Last close As at 21/08/2026
CHF12.54
▲ −0.04 (−0.32%)
Market capitalisation
CHF261m
Research: Healthcare
The FDA has notified Newron that an application for a generic safinamide (Xadago) has been filed. Xadago has new chemical entity (NCE) exclusivity until 27 March 2022. Xadago is then protected to December 2028 by three patents that have potential extensions to 2031. If Newron files to enforce its patents before mid-June 2021, as we expect, the FDA will not authorise a generic for up to 30 months (to September 2024) while the legal situation is clarified. However, if a generic is launched in the next few years, it might reduce our expectations of Xadago’s US sales potential. We retain our indicative value of CHF121m until the Xadago legal situation is clarified and the evenamide study 008A completes in late 2021.
Written by
Newron Pharmaceuticals |
Long-term generic challenge to Xadago |
Xadago patents |
Pharma & biotech |
18 May 2021 |
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Newron Pharmaceuticals is a research client of Edison Investment Research Limited |
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The FDA has notified Newron that an application for a generic safinamide (Xadago) has been filed. Xadago has new chemical entity (NCE) exclusivity until 27 March 2022. Xadago is then protected to December 2028 by three patents that have potential extensions to 2031. If Newron files to enforce its patents before mid-June 2021, as we expect, the FDA will not authorise a generic for up to 30 months (to September 2024) while the legal situation is clarified. However, if a generic is launched in the next few years, it might reduce our expectations of Xadago’s US sales potential. We retain our indicative value of CHF121m until the Xadago legal situation is clarified and the evenamide study 008A completes in late 2021.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
7.04 |
(18.04) |
(1.01) |
0.0 |
N/A |
N/A |
12/20 |
5.26 |
(18.16) |
(1.09) |
0.0 |
N/A |
N/A |
12/21e |
6.67 |
(18.10) |
(1.01) |
0.0 |
N/A |
N/A |
12/22e |
7.68 |
(27.24) |
(1.53) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. 2019 accounts were restated.
Orange book patents
The FDA granted Xadago standard NCE protection expiring 27 March 2022. Safinamide’s strongest (form of matter) patent has expired. Newron lists three active US patents in the FDA Orange Book (the list of approved pharmaceuticals). The FDA does not enforce patents (courts do) or rule on patent validity (US Patent Office). The active patents are a production method expiring 10 December 2028 (US8076515B2); a process patent expiring 8 June 2027 (US8278485B2); and a use patent covering safinamide co-administration with other PD therapies (US8278485B2) expiring 1 September 2027. In our experience, it can be complex to try to enforce production and use patents; we do not comment on this case.
Abbreviated new drug application (ANDA)
To make an ANDA, a generic manufacturer claims that any active patents are invalid or not infringed. Under Paragraph IV of the FDA rules, If Newron files a court suit against the ANDA within 45 days, as we expect, the FDA will suspend the ANDA for up to 30 months (to September 2024). But if court rulings agree with the ANDA earlier, the FDA might authorise a generic after April 2022. This would reduce our expectations of US royalties, currently about 6% of US sales. Europe has regulatory protection for up to 10 years ending 21 February 2025.
Valuation: Held at CHF121m until more data available
In 2020 Xadago had annual royalties of €5.3m including low (undisclosed) US royalties. Our valuation contains an NPV of CHF100m for future Xadago sales (including the added dyskinesia indication) out of CHF240m total NPV revenues. If Xadago were exposed to earlier US generic competition (after April 2022) than we expect, this may need to be re-evaluated. Our Newron valuation of CHF121m (CHF6.8/share) is retained until study 008A of the schizophrenia drug evenamide (30mg) reports in late 2021 and any court action is resolved.
Exhibit 1: Financial summary
€000s |
2019 |
2020 |
2021e |
2022e |
||
Year end December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
7,038 |
5,258 |
6,669 |
7,678 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
7,038 |
5,258 |
6,669 |
7,678 |
||
EBITDA |
|
|
(18,567) |
(16,386) |
(16,681) |
(25,822) |
Depreciation |
(206) |
(219) |
(219) |
(219) |
||
Share option adjustments |
(2,126) |
(1,461) |
0 |
0 |
||
Operating Profit |
(20,899) |
(18,066) |
(16,900) |
(26,041) |
||
Net Interest |
737 |
(1,552) |
(1,200) |
(1,200) |
||
Profit Before Tax (norm) |
|
|
(18,036) |
(18,157) |
(18,100) |
(27,241) |
Profit Before Tax (reported) |
|
|
(20,162) |
(19,618) |
(18,100) |
(27,241) |
Tax |
(45) |
(1,380) |
0 |
0 |
||
Profit After Tax (norm) |
(18,081) |
(19,537) |
(18,100) |
(27,241) |
||
Profit After Tax (reported) |
(20,207) |
(20,998) |
(18,100) |
(27,241) |
||
Average Number of Shares Outstanding (m) |
17.8 |
17.8 |
17.8 |
17.8 |
||
EPS - normalised (€) |
|
|
(1.01) |
(1.09) |
(1.01) |
(1.53) |
EPS - (reported) (€) |
|
|
(1.13) |
(1.18) |
(1.01) |
(1.53) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
||
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 |
|
|
14,797 |
13,324 |
13,309 |
13,294 |
Intangible Assets |
20 |
11 |
11 |
11 |
||
Tangible Assets |
252 |
734 |
719 |
704 |
||
Investments |
14,525 |
12,579 |
12,579 |
12,579 |
||
Current Assets |
|
|
45,491 |
37,874 |
20,048 |
8,323 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
6,328 |
6,624 |
6,324 |
6,324 |
||
Cash |
39,163 |
31,250 |
13,724 |
1,999 |
||
Current Liabilities |
|
|
(5,595) |
(6,892) |
(7,151) |
(7,651) |
Creditors |
(5,595) |
(6,892) |
(7,151) |
(7,651) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(17,895) |
(27,060) |
(27,060) |
(42,060) |
Long term borrowings |
(16,749) |
(25,674) |
(25,674) |
(40,674) |
||
Other long-term liabilities |
(1,146) |
(1,386) |
(1,386) |
(1,386) |
||
Net Assets |
|
|
36,798 |
17,246 |
(854) |
(28,094) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(22,668) |
(12,656) |
(16,141) |
(25,341) |
Net Interest |
737 |
(1,552) |
(1,200) |
(1,200) |
||
Tax |
(45) |
(1,380) |
0 |
0 |
||
Capex |
(51) |
(34) |
(50) |
(50) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
0 |
0 |
0 |
0 |
||
Other |
17,337 |
7,365 |
(135) |
14,865 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(4,690) |
(8,257) |
(17,526) |
(11,726) |
||
Opening net debt/(cash) |
|
|
(42,972) |
(22,414) |
(5,576) |
11,950 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
(15,868) |
(8,581) |
0 |
(15,000) |
||
Closing net debt/(cash) |
|
|
(22,414) |
(5,576) |
11,950 |
38,675 |
Source: Company accounts, Edison Investment Research
|
|
Research: Healthcare
CASI continues to execute on multiple fronts and demonstrates that it has become a multifaceted company. It is expanding the sales of Evomela, its proprietary formulation of melphalan for multiple myeloma in China. Simultaneously, it is adding to its pipeline with new licensing deals and is executing on its development strategy, with four drug candidates currently in the clinic.