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Research: Healthcare
Onxeo
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Onxeo |
BelCHOP data at ASH ahead of Phase III start |
Clinical data |
Pharma & biotech |
22 December 2015 |
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With Phase I data confirming the existing safety profile from the BelCHOP (Beleodaq with CHOP) study in the treatment of frontline PTCL, the path is now clear for initiation of the planned Phase III trial during H116 with partner Spectrum. Beleodaq is one of a trio of orphan oncology assets under development at Onxeo, also including Livatag (liver cancer), which has now completed seven safety reviews, and Validive (oral mucositis arising from chemoradiotherapy). New preclinical collaborations for Livatag and Beleodaq could further expand the potential of both.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/13 |
1.5 |
(15.3) |
(0.74) |
0.0 |
N/A |
N/A |
12/14 |
22.1 |
0.2 |
(0.05) |
0.0 |
N/A |
N/A |
12/15e |
3.6 |
(21.5) |
(0.60) |
0.0 |
N/A |
N/A |
12/16e |
7.0 |
(19.6) |
(0.56) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items.
Phase I BelCHOP data support Phase III initiation
Data from the Phase I open-label safety study in 23 patients combining Beleodaq with CHOP chemotherapy (cyclophosphamide, hydroxydaunorubicin, oncovin, prednisone) were reported at ASH. The trial’s primary purpose was to establish the maximum tolerated dose (MTD) of Beleodaq in combination with CHOP (BelCHOP) for the planned Phase III trial. This was established as 1,000mg/m2 IV infusion on days 1-5 of a treatment cycle, the same dosing regimen as approved in r/r PTCL.
BelCHOP response rate of 86%
Efficacy data were also reported at ASH, with an overall response rate (ORR) of 86% based on data from 21 evaluable patients. 67% (n=14) achieved a complete response (CR) and there were four partial responses (19%). There was no control arm in the trial. With safety now confirmed, BelCHOP will be compared to CHOP alone in front-line PTCL in the planned Phase III trial. A controlled trial is required for approval in Europe and was a condition of FDA approval in relapsed/refractory PTCL (r/r PTCL). We anticipate this will start in H116. Assuming the trial takes around two to three years, we now estimate EU filing in 2019 and launch in 2020.
Preclinical collaborations for Livatag and Beleodaq
Onxeo recently signed two preclinical collaborations to investigate both Livatag and Beleodaq in indications and combinations beyond those currently in development (Beleodaq in PTCL and monotherapy Livatag in liver cancer). Both Beleodaq and Livatag will be combined with current and new treatments, including in combination with immuno-oncology, and investigated in liver cancer, but also a range of other cancers.
Valuation: rNPV of €329m or €8.1/share
Our valuation is largely unchanged at €329m or €8.1/share. The only change to our assumptions is Beleodaq’s filing in the EU being postponed by one year, which had minimal impact. We continue to believe that Onxeo’s current cash should be sufficient to fund operations into 2017.
Onxeo is a research client of Edison Investment Research Limited
Valuation
Our Onxeo valuation is largely unchanged at €329m or €8.1/share. The only change to our assumptions is Beleodaq’s filing in the EU being postponed by one year, but this had a minimal impact on valuation. We have rolled our valuation forwards in time, with the resulting increase largely offset by the lower cash position at end September 2015 compared with end June 2015. Our valuation, which is based on a risk-adjusted NPV analysis using a 12.5% discount rate, is shown in Exhibit 1.
Exhibit 1: Onxeo rNPV valuation
Product |
Indication |
Launch |
Peak sales (€m) |
NPV |
Probability |
rNPV (€m) |
NPV/share (€/share) |
Validive |
Oral mucositis (H&N cancer) |
2019 |
200 |
117.0 |
60 |
67.1 |
1.7 |
Livatag |
Liver cancer |
2018 |
250 |
154.5 |
40 |
56.7 |
1.4 |
Beleodaq US |
PTCL |
2014 |
80 |
44.2 |
100 |
44.2 |
1.1 |
Beleodaq EU |
PTCL |
2020 |
60 |
53.0 |
70 |
35.3 |
0.9 |
Loramyc/Oravig |
Oropharyngeal candidiasis |
2007 |
50 |
24.4 |
100 |
24.4 |
0.6 |
Sitavig |
Recurrent herpes labialis |
2014 |
110 |
67.3 |
100 |
67.3 |
1.7 |
Net cash |
33.9 |
100 |
33.9 |
0.8 |
|||
Valuation |
|
|
|
494.4 |
329.1 |
8.1 |
Source: Edison Investment Research. Note: Specialty products shaded. PTCL: peripheral T-cell lymphoma.
Financials
We have made only one change to our financial forecasts to include a €0.3m milestone payment from Sitavig’s Italian partner Bruno Farmaceutici, which was received in Q315, increasing our 2015 revenue forecast and the consequent small increase to operating and net loss. We have made no other adjustments to our forecasts. A summary of the changes to our estimates is shown in Exhibit 2 and our updated forecasts are shown in Exhibit 3.
Onxeo reported cash and equivalents at end-September 2015 of €35.8m. Together with last reported debt at end-June 2015 of €1.9m (including short term-debt of €1.8m), we therefore estimate Onxeo had net cash at end September of approximately €33.9m. We continue to believe that this should be sufficient to fund operations into 2017. Development of Beleodaq in additional indications, which is under discussion with partner Spectrum, could affect the cash reach.
Exhibit 2: Summary of the main changes to our Onxeo financial forecasts
€m |
2015e |
2015e |
% change |
2016e |
2016e |
% change |
|
Old |
New |
Old |
New |
||
Revenue |
3.328 |
3.628 |
+9 |
7.049 |
7.049 |
+0 |
Personnel costs |
(8.624) |
(8.624) |
-0 |
(9.056) |
(9.055) |
-0 |
External expenses |
(16.437) |
(16.437) |
-0 |
(17.260) |
(17.260) |
-0 |
Operating profit |
(24.380) |
(24.070) |
-1 |
(21.576) |
(21.576) |
+0 |
Profit before tax (reported) |
(23.371) |
(23.071) |
-1 |
(21.195) |
(21.195) |
+0 |
Profit after tax (reported) |
(26.337) |
(26.037) |
-1 |
(24.161) |
(24.161) |
+0 |
Source: Edison Investment Research
Exhibit 3: Financial summary
€000s |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015e |
2016e |
||
Year-end December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||||
Revenue |
|
|
7,536 |
22,532 |
3,231 |
4,028 |
1,467 |
22,081 |
3,628 |
7,049 |
Cost of Sales |
(399) |
(859) |
(750) |
(375) |
(264) |
(249) |
(324) |
(324) |
||
Gross Profit |
7,138 |
21,673 |
2,481 |
3,653 |
1,202 |
21,832 |
3,304 |
6,725 |
||
EBITDA |
|
|
(15,024) |
3,065 |
(14,429) |
(11,300) |
(15,189) |
(4,505) |
(22,099) |
(19,590) |
Operating Profit (before amort. and except.) |
(15,362) |
2,698 |
(14,841) |
(11,506) |
(15,412) |
184 |
(22,484) |
(19,990) |
||
Intangible Amortisation |
(117) |
(105) |
(97) |
(9) |
(10) |
(800) |
(1,586) |
(1,586) |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
(4,861) |
0 |
0 |
||
Operating Profit |
(15,478) |
2,593 |
(14,938) |
(11,515) |
(15,422) |
(5,477) |
(24,070) |
(21,576) |
||
Other |
0 |
0 |
0 |
0 |
(29) |
(77) |
(10) |
0 |
||
Net Interest |
95 |
217 |
316 |
(33) |
126 |
5 |
1,009 |
381 |
||
Profit Before Tax (norm) |
|
|
(15,266) |
2,914 |
(14,525) |
(11,539) |
(15,286) |
189 |
(21,476) |
(19,609) |
Profit Before Tax (reported) |
|
|
(15,383) |
2,809 |
(14,622) |
(11,548) |
(15,325) |
(5,549) |
(23,071) |
(21,195) |
Tax |
0 |
(0) |
0 |
0 |
0 |
(2,150) |
(2,966) |
(2,966) |
||
Profit After Tax (norm) |
(15,266) |
2,914 |
(14,525) |
(11,539) |
(15,315) |
(2,038) |
(24,452) |
(22,575) |
||
Profit After Tax (reported) |
(15,383) |
2,809 |
(14,622) |
(11,548) |
(15,325) |
(7,699) |
(26,037) |
(24,161) |
||
Average Number of Shares Outstanding (m) |
12.9 |
13.6 |
17.7 |
17.7 |
20.7 |
40.5 |
40.5 |
40.6 |
||
EPS - normalised (€) |
|
|
(1.18) |
0.21 |
(0.82) |
(0.65) |
(0.74) |
(0.05) |
(0.60) |
(0.56) |
EPS - normalised and fully diluted (€) |
|
(1.18) |
0.21 |
(0.82) |
(0.65) |
(0.74) |
(0.05) |
(0.60) |
(0.56) |
|
EPS - (reported) (€) |
|
|
(1.19) |
0.21 |
(0.83) |
(0.65) |
(0.74) |
(0.19) |
(0.64) |
(0.60) |
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
94.7 |
96.2 |
76.8 |
90.7 |
82.0 |
98.9 |
91.1 |
95.4 |
||
EBITDA Margin (%) |
N/A |
13.6 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
12.0 |
N/A |
N/A |
N/A |
0.8 |
N/A |
N/A |
||
BALANCE SHEET |
||||||||||
Fixed Assets |
|
|
2,319 |
2,083 |
1,793 |
1,540 |
1,300 |
89,052 |
87,252 |
85,619 |
Intangible Assets |
130 |
117 |
27 |
33 |
23 |
87,932 |
86,346 |
84,760 |
||
Tangible Assets |
1,919 |
1,632 |
1,401 |
1,086 |
908 |
711 |
507 |
459 |
||
Investments |
270 |
334 |
366 |
422 |
369 |
409 |
399 |
399 |
||
Current Assets |
|
|
19,017 |
24,251 |
32,288 |
20,581 |
16,432 |
62,946 |
39,188 |
17,688 |
Stocks |
21 |
38 |
1 |
3 |
3 |
65 |
85 |
85 |
||
Debtors |
957 |
243 |
456 |
2,089 |
338 |
582 |
398 |
772 |
||
Cash |
14,710 |
20,947 |
28,666 |
14,503 |
11,329 |
57,227 |
33,633 |
11,758 |
||
Other |
3,328 |
3,023 |
3,164 |
3,986 |
4,762 |
5,073 |
5,073 |
5,073 |
||
Current Liabilities |
|
|
(6,794) |
(5,737) |
(7,051) |
(6,147) |
(6,357) |
(12,919) |
(12,792) |
(13,053) |
Creditors |
(6,719) |
(5,680) |
(6,881) |
(6,090) |
(6,266) |
(11,290) |
(11,162) |
(11,423) |
||
Short term borrowings |
(75) |
(57) |
(170) |
(57) |
(91) |
(1,630) |
(1,630) |
(1,630) |
||
Long Term Liabilities |
|
|
(1,780) |
(1,745) |
(4,128) |
(4,231) |
(3,487) |
(17,108) |
(16,950) |
(16,950) |
Long term borrowings |
(1,067) |
(1,131) |
(2,237) |
(511) |
(303) |
(138) |
0 |
0 |
||
Other long term liabilities |
(714) |
(614) |
(1,891) |
(3,720) |
(3,185) |
(16,970) |
(16,950) |
(16,950) |
||
Net Assets |
|
|
12,761 |
18,852 |
22,902 |
11,742 |
7,888 |
121,971 |
96,699 |
73,304 |
CASH FLOW |
||||||||||
Operating Cash Flow |
|
|
(17,426) |
3,492 |
(11,614) |
(14,076) |
(14,020) |
(7,733) |
(21,521) |
(18,938) |
Net Interest |
(714) |
(61) |
(1,106) |
1,837 |
333 |
843 |
1,009 |
381 |
||
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
(2,762) |
(2,966) |
||
Capex |
(230) |
(108) |
(148) |
(39) |
(119) |
(2) |
(181) |
(352) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
14,208 |
0 |
0 |
||
Financing |
610 |
2,867 |
19,367 |
(46) |
10,807 |
37,207 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(17,760) |
6,191 |
6,499 |
(12,324) |
(3,000) |
44,524 |
(23,455) |
(21,876) |
||
Opening net debt/(cash) |
|
|
(31,329) |
(13,569) |
(19,760) |
(26,259) |
(13,935) |
(10,935) |
(55,459) |
(32,004) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
(0) |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(13,569) |
(19,760) |
(26,259) |
(13,935) |
(10,935) |
(55,459) |
(32,004) |
(10,128) |
Source: Edison Investment Research, Onxeo accounts. Note: Historic financials display standalone data only, with Topotarget consolidated from H214.
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