Nicox — Looking ahead to Mont Blanc study readout

Nicox (Euronext Growth: ALCOX)

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Research: Healthcare

Nicox — Looking ahead to Mont Blanc study readout

Nicox expects to report top-line primary efficacy results in early November from its Mont Blanc Phase III study of lead drug candidate NCX-470, being advanced for the treatment of elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension (OHTN). We provide a preview of the upcoming readout and review some competing drug candidates in the therapeutic landscape. Positive Mont Blanc study data, demonstrating superior IOP-lowering efficacy to latanoprost, would materially de-risk future NCX-470 development and likely drive a re-rating of the stock.

Written by

Pooya Hemami

Analyst - Healthcare

nicox01

Healthcare

Nicox

Looking ahead to Mont Blanc study readout

Clinical results preview

Pharma and biotech

26 October 2022

Price

€1.95

Market cap

€84m

$0.98/€

Net cash (€m) at 30 September 2022

5.0

Shares in issue

43.2m

Free float

86%

Code

COX

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.2

14.2

(36.7)

Rel (local)

6.8

14.9

(30.7)

52-week high/low

€3.3

€1.7

Business description

France-based Nicox develops therapeutics for the treatment of ocular conditions. Its lead candidate NCX-470 is in Phase III studies for the treatment of glaucoma, and it is advancing NCX-4251 for dry eye disease. Nicox also receives licence revenue for its FDA-approved drugs Vyzulta and Zerviate.

Next events

Mont Blanc Phase III NCX-470 top-line results

November 2022

Analysts

Pooya Hemami
OD MBA CFA

+1 646 653 7026

Soo Romanoff

+44 (0)20 3077 5700

Nicox is a research client of Edison Investment Research Limited

Nicox expects to report top-line primary efficacy results in early November from its Mont Blanc Phase III study of lead drug candidate NCX-470, being advanced for the treatment of elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension (OHTN). We provide a preview of the upcoming readout and review some competing drug candidates in the therapeutic landscape. Positive Mont Blanc study data, demonstrating superior IOP-lowering efficacy to latanoprost, would materially de-risk future NCX-470 development and likely drive a re-rating of the stock.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/20

14.4

(10.2)

(0.30)

0.0

N/A

N/A

12/21

8.6

(15.5)

(0.35)

0.0

N/A

N/A

12/22e

5.2

(17.3)

(0.36)

0.0

N/A

N/A

12/23e

7.4

(16.4)

(0.37)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Dolomites study data provide us with confidence

NCX-470 was studied in the 433-patient US 28-day Dolomites trial, where different NCX-470 dose concentrations were compared with latanoprost (0.005%). Top-line results reported in Q419 showed the highest tested concentration (0.065%) demonstrated both statistical non-inferiority and superiority in IOP lowering (from baseline) to the latanoprost arm at day 28. The IOP-lowering effect of NCX-470 (at 0.065%) from baseline was 7.6–9.8mmHg versus 6.3–8.8mmHg for latanoprost. Statistical superiority was met with NCX-470 (at 0.065%) being up to 1.4mmHg superior (in IOP-lowering efficacy) to latanoprost at day 28 (p<0.025).

Mont Blanc testing 0.1% concentration

The Mont Blanc Phase III study began in mid-2020 and has enrolled 691 patients with open-angle glaucoma (OAG) or OHTN and included around 50 US sites. Subjects are randomised to take either NCX-470 or latanoprost, and if results are positive, NCX-470 could be the first monotherapy drug to have shown statistical superiority to a prostaglandin F2α analogue (PGA) drug in a registration trial. We also reiterate that the chosen NCX-470 concentration (0.1%) studied in Mont Blanc is higher than the 0.065% used in the Dolomites study and we estimate there is a reasonable probability the incremental IOP reduction to latanoprost that can be shown could be higher than the 1.4mmHg amount shown in the Dolomites study.

Valuation: Mild revision following Q322 update

Nicox recently reported Q322 financial highlights, and reiterated that it is funded into Q423, based on the development of NCX-470 alone. After updating our forecasts to reflect slightly higher than expected Q322 cash utilisation, updating our forex assumptions and rolling forward our estimates, we now obtain an rNPV valuation for Nicox of €236.2m (versus €224.0m previously). After updating for Q322 net cash of €5.0m, we obtain an equity value of €241.2m, or €5.58 per basic share (€5.29 fully diluted), up from €5.45 previously (€5.17 fully diluted).

Results from first NCX-470 Phase III trial on deck

Nicox expects to report top-line primary efficacy results in early November from its Mont Blanc Phase III study of lead topical ophthalmic drug candidate NCX-470, which is being advanced for the treatment of elevated IOP in patients with open-angle glaucoma or OHTN.

NCX-470 is a second clinical-stage compound based on the company’s proprietary NO-donating platform that combines a nitric oxide (NO)-donating molecule with an established PGA drug, which, as explained below, provides an additional mechanism for the drug to reduce IOP. The technology has already been applied successfully in a first commercial glaucoma drug, Vyzulta, developed by Nicox and out-licensed to and commercialised by Bausch + Lomb (B+L). If trends from the Dolomites Phase II study are reproduced, NCX-470 could potentially become the first once-daily dosed non-combination glaucoma drug product to show statistical superiority to a standalone PGA drug in its registration-enabling pivotal trials.

As explained in our May 2022 Outlook report, glaucoma is a series of ocular disorders characterised by optic nerve damage that results in a progressive and irreversible vision loss, and is often, but not always, caused by an elevated level of IOP. PGA drugs have become the most commonly used first-line glaucoma treatment, owing to their more effective reduction of IOP compared to nearly all previous drug treatment classes. PGA drugs work by reducing aqueous humour (AH) outflow through the uveoscleral tract, and offer a convenient dosing schedule (once daily) and relatively benign adverse event (AE) profile. PGAs command c 50% of the topical glaucoma market in the US.

Vyzulta, approved by the FDA in 2017, is a modified form of latanoprost (the first PGA drug approved to treat glaucoma) designed to also donate NO. Vyzulta provides latanoprost’s PGA-lowering mechanism of action (MoA), but the donation of NO can also further reduce IOP by relaxing the trabecular meshwork and increasing AH outflow through the trabecular meshwork/Schlemm canal (TM/SC) pathway.

NCX-470 positioned as a more potent NO-donating PGA

NCX-470 is a second NO-donating candidate drug. Instead of incorporating latanoprost as the base PGA molecule (as in Vyzulta), NCX-470 releases bimatoprost and NO when instilled into the eye. Bimatoprost is a second-generation PGA marketed as Lumigan 0.01% by AbbVie and is the best-selling branded glaucoma drug in the US in terms of revenue. Bimatoprost is generally considered the most effective approved base PGA molecule for glaucoma, with meta-studies1 suggesting incremental IOP reductions of c 0.5mmHg to c 1.2mmHg compared to latanoprost or travoprost, albeit with a higher incidence of hyperaemia. Further, the NCX-470 formulation in current trials provides a higher effective NO dose release per eye drop compared to Vyzulta, which could potentially lead to a stronger therapeutic effect.

Dolomites sets expectations for Mont Blanc study results

NCX-470 was studied in the 433-patient US multicentre 28-day Dolomites trial, where different NCX-470 dose concentrations were compared with latanoprost (0.005%). Top-line results were reported in Q419, and discussed in a peer-reviewed journal article. The study showed the highest tested concentration (0.065%) demonstrated both statistical non-inferiority and superiority in IOP lowering (versus baseline) compared to the latanoprost arm at day 28. The IOP-lowering effect of NCX-470 (at 0.065%) from baseline was 7.6–9.8mmHg versus 6.3–8.8mmHg for latanoprost. Statistical superiority was met with NCX-470 (at 0.065%) being up to 1.4mmHg superior (in IOP-lowering efficacy) to latanoprost at day 28 (p<0.025).

Dolomites set the basis for the Mont Blanc Phase III study, which began in mid-2020 and enrolled 691 patients with OAG or OHTN and included around 50 US sites. Following the initial adaptive design phase of the study, subjects are randomised to take either NCX-470 (0.1% concentration) or latanoprost (0.005%) once daily in both eyes for three months. The primary endpoint is the mean IOP reduction from a time-matched baseline at 8am and 4pm time points at weeks two and six and month-three visits. The last patient visit was conducted on 16 September, and study results are expected in early November.

As a reminder, a second Phase III study in glaucoma will be required for FDA approval and this study, Denali, started in Q420. The company recently guided that, based on current recruitment rates, it now expects to report top-line results for Denali after 2024. We currently model a potential NCX-470 launch in the US to 2027.

Positive Mont Blanc results could open opportunities

We anticipate that positive Mont Blanc top-line study data, demonstrating superior IOP-lowering efficacy to latanoprost, would materially de-risk future NCX-470 development and likely drive a re-rating of the stock. Further, positive Mont Blanc data could provide optionality as it may open the door for NCX-470 out-licensing transactions (eg for North America, Japan or Europe) or other strategic deals or initiatives. We highlight that in August 2022, Alcon announced it was purchasing Aerie Pharmaceuticals for $770m in equity value, a 37% premium to Aerie’s last closing price. Aerie’s leading commercial-stage products, and in our view, likely the primary drivers for the transaction, are its two FDA-approved glaucoma drugs based on its Rho-kinase (ROCK) inhibitor molecule, netarsudil. These are Rocklatan (a combination of netarsudil and latanoprost) and Rhopressa (netarsudil standalone).

Level of IOP reduction may influence NCX-470 market potential

As stated above, the glaucoma market is generally dominated by PGA drugs, with the PGA showing the highest IOP-lowering efficacy (bimatoprost) generally commanding stronger share and revenue prospects among monotherapy treatments. Net US Lumigan sales (after all discounts) were reported by AbbVie at $273m in 2021 and its international sales, including Ganfort (bimatoprost/timolol combination), were $306m. Hence, Nicox estimates that the commercial potential of NCX-470 will be more favourable with a higher level of IOP reduction versus latanoprost.

While predicting the precise quantity of incremental IOP benefit needed to show a differentiated and competitive profile in the glaucoma treatment market is not an exact science, we estimate a relative reduction of at least c 1.5mmHg vs latanoprost, provided that statistical superiority is demonstrated, should enable NCX-470 to distinguish itself effectively against other glaucoma monotherapy drugs.

We reiterate that the chosen NCX-470 concentration (0.1%) studied in Mont Blanc is higher than the 0.065% used in the Dolomites study and based on the Dolomites results, we estimate there is a reasonable probability the incremental IOP reduction to latanoprost 0.005% that can be shown could be higher than the 1.4mmHg amount shown in the Dolomites study.

We also note that no glaucoma drug class, including ROCK inhibitors (the most recent new drug class to reach the market), has matched PGA drugs in IOP-lowering efficacy. Further, nearly every PGA-based glaucoma drug that has been commercialised in recent years, including Vyzulta, has had its Phase III registration trials compare efficacy against a β-blocker drug for the primary endpoint. NCX-470 is being measured against latanoprost, a PGA (the standard-of-care), and if successful, would be the first monotherapy drug to show a statistical advantage in a head-to-head comparison against another PGA drug in a registration trial. We note Rocklatan has shown statistical superiority to latanoprost in Phase III studies, but it is a combination drug (and thus has the AE profiles of both constituent molecules) and, as with Rhopressa, can lead to hyperaemia (59% incidence in registration trials)2 and corneal verticillata. Altogether, among current US approved products, we perceive the most direct competitors to NCX-470 as Lumigan, Vyzulta and Rocklatan. We note that Aerie had guided for its total glaucoma franchise (Rocklatan and Rhopressa) net product revenue to be $130–140m for FY22.

Recent Omlonti approval adds new entrant to glaucoma market

Another recent market entrant is Santen’s Omlonti (omidenepag isopropyl 0.002%), approved by the FDA in September. Omlonti targets prostanoid receptor EP2 (unlike currently approved PGA drugs, which target receptor FP) and, as a result, may also improve outflow through the conventional (TM/SC) pathway in addition to the uveoscleral pathway. In Santen’s initial new drug application with the US FDA, two of the three included Phase III studies meeting the non-inferiority statistical endpoint compared to timolol and latanoprost. Studies with Omlonti show a comparable or perhaps marginally lower IOP reduction (c 2030%) to latanoprost 0.005% (25–35%), however its different MoA to approved PGA drugs, mentioned above, has thus far been shown to result in materially fewer cases of ocular prostaglandin-associated side effects (ie eyelash growth and eyelid pigmentation) compared to a more conventional PGA drug, tafluprost. Thus, we anticipate that Omlonti may not necessarily be positioned as a direct competitor for NCX-470 (whose key profile is expected to be superior IOP reduction to an established PGA) as rather than showing increased efficacy compared to approved PGA drugs, Omlonti’s differentiating aspect would be an improved safety profile.

Additional emerging pipeline considerations

NCX-470, if approved, may need to compete against other emerging glaucoma therapeutic agents. We provide a selected list of some of the later-stage product candidates below (to our knowledge, none of these has yet shown statistical superiority in IOP-lowering efficacy to an approved PGA drug). Some of these (eg K-232, PHP-201) are targeting Asian markets first and/or may not be initial competitors for the US or Europe.

Santen/Ona’s sepetaprost (DE-126) is a dual agonist of the prostanoid EP3 and FP receptors and a dose-ranging Phase IIb (ANGEL) study found sepetaprost 0.002% delivered a similar IOP reduction to latanoprost 0.005% across all time points through three months and a lower rate of AEs. A subsequent Phase IIb (ANGEL-2) study was initiated comparing DE-126 to timolol 0.5% and was completed near YE21, but to our knowledge results have not yet been published.

Exhibit 1: Selected emerging potentially competing topical drug treatments for glaucoma

Product

Company

Stage or Status

Description

Notes

Sepetaprost (DE-126)

Santen/Ono Pharma

Phase IIb

Prostaglandin with a novel mode of action that is both an FP- and EP-receptor dual agonist

Phase IIb (NCT03216902) dose-ranging (n=241) study found 0.002% concentration (n=44) arm had 7mmHg reduction in IOP versus baseline (29% drop) versus 6.8mmHg (26% drop) for latanoprost comparator arm; 0.002% DE-126 arm was well tolerated with lower AE than latanoprost arm. Subsequent Phase IIb (NCT04742283, n=323) compared the drug to timolol 0.5% (results not yet published). Initiated European Phase II exploratory study in September 2021

K-232 (ripasudil/ brimonidine)

Kowa (D. Western Therapeutics)

Phase III (Japan)

Ripasudil is ROCK inhibitor (lowers IOP by relaxing TM); brimonidine is an α2-receptor agonist

Ripasudil (standalone) approved in Japan in 2014; Phase III studies of K-232 started in early 2020. In Q421 application filed for approval of domestic manufacturing and marketing in Japan

Bamosiran (SYL040012)

Sylentis
(Grupo Zeltia)

Phase II

Topical RNAi-based therapy that blocks production of the β2-adrenergic receptors

180-patient Phase II (NCT02250612) showed non-inferiority versus twice-daily timolol in patients with baseline IOP over 25mmHg, but did not show non-inferiority in total study population

Razuprotafib (AKB-9778)

Aadi Bioscience (Aerpio Pharma)

Phase II

Inhibitor of vascular endothelial protein tyrosine phosphatase, resulting in activation of Tie2 (tyrosine kinase receptor 2), which is projected to restore SC vasculature and improve AH outflow

Phase II (NCT04405245; n=194) top-line results showed the change from baseline at day 28 in diurnal mean IOP in eyes treated with razuprotafib twice daily, plus latanoprost showed a statistically significant improvement in IOP reduction (mean difference of 0.92mmHg) compared to those treated with latanoprost plus placebo

H-1337

D.Western Therapeutics Institute

Phase II

Multikinase inhibitor that inhibits various protein kinases, including leucine-rich repeat kinase and Rho, and is thought to stimulate AH drainage via TM/SC

87-patient US Phase II study (NCT03452033) completed in 2018 and showed 4.7mmHg incremental reduction in IOP vs baseline compared to placebo at 28 days

Sovesudil (PHP-201)

pH Pharma

Phase IIb (and Phase III in Korea)

ROCK inhibitor (lowers IOP by relaxing TM)

Phase IIb trial in patients with normotensive glaucoma showed superior reduction in IOP vs placebo. The company obtained approval to start a Phase III study in Korea (NCT04863365)

QLS-101

Qlaris Bio

Phase II

ATP-sensitive potassium channel activating prodrug. Believed to reduce distal outflow resistance and episcleral venous pressure, which may reduce IOP

Phase II trial (NCT04830397, n=84) showed a positive efficacy signal of QLS-101 as well as a favourable safety profile with no incidences of hyperaemia. Two other Phase II trials are underway: NCT04947124 (patients with Sturge-Weber Syndrome-related glaucoma) and NCT04857827 (patients with normal tension glaucoma)

Cenegermin (rhNGF)

Dompe

Phase I/II

Recombinant human nerve growth factor (rhNGF) designed to support RGC survival (rather than control IOP)

Lower-dose formulation (Oxervate) has already been approved for treatment of neurotrophic keratitis; results of 60-patient Phase Ib/II study (NCT02855450) showed no statistically significant neuroenhancement, although rhNGF was well tolerated. The study authors suggest that further neuroprotection trials are warranted

OCS-05 (ACT-01)

Oculis (Accure Therapeutics)

Phase II (Europe)

Activates trophic signalling pathways eg IGF-1 and BDNF. This process may have potential to protect nerve axons in conditions where the optic nerve may be compromised (eg glaucoma, optic neuritis)

Positive preclinical data and safety/tolerability shown in Phase I safety study in healthy volunteers. Phase IIa (ACUITY, NCT04762017, n=36) study in optic neuritis ongoing in Europe (results expected H223)

Source: Edison Investment Research

Preclinical study shows possible neuroprotection

There has been ongoing interest in the ophthalmic community in other (neuroprotective) approaches to manage glaucoma, such as improving ocular perfusion, to preserve the functionality of the retinal ganglion cells affected by glaucoma. The current approved treatments are designed to reduce IOP, which may not fully prevent retinal ganglion cell degeneration and thus progression of the condition in many patients, particularly those with normal tension glaucoma. It is thought that neuroprotective therapies could have the potential to prevent ischemic optic neuropathy (restricted blood flow to optic nerve) and oxidative damage (which would otherwise lead to apoptosis of retinal ganglion cells and optic nerve atrophy). A preclinical study of NCX-470 suggests it might exhibit neuroprotective activity alongside IOP reduction properties. Further evidence of NCX-470 neuroprotective activity could bolster its therapeutic profile and competitiveness among first-line glaucoma medications.

The preclinical study, discussed in a prior note, consisted of an endothelin-1 (ET-1) induced ischemia/reperfusion model in rabbits, used to mimic glaucoma pathophysiology. Rabbits were injected twice weekly for two weeks near the optic nerve with ET-1, followed by concomitant dosing with NCX-470 (0.1% twice daily) in one eye and vehicle in the other for an additional four weeks. The trial investigated changes in three key metrics: IOP, ophthalmic artery resistive index (OA-RI) and retina physiology (electroretinogram, ERG). OA-RI is a measurement of blood flow resistance that assesses vascular damage of the ophthalmic artery. Additionally, the change in concentration of oxidative stress markers were measured in the dissected retina and ciliary body (extension of the iris).

Exhibit 2: NCX-470 showing retinal cell protection in a non-clinical animal model*

Source: Nicox. Note: *Nicox internal data in a model of ischemia/reperfusion injury to the optic nerve in rabbits induced by ET-1. ET-1 alone was administered twice-weekly for two weeks, followed by concomitant dosing with NCX-470 or vehicle for a further four weeks.

In this preclinical study, repeated ocular dosing with NCX-470 from week three was shown to reverse ET-1-induced changes in IOP; ET-1 increased IOP from 20.7±0.6mmHg at baseline to 27.0±0.6mmHg at week six, but with NCX-470 treatment baseline IOP was re-established (21.8±1.0 mmHg) at week six. OA-RI was calculated through the measurement of OA-PSV (ophthalmic artery peak systolic velocity) and OA-EDV (ophthalmic artery end diastolic velocity), both of which have been shown to be altered in glaucoma patients. ET-1 injection was found to increase OA-RI from baseline of 0.30±0.02 to 0.42±0.03 in week six, compared to NCX-470 treatment which re-established OA-RI to 0.33±0.02 in week six (p<0.05 vs vehicle). Therefore NCX-470 was shown to significantly reverse the increase in OA-RI induced by ET-1 injections over time.

ERG responses were investigated after flashlight stimulations in scotopic (dim lights) and photopic (well-lit) conditions following repeated NCX-470 dosing after ET-1-induced injury. Data showed that significantly less impairment occurred in both the rod photoreceptor response (dark-adapted scotopic ERG 0.01) and the combined response of rod and cone photoreceptors (dark-adapted scotopic ERG 3.0) with NCX-470 treatment compared to vehicle. The marked decline in photoreceptor responses seen with ET-1 dosing (which continued in eyes treated with vehicle) was nearly completely reversed by week six in the NCX-470-treated eyes (p<0.05 vs vehicle). Additional data showed changes in the concentration and activity of oxidative stress markers; the reduced levels of glutathione as well as the lower manganese superoxide dismutase activity in ET-1 treated eyes were reversed with twice daily NCX-470 treatment. Overall results from the study suggest that NCX-470 may also provide benefit in glaucoma patients through a mechanism other than IOP reduction, namely by potentially improving ocular perfusion. Larger human clinical trials would be needed to demonstrate possible neuroprotective activity of NCX-470, but we estimate that such studies would likely only occur following regulatory approval. Nonetheless, animal data suggestive of neuroprotection may improve the drug’s competitive profile, both once approved, and also for possible licensing or other corporate activity prior to the results from Denali.

Limited success in other neuroprotective approaches to date

Oculis’ OCS-05 (ATP-sensitive potassium channel activating prodrug) is a drug candidate that also aims for neuroprotection (rather than IOP control), but remains at a very early stage and is currently under evaluation for optic neuritis. So far, to our knowledge, no pipeline treatments have demonstrated significant and repeatable neuroprotection in clinical trials in glaucoma patients. Notably, oral memantine, an N-methyl-D-aspartate antagonist approved for Alzheimer’s disease, was not shown to reduce glaucoma progression across two Phase III studies studying up to 48 months. Brimonidine, a topical α2-adrenergic receptor agonist approved for glaucoma, had been previously suggested to slow visual field deterioration, however, a multicenter trial (n=190) comparing 0.2% brimonidine with 0.5% timolol did not provide conclusive evidence. We also note that a topical recombinant human nerve growth factor did not demonstrate statistically significant short-term neuroenhancement in a Phase Ib trial, but study authors recommended further investigation.

Financials and valuation

On 19 October Nicox reported Q322 financial and operating highlights, where it confirmed its overall business plan and its expectation to report primary efficacy data for Mont Blanc in early November.

Nicox reported that net royalty revenue (which we estimate is predominantly due to Vyzulta-related royalties from B+L, with a minor contribution from Zerviate royalties from Eyevance) was €0.8m in Q322, up from €0.7m of net royalties in Q321. Total Q321 revenue of €2.4m also included €1.7m of non-recurring licensing payments. Vyzulta US prescriptions continue to increase robustly, up 37% y-o-y in Q322 (vs a 35% y-o-y increase in Q222). We believe that pricing issues in reimbursement are continuing to drive a discrepancy between Nicox’s reported royalties and the Vyzulta prescriptions growth rate, but these should likely flatten out in coming quarters.

Nicox reported €25.6m in cash and equivalents at 30 September, compared to €31.6m at June 30. It reported financial debt of €20.6m, consisting of its €18.6m bond financing agreement with Kreos Capital and a €2m credit agreement guaranteed by the French government. We calculate Q322 net cash of €5.0m, excluding lease liabilities. Nicox estimates that it is financed until 31 October 2023 (or end-November 2023 assuming the extension of the interest only period of the existing Kreos debt), based on the development of NCX-470 alone.

Following the Q322 update, we have increased our 2022 G&A and R&D expense forecasts to €7.9m and €15.1m, respectively, from our prior estimates of €7.8m and €14.3m, respectively. Our FY22 normalised PBT and EPS estimates now project losses of €17.3m and €0.36, respectively, versus our prior forecasts of losses of €16.4m and €0.34, respectively. Our FY23 forecasts are broadly unchanged. We now also assume FY22e year-end net cash of €1.1m, compared to our prior assumption of €2.0m net cash (both excluding lease liabilities). We continue to expect the company will require €85m in added funding before the anticipated launch of NCX-470 (which we forecast in 2027). Our projections do not include any potential proceeds from the exercise of options or warrants, which if exercised would lower our funding forecasts accordingly.

We have also updated our model to reflect a $0.98/€ exchange rate (versus parity, previously) and have rolled forward our estimates.

Exhibit 3: Nicox SA rNPV assumptions

Product contribution

Indication

Stage

NPV (€m)

Probability of success

rNPV (€m)

rNPV/
basic share (€)

Launch year

Peak sales (€m) **

NCX-470 (net of R&D and SG&A costs) in US market

Glaucoma

Phase III ongoing

289.8

50%

139.5

3.23

2027

394

NCX-470 (net of R&D and SG&A costs) in Europe and unpartnered regions

Glaucoma

Phase III

149.0

35%

50.3

1.16

2028

199

NCX-470 license fees from Ocumension (China and other)

Glaucoma

Phase III ongoing

8.5

50%

4.0

0.09

2027

3.7*

NCX-4251 (net of R&D and SG&A costs) sales and license fees/royalties

Dry eye disease

Phase IIb

158.3

25%

39.5

0.91

2028

86*

Vyzulta royalties from B+L

Glaucoma

Commercial

41.8

100%

41.8

0.97

2017

11.3*

Zerviate royalties from Eyevance and others

Allergic conjunctivitis

Commercial

28.2

100%

28.2

0.65

2020

6.8*

Corporate costs

(67.0)

100%

(67.0)

(1.55)

Total

608.6

236.2

5.47

Net cash (Q322) excluding lease liabilities

5.0

5.0

0.12

Total equity value

613.6

241.2

5.58

Basic shares outstanding (000)

43,225

Outstanding options and warrants (000)

6,142

FD shares outstanding (000)

49,367

Source: Edison Investment Research. Note: *Reflects net license and royalties received by Nicox and not commercial sales by licensee. **Peak projected sales shown for year 2032 except for Vyzulta where peak anticipated royalties are shown for year 2030.

Following these changes, we now obtain an rNPV valuation for Nicox of €236.2m (versus €224.0m previously). Our underlying probability of success estimates are unchanged. After updating for Q322 net cash of €5.0m, we obtain an equity value of €241.2m, or €5.58 per basic share (up from €5.45 previously). After considering the potential dilutive effect of options and warrants and their effects on net cash, our fully diluted valuation would be €5.29 (up from €5.17 previously) per fully diluted share.

Exhibit 4: Financial summary

€(000)

2018

2019

2020

2021e

2022e

2023e

2024e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

4,717

8,260

14,423

8,583

5,246

7,435

9,890

Cost of Sales

(690)

(1,405)

(1,516)

(1,350)

(1,606)

(1,786)

(2,205)

Gross Profit

4,027

6,855

12,907

7,233

3,639

5,649

7,685

General & Administrative

(9,506)

(7,666)

(6,677)

(7,000)

(7,905)

(8,269)

(11,543)

Net Research & Development

(15,491)

(16,883)

(11,991)

(17,194)

(15,063)

(12,336)

(14,136)

Amortisation of intangible assets

0

(659)

(1,252)

(1,205)

(423)

(798)

(778)

Operating profit before exceptionals

(20,970)

(18,353)

(7,013)

(18,166)

(19,752)

(15,755)

(18,772)

EBITDA

 

 

(20,718)

(17,230)

(5,270)

(16,505)

(18,941)

(14,649)

(17,724)

Depreciation & other

(252)

(464)

(491)

(456)

(388)

(308)

(270)

Operating Profit (before amort. and except.)

(20,970)

(17,694)

(5,761)

(16,961)

(19,329)

(14,957)

(17,994)

Exceptionals including asset impairment

302

(6,115)

(6,621)

(30,658)

(11,631)

0

0

Other

0

0

0

(1,159)

0

0

0

Operating Profit

(20,668)

(23,809)

(12,382)

(48,778)

(30,960)

(14,957)

(17,994)

Net Interest

2,390

1,690

(4,436)

1,419

2,057

(1,459)

(3,549)

Profit Before Tax (norm)

 

 

(18,580)

(16,004)

(10,197)

(15,542)

(17,272)

(16,415)

(21,543)

Profit Before Tax (FRS 3)

 

 

(18,278)

(22,778)

(18,070)

(48,564)

(29,326)

(17,213)

(22,322)

Tax

(113)

3,856

(28)

3,644

1,679

0

0

Profit After Tax and minority interests (norm)

(18,693)

(12,148)

(10,225)

(13,057)

(15,593)

(16,415)

(21,543)

Profit After Tax and minority interests (FRS 3)

(18,391)

(18,922)

(18,098)

(44,920)

(27,647)

(17,213)

(22,322)

Average Basic Number of Shares Outstanding (m)

29.6

30.3

33.7

37.5

43.4

44.0

44.6

EPS - normalised (€)

 

 

(0.63)

(0.40)

(0.30)

(0.35)

(0.36)

(0.37)

(0.48)

EPS - normalised and fully diluted (€)

 

(0.63)

(0.40)

(0.30)

(0.35)

(0.36)

(0.37)

(0.48)

EPS - (IFRS) (€)

 

 

(0.62)

(0.62)

(0.54)

(1.20)

(0.64)

(0.39)

(0.50)

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

66,871

61,045

60,125

59,324

Intangible Assets

71,397

72,120

64,848

39,974

32,127

31,329

30,550

Tangible Assets

25,628

27,517

24,829

26,660

28,760

28,638

28,615

Investments in long-term financial assets

15,473

11,023

68

237

158

158

158

Current Assets

 

 

26,092

32,146

52,521

47,738

26,578

36,028

40,176

Short-term investments

0

0

0

0

0

0

0

Cash

22,059

28,102

47,195

41,970

21,104

30,078

34,095

Other

4,033

4,044

5,326

5,768

5,475

5,950

6,082

Current Liabilities

 

 

(8,069)

(9,828)

(15,404)

(8,000)

(8,036)

(6,718)

(5,304)

Creditors

(8,069)

(7,751)

(10,115)

(8,000)

(8,036)

(6,718)

(5,304)

Short term borrowings

0

(2,077)

(5,289)

0

0

0

0

Long Term Liabilities

 

 

(16,868)

(23,681)

(26,027)

(31,057)

(28,846)

(54,846)

(80,846)

Long term borrowings

0

(9,045)

(12,687)

(20,520)

(20,196)

(46,196)

(72,196)

Other long term liabilities

(16,868)

(14,636)

(13,340)

(10,537)

(8,650)

(8,650)

(8,650)

Net Assets

 

 

113,653

109,297

100,835

75,552

50,741

34,589

13,350

CASH FLOW

Operating Cash Flow

 

 

(21,533)

(17,741)

(956)

(19,900)

(22,919)

(15,381)

(18,187)

Net interest and financing income (expense)

2,390

1,690

(4,436)

1,419

2,057

(1,459)

(3,549)

Tax

0

0

0

0

0

0

0

Net Operating Cash Flow

(19,143)

(16,051)

(5,392)

(18,481)

(20,862)

(16,839)

(21,736)

Capex

(268)

(95)

(20)

(8)

(83)

(186)

(247)

Acquisitions/disposals

0

0

0

0

37

0

0

Financing

0

11,290

13,321

13,804

186

0

0

Dividends

0

0

0

0

0

0

0

Net Cash Flow

(19,411)

(4,856)

7,909

(4,685)

(20,722)

(17,025)

(21,984)

Opening net debt/(cash)

 

 

0

(37,532)

(28,003)

(29,287)

(21,687)

(1,066)

15,960

HP finance leases initiated

0

0

0

0

0

0

0

Other

56,943

(4,673)

(6,625)

(2,915)

101

0

0

Closing net debt/(cash)

 

 

(37,532)

(28,003)

(29,287)

(21,687)

(1,066)

15,960

37,943

Lease debt

na

1,527

1,099

986

1,297

1,297

1,297

Closing net debt/(cash) inclusive of IFRS16 lease debt

(37,532)

(26,476)

(28,188)

(20,701)

231

17,257

39,240

Source: Company reports, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Nicox and prepared and issued by Edison, in consideration of a fee payable by Nicox. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Nicox and prepared and issued by Edison, in consideration of a fee payable by Nicox. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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