-state lithium microbatteries with the intention of manufacturing them in volume in its roll-to-roll (R2R) production facility. Consistent with this strategy, the company has announced material progress with regards to commercial discussions, technical validation and manufacturing validation. It remains on track to generate initial microbattery revenues in Q421.