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Research: Healthcare
The licence agreement between SymBio and The Medicines Company (MDCO) for the exclusive rights to develop the IONSYS (SyB P-1501) pain patch in Japan has terminated effective 30 November. SymBio is seeking damages of at least $82m (¥9bn) arising from MDCO’s repudiation of the licence agreement. The termination is in line with our expectations after MDCO voluntarily withdrew IONSYS from sale in the US market in June; any compensation payments received from MDCO would represent upside to our forecasts and valuation. Our forecasts and valuation ($174m) are unchanged, as we have already removed all future costs and revenues for SyB P-1501 from our financial model.
Written by
SymBio Pharmaceuticals |
Licence agreement for IONSYS terminated |
Corporate update |
Pharma & biotech |
15 December 2017 |
ADR research
Business description
Next events
Analysts
SymBio Pharmaceuticals is a research client of Edison Investment Research Limited |
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The licence agreement between SymBio and The Medicines Company (MDCO) for the exclusive rights to develop the IONSYS (SyB P-1501) pain patch in Japan has terminated effective 30 November. SymBio is seeking damages of at least $82m (¥9bn) arising from MDCO’s repudiation of the licence agreement. The termination is in line with our expectations after MDCO voluntarily withdrew IONSYS from sale in the US market in June; any compensation payments received from MDCO would represent upside to our forecasts and valuation. Our forecasts and valuation ($174m) are unchanged, as we have already removed all future costs and revenues for SyB P-1501 from our financial model.
Year |
Revenue |
PTP |
EPADR |
DPADR |
P/E |
Gross yield |
12/15 |
17.1 |
(23.3) |
(0.72) |
0.0 |
N/A |
N/A |
12/16 |
21.0 |
(20.5) |
(0.52) |
0.0 |
N/A |
N/A |
12/17e |
31.9 |
(35.4) |
(0.73) |
0.0 |
N/A |
N/A |
12/18e |
37.6 |
(17.7) |
(0.35) |
0.0 |
N/A |
N/A |
Note: Converted at ¥113/US$.
Suspended SyB P-1501 Phase III to be terminated
SymBio in-licensed IONSYS (Syb P-1501) for the treatment of post-operative pain from MDCO in October 2015, and initiated a Phase III trial of SyB P-1501 in Japan in June 2016. SymBio suspended enrolment in the trial in April. In conjunction with the termination of the licence agreement, SymBio will terminate the development of SyB P-1501, a process that it expects to complete by 31 March 2018.
Rigosertib Phase III interim analysis expected Q417
Partner Onconova reported in November that it expects the interim analysis of the INSPIRE Phase III trial of rigosertib to be performed in Q417 or early 2018. The study is investigating iv rigosertib as a second-line therapy in 225 patients with high-risk myelodysplastic syndrome. The trial is expected to fully enroll in H118 and report top-line data in 2018. SymBio holds Japan and Korea rights and has contributed 33 of ~170 trial sites that were active as at 31 October 2017.
Strong Treakisym sales growth continues
Growth of Treakisym sales continues to be strong, driven by the approval of two new indications in 2016. In-market sales grew by 53%y-o-y in the first nine months of 2017, and net sales to partner Eisai grew by 68%. SymBio reported net sales growth of 72% to $21.4m in Q317. Despite the sales growth, the net operating loss for Q317 has increased to $31.0m from $16.8m in Q316, due largely to higher spending on clinical trials and costs associated with in-licensing bendamustine HCl RTD and RI injection products. SymBio has maintained its 2017 financial guidance, which was revised upwards in September.
Valuation: rNPV of $174m or $3.6/ADR
Our risk-adjusted valuation is unchanged at $174m or $3.6/ADR. We estimate that net cash of $40.7m at 30 September should be sufficient to fund operations into H218, by which point the Phase III clinical trial for rigosertib iv should be complete. We model $5.5m of indicative debt in FY18.
Exhibit 1: Financial summary
Accounts: JPN GAAP, year-end: December, $’000s |
|
2013 |
2014 |
2015 |
2016 |
2017e |
2018e |
|
PROFIT & LOSS |
||||||||
Total revenues |
|
|
13,558 |
17,301 |
17,108 |
20,957 |
31,850 |
37,593 |
Cost of sales |
|
|
(10,744) |
(12,641) |
(11,949) |
(12,955) |
(22,423) |
(26,465) |
Gross profit |
|
|
2,814 |
4,661 |
5,159 |
8,002 |
9,428 |
11,127 |
SG&A (expenses) |
|
|
(8,369) |
(9,343) |
(9,734) |
(12,072) |
(16,372) |
(17,027) |
R&D costs |
|
|
(9,317) |
(6,850) |
(18,006) |
(14,753) |
(27,832) |
(11,947) |
Other income/(expense) included in adjusted |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
Other income/(expense) excluded from adjusted |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
Reported EBIT |
|
|
(14,872) |
(11,533) |
(22,581) |
(18,823) |
(34,776) |
(17,846) |
Finance income/ (expense) |
|
|
89 |
219 |
144 |
48 |
(619) |
153 |
Other income/(expense) included in adjusted |
|
|
0 |
(16) |
19 |
65 |
0 |
0 |
Other income/(expense) excluded from adjusted |
|
|
612 |
1,488 |
(841) |
(1,728) |
0 |
0 |
Reported PBT |
|
|
(14,172) |
(9,841) |
(23,259) |
(20,437) |
(35,395) |
(17,693) |
Income tax expense |
|
|
(34) |
(34) |
(34) |
(34) |
(34) |
(34) |
Reported net income |
|
|
(14,206) |
(9,875) |
(23,293) |
(20,471) |
(35,429) |
(17,726) |
Average number of ADRs - basic (m) |
|
|
23.2 |
30.8 |
32.4 |
39.3 |
48.6 |
50.7 |
Basic Earnings per ADR (US$) |
|
(0.61) |
(0.32) |
(0.72) |
(0.52) |
(0.73) |
(0.35) |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
(14,800) |
(11,421) |
(22,367) |
(18,596) |
(34,537) |
(17,580) |
Adjusted EBIT |
|
|
(14,872) |
(11,533) |
(22,581) |
(18,823) |
(34,776) |
(17,846) |
Adjusted PBT |
|
|
(14,172) |
(9,826) |
(23,278) |
(20,503) |
(35,395) |
(17,693) |
Adjusted Earnings per ADR (US$) |
|
(0.61) |
(0.32) |
(0.72) |
(0.52) |
(0.73) |
(0.35) |
|
Adjusted diluted Earnings per ADR (US$) |
|
(0.61) |
(0.32) |
(0.72) |
(0.52) |
(0.73) |
(0.35) |
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
76 |
434 |
469 |
660 |
839 |
1,033 |
Goodwill |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
Intangible assets |
|
|
69 |
585 |
460 |
372 |
307 |
260 |
Other non-current assets |
|
|
324 |
430 |
465 |
680 |
680 |
680 |
Total non-current assets |
|
|
469 |
1,449 |
1,394 |
1,711 |
1,826 |
1,973 |
Cash and equivalents |
|
|
46,851 |
45,063 |
37,712 |
50,613 |
15,269 |
3,540 |
Inventories |
|
|
1,107 |
2,164 |
1,177 |
2,413 |
3,072 |
2,900 |
Trade and other receivables |
|
|
0 |
2,413 |
2,661 |
4,314 |
5,672 |
5,150 |
Other current assets |
|
|
19,600 |
14,874 |
1,164 |
1,818 |
1,818 |
1,818 |
Total current assets |
|
|
67,557 |
64,514 |
42,715 |
59,159 |
25,831 |
13,408 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
3,982 |
0 |
4,164 |
Trade and other payables |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
Other non-current liabilities |
|
|
27 |
20 |
14 |
12 |
12 |
12 |
Total non-current liabilities |
|
|
27 |
20 |
14 |
3,995 |
12 |
4,176 |
Trade and other payables |
|
|
0 |
2,708 |
2,831 |
2,848 |
3,614 |
2,360 |
Current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
1,327 |
Other current liabilities |
|
|
2,221 |
1,610 |
2,045 |
5,489 |
5,489 |
5,489 |
Total current liabilities |
|
|
2,221 |
4,318 |
4,876 |
8,337 |
9,103 |
9,176 |
Equity attributable to company |
|
|
65,779 |
61,625 |
39,220 |
48,539 |
18,543 |
2,029 |
Non-controlling interest |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
Profit before tax |
|
|
(14,172) |
(9,841) |
(23,259) |
(20,437) |
(35,395) |
(17,693) |
Depreciation and Amortization |
|
|
72 |
112 |
215 |
227 |
239 |
266 |
Share based payments |
|
|
589 |
838 |
911 |
1,212 |
1,212 |
1,212 |
Other adjustments |
|
|
(236) |
(1,830) |
231 |
1,744 |
619 |
(153) |
Movements in working capital |
|
|
(1,123) |
(688) |
1,678 |
(111) |
(1,251) |
(560) |
Net cash from operating activities (pre-tax) |
|
|
(14,869) |
(11,409) |
(20,226) |
(17,365) |
(34,575) |
(16,928) |
Interest paid / received |
|
|
59 |
238 |
156 |
53 |
(619) |
153 |
Income taxes paid |
|
|
(34) |
(34) |
(34) |
(34) |
(34) |
(34) |
Cash from operations (CFO) |
|
|
(14,844) |
(11,205) |
(20,103) |
(17,346) |
(35,228) |
(16,808) |
Capex |
|
|
0 |
(961) |
(210) |
(247) |
(354) |
(412) |
Acquisitions & disposals net |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
(11,790) |
3,743 |
13,389 |
(141) |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(11,790) |
2,782 |
13,178 |
(388) |
(354) |
(412) |
Net proceeds from issue of shares |
|
|
35,907 |
4,818 |
(16) |
28,550 |
4,220 |
0 |
Movements in debt |
|
|
0 |
0 |
0 |
3,982 |
(3,982) |
5,491 |
Other financing activities |
|
|
(7) |
(7) |
(7) |
(159) |
0 |
0 |
Cash from financing activities (CFF) |
|
|
35,900 |
4,812 |
(23) |
32,373 |
238 |
5,491 |
Currency translation differences and other |
|
|
62 |
1,823 |
(402) |
(1,738) |
0 |
0 |
Increase/(decrease) in cash and equivalents |
|
|
9,328 |
(1,788) |
(7,351) |
12,902 |
(35,345) |
(11,729) |
Cash and equivalents at end of period |
|
|
46,851 |
45,063 |
37,712 |
50,613 |
15,269 |
3,540 |
Net (debt) cash |
|
|
46,851 |
45,063 |
37,712 |
46,631 |
15,269 |
(1,951) |
Movement in net (debt) cash over period |
|
|
9,328 |
(1,788) |
(7,351) |
8,919 |
(31,362) |
(17,220) |
Source: Edison Investment Research and SymBio Pharmaceuticals accounts. Note: Solely for the convenience of the reader the financial summary table has been converted at a rate of ¥113 to $1. SymBio reports statutory accounts in Japanese yen. These translations should not be considered representations that any such amounts have been or could be converted into US dollars at the assumed conversion rate.
|
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