Currency in SEK
Last close As at 04/02/2023
SEK11.90
▲ −0.02 (−0.17%)
Market capitalisation
SEK617m
Research: Healthcare
IRLAB Therapeutics has reported Q322 results, providing an operational and financial update that are largely in line with our estimates. Patient recruitment for the critical Phase IIb mesdopetam trial in Parkinson’s disease levodopa-induced dyskinesias (PD-LIDs) concluded in September 2022. We view this as a positive indicator for the company being on track to deliver top-line readouts by around the end of FY22. The Q322 net loss of SEK23.9m, in line with previous quarters, brought the net loss for the first nine months of FY22 (9M22) to SEK80.2m. At end-Q322, IRLAB had net cash of SEK291.7m which, at the current quarterly burn rate (Q322: SEK30.1m), we expect will fund operations well into FY24. We value IRLAB at SEK6.72bn or SEK129.8/share (previously SEK6.40bn or SEK123.7/share).
IRLAB Therapeutics |
Mesdopetam top-line data readout approaches |
Q322 update |
Pharma and biotech |
9 November 2022 |
Share price performance
Business description
Next events
Analysts
IRLAB Therapeutics is a research client of Edison Investment Research Limited |
IRLAB Therapeutics has reported Q322 results, providing an operational and financial update that are largely in line with our estimates. Patient recruitment for the critical Phase IIb mesdopetam trial in Parkinson’s disease levodopa-induced dyskinesias (PD-LIDs) concluded in September 2022. We view this as a positive indicator for the company being on track to deliver top-line readouts by around the end of FY22. The Q322 net loss of SEK23.9m, in line with previous quarters, brought the net loss for the first nine months of FY22 (9M22) to SEK80.2m. At end-Q322, IRLAB had net cash of SEK291.7m which, at the current quarterly burn rate (Q322: SEK30.1m), we expect will fund operations well into FY24. We value IRLAB at SEK6.72bn or SEK129.8/share (previously SEK6.40bn or SEK123.7/share).
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
0.4 |
(91.4) |
(1.92) |
0.0 |
N/A |
N/A |
12/21 |
207.9 |
91.1 |
1.76 |
0.0 |
N/A |
N/A |
12/22e |
62.1 |
(110.3) |
(2.13) |
0.0 |
N/A |
N/A |
12/23e |
0.3 |
(121.2) |
(2.34) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Mesdopetam and new clinical assets on horizon
Top-line data from the Phase IIb trial of mesdopetam in PD-LIDs is the next major catalyst for IRLAB’s share price, with top-line data on track to be reported around year-end FY22. IRLAB’s out-licensing partner for the mesdopetam PD-LIDs study, Ipsen, has also began preparatory studies necessary to progress the drug into Phase III studies. IRLAB is now planning to progress a further two late-stage preclinical assets, IRL942 in cognitive impairment and IRL757 in apathy, to Phase I studies in FY23, the initiation of which would further bolster its clinical pipeline.
Funding into FY24 past key readouts
IRLAB reported a net cash position of SEK291.7m at 30 September and a Q322 cash burn rate of SEK30.1m (cash outflow from operations of SEK27.9m and capex of SEK2.2m). We estimate that IRLAB has sufficient cash to fund operations well into FY24 past further key clinical readouts that include top-line data from the IIb pirepemat study in PD-Falls in H223.
Valuation: SEK6.72bn or SEK129.8 per share
We value IRLAB at SEK6.72bn or SEK129.8 per share (previously SEK6.40bn or SEK123.7 per share) based on a risk-adjusted NPV of mesdopetam and pirepemat using a 12.5% discount rate and including net cash of SEK291.7m at end Q322. Value uplift was realised by rolling our model forward by two months, updating our FX assumptions and net cash position. We have updated our estimates in light of the Q322 results, but our underlying valuation assumptions are unchanged.
Exhibit 1: Financial summary
Accounts: IFRS, year-end: 31 December, SEK’000s |
|
|
2019 |
2020 |
2021 |
2022e |
2023e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
448 |
404 |
207,906 |
62,142 |
317 |
Cost of sales |
|
|
0 |
0 |
0 |
0 |
0 |
Gross profit |
|
|
448 |
404 |
207,906 |
62,142 |
317 |
Total operating expenses |
|
|
(96,296) |
(91,862) |
(155,330) |
(172,450) |
(121,407) |
Research and development expenses |
|
|
(79,381) |
(75,989) |
(129,748) |
(125,694) |
(63,763) |
EBITDA (reported) |
|
|
(92,888) |
(89,202) |
56,050 |
(108,241) |
(118,870) |
Operating income (reported) |
|
|
(95,848) |
(91,458) |
52,576 |
(110,308) |
(121,090) |
Operating margin % |
|
|
N/A |
N/A |
N/A |
N/A |
N/A |
Finance income/(expense) |
|
|
(272) |
(195) |
(795) |
(247) |
(84) |
Exceptionals and adjustments |
|
|
999 |
259 |
39,350 |
259 |
0 |
Profit before tax (reported) |
|
|
(96,120) |
(91,653) |
51,781 |
(110,555) |
(121,175) |
Profit before tax (normalised) |
|
|
(95,121) |
(91,394) |
91,131 |
(110,296) |
(121,175) |
Income tax expense (includes exceptionals) |
|
|
0 |
0 |
0 |
0 |
0 |
Net income (reported) |
|
|
(96,120) |
(91,653) |
51,781 |
(110,555) |
(121,175) |
Net income (normalised) |
|
|
(95,121) |
(91,394) |
91,131 |
(110,296) |
(121,175) |
Basic average number of shares, m |
|
|
40.6 |
47.7 |
51.7 |
51.9 |
51.9 |
Basic EPS (SEK) |
|
|
(2.37) |
(1.92) |
1.00 |
(2.13) |
(2.34) |
Adjusted EPS (SEK) |
|
|
(2.34) |
(1.92) |
1.76 |
(2.13) |
(2.34) |
Dividend per share (SEK) |
|
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
BALANCE SHEET |
|
|
|
|
|
|
|
Tangible assets |
|
|
5,913 |
4,317 |
8,348 |
9,202 |
6,981 |
Intangible assets |
|
|
82,269 |
82,010 |
42,662 |
42,402 |
42,402 |
Other non-current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current assets |
|
|
88,182 |
86,327 |
51,010 |
51,604 |
49,383 |
Cash and equivalents |
|
|
110,527 |
277,009 |
401,897 |
247,241 |
122,953 |
Inventories |
|
|
0 |
0 |
0 |
0 |
0 |
Trade and other receivables |
|
|
9,351 |
6,732 |
19,543 |
19,543 |
19,543 |
Other current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Total current assets |
|
|
119,878 |
283,741 |
421,440 |
266,784 |
142,496 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
Non-current lease liabilities |
|
|
2,900 |
1,270 |
3,566 |
72 |
72 |
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current liabilities |
|
|
2,900 |
1,270 |
3,566 |
72 |
72 |
Accounts payable |
|
|
8,438 |
3,683 |
4,634 |
6,968 |
4,898 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
Current lease liabilities |
|
|
1,643 |
1,657 |
3,034 |
3,264 |
0 |
Deferred Income |
|
|
0 |
0 |
42,576* |
0 |
0 |
Other current liabilities |
|
|
13,259 |
15,578 |
19,158 |
19,158 |
19,158 |
Total current liabilities |
|
|
23,340 |
20,918 |
69,402 |
29,390 |
24,056 |
Equity attributable to company |
|
|
181,827 |
347,880 |
399,481 |
288,926 |
167,752 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Operating income |
|
|
(95,848) |
(91,458) |
52,576 |
(110,308) |
(121,090) |
Depreciation and amortisation |
|
|
2,960 |
2,256 |
3,474 |
2,067 |
2,220 |
Share based payments |
|
|
0 |
0 |
0 |
0 |
0 |
Other adjustments |
|
|
(272) |
(195) |
38,295 |
(247) |
(84) |
Movements in working capital |
|
|
1,959 |
183 |
34,296 |
(40,242) |
(2,070) |
Cash from operations (CFO) |
|
|
(91,201) |
(89,214) |
128,641 |
(148,730) |
(121,024) |
Capex |
|
|
(137) |
(394) |
(708) |
(2,662) |
0 |
Acquisitions & disposals net |
|
|
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(137) |
(394) |
(708) |
(2,662) |
0 |
Net proceeds from issue of shares |
|
|
68,970 |
257,706 |
(180) |
0 |
0 |
Movements in debt |
|
|
(1,547) |
(1,616) |
(2,865) |
(3,264) |
(3,264) |
Other financing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
67,423 |
256,090 |
(3,045) |
(3,264) |
(3,264) |
Cash and equivalents at beginning of period |
|
|
134,442 |
110,527 |
277,009 |
401,897 |
247,241 |
Increase/(decrease) in cash and equivalents |
|
|
(23,915) |
166,482 |
124,888 |
(154,656) |
(124,288) |
Effect of FX on cash and equivalents |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents at end of period |
|
|
110,527 |
277,009 |
401,897 |
247,241 |
122,953 |
Net (debt)/cash |
|
|
110,527 |
277,009 |
401,897 |
247,241 |
122,953 |
Source: Source: IRLAB Therapeutics, Edison Investment Research. Note: *Deferred income from Ipsen deal, company expects to record fully by end-FY22. |
|
|
Research: Healthcare
Oryzon Genomics announced that it has received FDA investigational new drug (IND) approval for the initiation of a collaborative Phase II trial investigating the use of the company’s LSD1 inhibitor, iadademstat, in the treatment of relapsed and refractory (r/r) neuroendocrine carcinomas (NECs). The trial will be conducted in collaboration with the Fox Chase Cancer Center, with Oryzon providing funding, iadademstat and technical advice. r/r NECs (of which it is estimated that 22–27% are small cell lung cancers, SCLCs) are highly aggressive tumours for which there are limited treatment options, meaning prognosis is often poor. In the new trial, iadademstat will be investigated in combination with other therapeutics that have shown activity in NECs. In our view, the IND approval represents an important event for Oryzon as the company continues to maximise the utility of iadademstat. We value Oryzon at €861m or €16.2 per share.
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