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Research: Healthcare
MagForce has announced the enrolment of the first patient in its pivotal clinical trial evaluating NanoTherm focal ablation therapy in the US for prostate cancer. The trial started as expected in Q218 and further patient recruitment is underway at the two clinical sites (CHRISTUS Santa Rosa and the University of Washington). Prostate cancer presents a significant market opportunity in the US (representing ~60% of our rNPV) and makes sense strategically as a first US indication.
Written by
MagForce |
NanoTherm US prostate cancer trial initiates |
First prostate cancer patient enrolled |
Pharma & biotech |
4 July 2018 |
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MagForce is a research client of Edison Investment Research Limited |
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MagForce has announced the enrolment of the first patient in its pivotal clinical trial evaluating NanoTherm focal ablation therapy in the US for prostate cancer. The trial started as expected in Q218 and further patient recruitment is underway at the two clinical sites (CHRISTUS Santa Rosa and the University of Washington). Prostate cancer presents a significant market opportunity in the US (representing ~60% of our rNPV) and makes sense strategically as a first US indication.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
0.5 |
(7.2) |
(0.28) |
0.0 |
N/A |
N/A |
12/17 |
0.7 |
(7.5) |
(0.28) |
0.0 |
N/A |
N/A |
12/18e |
2.9 |
(8.8) |
(0.33) |
0.0 |
N/A |
N/A |
12/19e |
7.1 |
(7.9) |
(0.30) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Financial forecasts prepared under HGB.
First US patient broadens NanoTherm use
In February 2018, MagForce received IDE approval to start its first pivotal clinical trial evaluating NanoTherm focal ablation therapy in the US for prostate cancer. The company believes there are potentially 50,000 to 100,000 men in active surveillance programmes in prostate cancer in the US who could benefit from this focal therapy. Importantly, the first patient has now been enrolled, effectively broadening the geographic and therapeutic reach of NanoTherm therapy beyond Europe, where it is already approved for brain cancer.
Paving the way for a late 2019 launch
MagForce anticipates the single-arm trial to recruit up to 120 prostate cancer patients (who have Gleason score grade 7 prostate cancer and are under active surveillance) to assess NanoTherm therapy as a focal treatment. Assuming the trial takes around 12-15 months to complete, data could become available in 2019. We assume approval and first sales of the pNanoActivators from Q419, allowing time for filing and regulatory review following data in 2019. NanoTherm US in prostate cancer (risk adjusted, we assign 80% probability of success and forecast peak sales of $268m) contributes €7 per share to our MagForce valuation (60% of our rNPV).
Valuation: €307.6m (€11.7 per share)
Our valuation of MagForce is unchanged at €307.6m or €11.7 per share based on a risk-adjusted NPV analysis. It is centred on NanoTherm therapy, risk adjusted to reflect the current development status and the respective core strategies for the EU and US. We value only glioblastoma multiforme (GBM) in the EU and prostate cancer in the US. While we recognise MagForce’s intention to treat additional indications in each region, we do not currently value these opportunities. Our valuation takes into account net debt of €4.3m net debt at 31 December 2017.
Exhibit 1: Financial summary
€'000s |
2016 |
2017 |
2018e |
2019e |
||
December |
HGB |
HGB |
HGB |
HGB |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
474 |
716 |
2,898 |
7,107 |
Cost of Sales |
(574) |
(974) |
(3,935) |
(6,143) |
||
Gross Profit |
(101) |
(258) |
(1,037) |
964 |
||
EBITDA |
|
|
(6,554) |
(6,739) |
(7,613) |
(6,646) |
Operating Profit (before amort. and except.) |
(7,456) |
(7,410) |
(7,975) |
(7,068) |
||
Intangible Amortisation |
(5) |
(1) |
(2) |
(0) |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Operating Profit |
(7,461) |
(7,411) |
(7,977) |
(7,068) |
||
Net Interest |
231 |
(53) |
(814) |
(875) |
||
Profit Before Tax (norm) |
|
|
(7,225) |
(7,463) |
(8,788) |
(7,943) |
Profit Before Tax (reported) |
|
|
(7,230) |
(7,464) |
(8,790) |
(7,943) |
Tax |
(1) |
(1) |
0 |
0 |
||
Profit After Tax (norm) |
(7,226) |
(7,464) |
(8,788) |
(7,943) |
||
Profit After Tax (reported) |
(7,231) |
(7,465) |
(8,790) |
(7,943) |
||
Average Number of Shares Outstanding (m) |
26.0 |
26.3 |
26.3 |
26.3 |
||
EPS - normalised (c) |
|
|
(27.8) |
(28.3) |
(33.4) |
(30.2) |
EPS - (reported) (€) |
|
|
(0.28) |
(0.28) |
(0.33) |
(0.30) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
N/A |
N/A |
13.6 |
||
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 |
|
|
18,742 |
20,672 |
21,596 |
22,587 |
Intangible Assets |
3 |
1 |
0 |
0 |
||
Tangible Assets |
3,706 |
3,589 |
4,515 |
5,506 |
||
Investments |
15,033 |
17,082 |
17,082 |
17,082 |
||
Current Assets |
|
|
1,536 |
1,360 |
4,219 |
5,706 |
Stocks |
71 |
301 |
323 |
505 |
||
Debtors |
71 |
85 |
1,588 |
3,894 |
||
Cash |
614 |
666 |
2,000 |
1,000 |
||
Other |
780 |
307 |
307 |
307 |
||
Current Liabilities |
|
|
(4,431) |
(3,747) |
(4,292) |
(5,445) |
Creditors |
(4,431) |
(3,747) |
(4,292) |
(5,445) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(197) |
(5,091) |
(15,240) |
(24,509) |
Long term borrowings |
0 |
(5,012) |
(15,161) |
(24,430) |
||
Other long term liabilities |
(197) |
(79) |
(78) |
(78) |
||
Net Assets |
|
|
15,650 |
13,193 |
6,284 |
(1,660) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(1,078) |
(7,930) |
(8,594) |
(7,981) |
Net Interest |
231 |
(53) |
(814) |
(875) |
||
Tax |
(1) |
(1) |
0 |
0 |
||
Capex |
(115) |
(553) |
(1,287) |
(1,413) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
0 |
5,000 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(963) |
(3,538) |
(10,694) |
(10,269) |
||
Opening net debt/(cash) |
|
|
(1,393) |
(614) |
4,347 |
13,161 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
184 |
(1,423) |
1,880 |
(0) |
||
Closing net debt/(cash) |
|
|
(614) |
4,347 |
13,161 |
23,430 |
Source: Company data, Edison Investment Research
|
|
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