Medigene
Written by
Medigene |
An advancing immunotherapies programme |
FY15 results |
Pharma & biotech |
6 April 2016 |
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Medigene is well funded, with a net cash position of €46.8m (FY15). There is a clear strategy in place to advance both its DC vaccine programmes and TCR programme with the funds. We expect newsflow in the near term from its most advanced technology (DC vaccines) in Phase I/II studies for AML and prostate cancer, and the start of the first clinical study with its promising TCR technology. Our rNPV-based valuation remains at €216m.
Year end |
Revenue (€m) |
PBT* (€m) |
EPS* (€) |
DPS (€) |
P/E (x) |
Yield (%) |
12/14 |
13.8 |
(5.3) |
(0.42) |
0.0 |
N/A |
N/A |
12/15 |
6.8 |
(12.8) |
(0.74) |
0.0 |
N/A |
N/A |
12/16e |
7.1 |
(13.1) |
(0.66) |
0.0 |
N/A |
N/A |
12/17e |
7.3 |
(13.5) |
(0.67) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Advancing DC vaccine programmes
Medigene’s DC vaccine programmes include investigator-initiated trials (IITs) and a company-initiated trial (CIT), both of which are making progress. The CIT is a Phase I/II study in 20 AML patients, started in March 2015. The first six patients have been treated and, following review by the Data and Safety Monitoring Board, Medigene has commenced Phase II with the recent announcement that the first Phase II patient has started treatment. Once patient recruitment is complete, the Phase II trial will take about two years to complete (one year of treatment and one year of follow-up), with expected completion in 2019 and data readout in 2020. The start of Phase II has triggered a €3.2m milestone payment to former Trianta Immunotherapies shareholders. This will be settled by the issue of new shares, already forecast in our model. We also expect data from an IIT in Phase II for use of its DC vaccine in prostate cancer in H116. As outlined previously, the DC vaccine has technical advantages and holds promise as both a mono and combination therapy.
Potential TCR technology newsflow
Also due to start (at end 2016) is the IIT of TCR therapy in cancer, currently being prepared for its clinical trial application and pending grant funding to move forward. Two CITs in TCR therapy are being prepared, due to start in 2017 and 2018.
Valuation: Maintained at €216m
Our rNPV-based valuation remains at €216m or €10.96 per share (vs €10.98 per share due to an increase in the number of shares). We have rolled the model forward by three months and now use an estimated Q116 cash of €48.2m, based on a projected cash burn of €1m per month, offset by receipt of €4.5m from the Catherex sale. We have also revised our DC vaccine assumptions and adjusted the timeframe of a potential deal to 2018 (vs 2017) and launch to 2023 (vs 2022) now that we have more clarity on study timing with commencement of the Phase II part of the trial. We expect Veregen revenues to remain stable following the one-off stocking problem identified in Q315. The rest of our valuation assumptions are unchanged. Medigene is well funded and focused on executing its clinical development strategy over the next few years.
Exhibit 1: Financial summary
€000s |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
13,784 |
6,808 |
7,056 |
7,330 |
of which: Veregen revenues (royalties/milestones/supply) |
5,195 |
3,101 |
3,462 |
3,737 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
6,096 |
1,214 |
1,100 |
1,100 |
||
Non-cash income (Eligard) |
2,493 |
2,493 |
2,493 |
2,493 |
||
Cost of sales |
(2,086) |
(1,103) |
(1,305) |
(1,415) |
||
Gross profit |
11,698 |
5,705 |
5,751 |
5,915 |
||
Selling, general & administrative spending |
(7,081) |
(7,615) |
(7,833) |
(8,057) |
||
R&D expenditure |
(7,498) |
(8,529) |
(9,808) |
(10,789) |
||
Other operating spending |
0 |
. |
0 |
0 |
||
Operating profit |
(2,881) |
(10,439) |
(11,890) |
(12,931) |
||
Goodwill & intangible amortisation |
(527) |
(526) |
(525) |
(524) |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Share-based payment |
(66) |
(111) |
(50) |
(50) |
||
EBITDA |
|
|
(2,005) |
(9,384) |
(11,090) |
(12,132) |
Operating profit (before GW and except.) |
|
|
(2,288) |
(9,802) |
(11,315) |
(12,357) |
Net interest |
(1,774) |
(2,914) |
(2,529) |
(2,361) |
||
Other (forex gains/losses; associate profit/loss) |
(1,257) |
(46) |
719* |
1,204* |
||
Profit before tax (norm) |
|
|
(5,319) |
(12,762) |
(13,126) |
(13,514) |
Profit before tax (FRS 3) |
|
|
(5,912) |
(13,399) |
(13,701) |
(14,088) |
Tax |
155 |
400 |
0 |
0 |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(5,164) |
(12,362) |
(13,126) |
(13,514) |
||
Profit after tax (FRS 3) |
(5,757) |
(12,999) |
(13,701) |
(14,088) |
||
Average number of shares outstanding (m) |
12.2 |
16.8 |
19.9 |
20.2 |
||
EPS - normalised (€) |
|
|
(0.42) |
(0.74) |
(0.66) |
(0.67) |
EPS - FRS 3 (€) |
|
|
(0.47) |
(0.77) |
(0.69) |
(0.70) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
46,617 |
53,631 |
45,730 |
46,309 |
Intangible assets & goodwill |
38,377 |
37,792 |
35,188 |
34,664 |
||
Tangible assets |
951 |
2,502 |
3,605 |
4,708 |
||
Other non-current assets |
7,289 |
13,337 |
6,937 |
6,937 |
||
Current assets |
|
|
24,666 |
59,900 |
54,364 |
37,836 |
Stocks |
4,406 |
6,654 |
6,654 |
6,654 |
||
Debtors |
1,733 |
763 |
763 |
763 |
||
Cash |
14,976 |
46,759 |
45,679 |
29,151 |
||
Other |
3,551 |
5,724 |
1,268 |
1,268 |
||
Current liabilities |
|
|
(7,755) |
(9,664) |
(8,376) |
(8,376) |
Trade accounts payable |
(1,785) |
(1,354) |
(1,354) |
(1,354) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Deferred income |
(57) |
(226) |
(226) |
(226) |
||
Other |
(5,913) |
(8,084) |
(6,796) |
(6,796) |
||
Long-term liabilities |
|
|
(14,457) |
(13,879) |
(13,879) |
(13,879) |
Pension provisions |
(413) |
(359) |
(359) |
(359) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(3,221) |
(2,915) |
(2,915) |
(2,915) |
||
Deferred revenues (Eligard non-cash income) |
(10,823) |
(10,605) |
(10,605) |
(10,605) |
||
Net assets |
|
|
49,071 |
89,988 |
77,839 |
61,890 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(8,765) |
(10,585) |
(9,495) |
(14,339) |
Net interest |
9 |
(20) |
(1,029) |
(861) |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(873) |
(1,328) |
(1,328) |
(1,328) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
9,953 |
0 |
||
Equity financing |
14,502 |
43,695 |
819 |
0 |
||
Other |
(62) |
21 |
0 |
0 |
||
Net cash flow |
4,811 |
31,783 |
(1,080) |
(16,528) |
||
Opening net debt/(cash) |
|
|
(10,166) |
(14,976) |
(46,759) |
(45,679) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
(1) |
0 |
(0) |
0 |
||
Closing net debt/(cash) |
|
|
(14,976) |
(46,759) |
(45,679) |
(29,151) |
Source: Company accounts and Edison Investment Research. Note: *To be consistent with company reporting, we have included the Imlygic royalties in the share of profit or loss from associates, whereas we included such payments in revenues previously.
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