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Currency in SEK
Last close As at 30/03/2023
SEK1.19
▲ 0.02 (1.71%)
Market capitalisation
SEK258m
Research: Healthcare
In its Q322 report, Mendus highlighted key developments in the period, and some significant post-period events, as the company prepares to present key survival and immunomonitoring data from its cancer relapse vaccine, DCP-001, at the American Society of Hematology (ASH) 2022 conference in December. This data will be important in framing DCP-001’s clinical utility versus (and in combination with) the main competitor in acute myeloid leukaemia (AML) maintenance, azacitidine. Mendus’s Q322 financials held no surprises, therefore our forecasts for FY22 and FY23 are largely unchanged. With SEK250m of debt financing secured and a net cash position of SEK15.7m at end-Q322, we expect Mendus’s operations to be sufficiently funded into H224. We value Mendus at SEK1.8bn or SEK9.1 per share (previously SEK1.87bn or SEK9.35 per share).
Mendus |
No surprises in Q3 as DCP-001 readout nears |
Q322 update |
Pharma and biotech |
14 November 2022 |
Share price performance
Business description
Next events
Analysts
Mendus is a research client of Edison Investment Research Limited |
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In its Q322 report, Mendus highlighted key developments in the period, and some significant post-period events, as the company prepares to present key survival and immunomonitoring data from its cancer relapse vaccine, DCP-001, at the American Society of Hematology (ASH) 2022 conference in December. This data will be important in framing DCP-001’s clinical utility versus (and in combination with) the main competitor in acute myeloid leukaemia (AML) maintenance, azacitidine. Mendus’s Q322 financials held no surprises, therefore our forecasts for FY22 and FY23 are largely unchanged. With SEK250m of debt financing secured and a net cash position of SEK15.7m at end-Q322, we expect Mendus’s operations to be sufficiently funded into H224. We value Mendus at SEK1.8bn or SEK9.1 per share (previously SEK1.87bn or SEK9.35 per share).
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
0.0 |
(89.2) |
(1.17) |
0.0 |
N/A |
N/A |
12/21 |
0.0 |
(133.4) |
(0.73) |
0.0 |
N/A |
N/A |
12/22e |
3.2 |
(130.9) |
(0.66) |
0.0 |
N/A |
N/A |
12/23e |
0.0 |
(138.5) |
(0.69) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Key data readout for DCP-001 in December
Positive safety and recent efficacy data from the ongoing ADVANCE II study indicate that DCP-001 could be a significant competitor in the AML maintenance market, in our view. Key to DCP-001’s impact will be relapse-free and overall survival data, which Mendus will present at the ASH 2022 conference on 12 December 2022. In Q322, the company secured a development and manufacturing partnership for DCP-001, an important step towards potentially pivotal stage trails, in our view.
Expenses under control, runway extended
Mendus’s Q322 results gave no surprises, with expenses largely within our estimates. A key financial development over the period was the securing of SEK250m in shareholder loans and convertible bonds by the company. Assuming Mendus fully exercises the committed financing, we expect this to fund the company’s operations into H224, past key readouts from the pipeline in FY22/23.
Valuation: SEK1.8bn or SEK9.1 per share
We value Mendus at SEK1.8bn or SEK9.1 per share (previously SEK1.87bn or SEK9.35 per share). Our valuation includes a net cash position of SEK15.7m at end-Q322. We have rolled our model forward three months and updated our foreign exchange rate assumptions. Our slightly reduced valuation is due completely to the reduction in net cash over Q322.
Financials
As expected, Mendus reported no revenues in Q322, however, other income relating to foreign exchange gains on accounts payable amounted to SEK1.14m. As the company continues to focus on the development of DCP-001, ilixadencel and the DCOne platform, total operating expenses in Q322 increased to SEK38.54m from SEK26.05m in Q321. Operating costs for the period comprised R&D-related expenses (SEK21.60m) and administration costs (SEK16.86m). However, total operating costs for 9M22 (SEK95.44m) were slightly reduced from 9M21 (SEK98.38m), largely due to lower clinical trials and Chemistry, Manufacturing and Controls costs. A cash outflow from operations of SEK27.82m was recorded in Q322, bringing the total operating cash outflow for 9M22 to SEK87.99m, lower than the same period a year previously (9M21: SEK112.41m) due to prepaid costs. The reported financials are within our estimates and, as a result, our forecasts are largely unchanged, bar a small increase in FY22e administration expenses to SEK45.34m from SEK43.49m previously.
Importantly, in Q322, Mendus secured financing commitments of up to SEK250m, comprising a shareholder loan of SEK50k from Van Herk Investments and up to SEK200m in convertible bonds from Negma Group. Post-Q322, the company drew down the first portion of the shareholder loan commitment to a value of SEK10m. We see this flexible financing commitment as a positive step for Mendus, as it secures the next stages of its development strategy. At end-Q322, Mendus reported a net cash position of SEK15.7m (excluding lease liabilities), which we expect to fund the company to Q123. However, given the SEK10m withdrawn already in Q422 and the remaining SEK240m committed, we have extended our cash runway estimate into H224, assuming the company exercises SEK10m in FY22, SEK140m in FY23 and the remainder of committed capital in FY24.
Exhibit 1: Financial summary
Accounts: IFRS, Yr end: December, SEK: Thousands |
2019 |
2020 |
2021 |
2022e |
2023e |
Income statement |
|
|
|
|
|
Total revenue |
0 |
0 |
31 |
3,212 |
0 |
Cost of sales |
0 |
0 |
0 |
0 |
0 |
Gross profit |
0 |
0 |
31 |
3,212 |
0 |
SG&A (expenses) |
(11,734) |
(37,193) |
(43,490) |
(45,342) |
(46,702) |
R&D costs |
(48,980) |
(47,883) |
(85,796) |
(82,727) |
(82,727) |
Other income/(expense) |
16,689 |
(64) |
(845) |
(1,007) |
0 |
Exceptionals and adjustments |
0 |
0 |
0 |
0 |
0 |
Reported EBITDA |
(44,025) |
(85,140) |
(130,100) |
(125,865) |
(129,430) |
Depreciation and amortisation |
(831) |
(887) |
0 |
(842) |
(4,185) |
Reported Operating Profit/(loss) |
(44,856) |
(86,027) |
(130,100) |
(126,707) |
(133,615) |
Finance income/(expense) |
(2,915) |
(3,220) |
(3,310) |
(4,200) |
(4,894) |
Other income/(expense) |
0 |
(1) |
0 |
0 |
0 |
Exceptionals and adjustments |
0 |
0 |
0 |
0 |
0 |
Reported PBT |
(47,771) |
(89,248) |
(133,410) |
(130,907) |
(138,509) |
Adjusted PBT |
(47,771) |
(89,248) |
(133,410) |
(130,907) |
(138,509) |
Income tax expense |
0 |
0 |
0 |
0 |
0 |
Reported net income |
(47,771) |
(89,248) |
(133,410) |
(130,907) |
(138,509) |
|
|
|
|
|
|
Basic average number of shares, m |
73.9 |
76.2 |
182.8 |
199.4 |
199.4 |
Basic EPS (SEK) |
(0.65) |
(1.17) |
(0.73) |
(0.66) |
(0.69) |
Diluted EPS (SEK) |
(0.65) |
(1.17) |
(0.73) |
(0.66) |
(0.69) |
|
|
|
|
|
|
Balance sheet |
|
|
|
|
|
Property, plant and equipment |
4,328 |
2,909 |
2,470 |
12,274 |
8,966 |
Intangible assets |
0 |
532,441 |
532,441 |
533,859 |
533,859 |
Right of use assets |
0 |
0 |
0 |
26,177 |
26,177 |
Other non-current assets |
442 |
678 |
843 |
0 |
0 |
Total non-current assets |
4,770 |
536,028 |
535,754 |
572,310 |
569,002 |
Cash and equivalents |
14,032 |
167,643 |
155,313 |
23,874 |
28,672 |
Prepaid expenses and accrued income |
422 |
4,760 |
10,215 |
10,215 |
10,215 |
Other current assets |
18,695 |
20,230 |
19,702 |
20,506 |
20,506 |
Total current assets |
33,150 |
192,633 |
185,230 |
54,595 |
59,393 |
Non-current loans and borrowings* |
31,062 |
18,982 |
36,666 |
49,752 |
189,752 |
Other non-current liabilities |
1,230 |
303 |
0 |
24,148 |
24,148 |
Total non-current liabilities |
32,292 |
19,285 |
36,666 |
73,900 |
213,900 |
Trade and other payables |
1,898 |
10,365 |
11,610 |
3,112 |
3,112 |
Other current liabilities |
8,537 |
22,158 |
15,657 |
21,719 |
21,719 |
Total current liabilities |
11,306 |
48,282 |
27,576 |
27,169 |
27,169 |
Equity attributable to company |
(5,677) |
661,094 |
656,742 |
525,835 |
387,326 |
|
|
|
|
|
|
Cashflow statement |
|
|
|
|
|
Operating Profit/(loss) |
(44,856) |
(86,027) |
(130,100) |
(126,707) |
(133,615) |
Depreciation and amortisation |
831 |
887 |
992 |
842 |
4,185 |
Other adjustments |
0 |
0 |
0 |
0 |
0 |
Movements in working capital |
(14,186) |
27,731 |
(10,089) |
(3,240) |
0 |
Interest paid / received |
(166) |
(103) |
(140) |
(4,200) |
(4,894) |
Income taxes paid |
0 |
0 |
0 |
0 |
0 |
Cash from operations (CFO) |
(57,569) |
(56,626) |
(138,031) |
(132,462) |
(134,324) |
Capex |
(809) |
(464) |
(1,361) |
(12,064) |
(878) |
Acquisitions & disposals net |
0 |
0 |
0 |
0 |
0 |
Other investing activities |
0 |
0 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
(809) |
157,298 |
(1,361) |
(12,064) |
(878) |
Net proceeds from issue of shares |
0 |
0 |
128,949 |
0 |
0 |
Movements in debt |
(760) |
(725) |
(1,922) |
13,086 |
140,000 |
Other financing activities |
67,818 |
51,629 |
0 |
0 |
0 |
Cash flow from financing activities |
67,058 |
50,904 |
127,027 |
13,086 |
140,000 |
Increase/(decrease) in cash and equivalents |
9,627 |
153,611 |
(12,330) |
(131,439) |
4,798 |
Cash and equivalents at beginning of period |
4,405 |
14,032 |
167,643 |
155,313 |
23,874 |
Cash and equivalents at end of period |
14,032 |
167,643 |
155,313 |
23,874 |
28,672 |
Net (debt) cash |
(17,030) |
133,782 |
118,647 |
(25,878) |
(161,080) |
Source: Company accounts, Edison Investment Research
|
|
Research: TMT
Tinexta’s Q322 results highlighted the consistent strong growth of Digital Trust (DT) and contributions from M&A (seven acquisitions), offset by the typical lower seasonal contribution from its other divisions, which management believes were accentuated by the phasing of demand for certain products and services. Despite the more challenging macroeconomic backdrop, management re-iterated its FY22 guidance. This will require a greater profit contribution by Q4 than is typical, which management believes is supported by revenue backlogs and more positive phasing than Q322. We have increased our DCF-based valuation to €39/share (€38 previously).
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