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Research: Healthcare
Paion
Written by
Paion |
Looking ahead to a pivotal year |
Q315 results |
Pharma & biotech |
18 November 2015 |
Share price performance
Business description
Next events
Analysts
Paion is a research client of Edison Investment Research Limited |
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Paion is at an advanced stage of developing its ultrashort-acting sedative remimazolam for use in procedural sedation and general anaesthesia. Three Phase III studies are due to report results in 2016, ahead of potential filings in the US and Europe in 2017. A positive outcome from a pre-NDA meeting with Japanese regulators in Q116 could lead to a filing in Japan in H216. We raise our valuation modestly to €230m from €224m as these milestones approach.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E (x) |
Yield |
12/13 |
4.2 |
(2.6) |
(7.2) |
0.0 |
N/A |
N/A |
12/14 |
3.5 |
(11.6) |
(22.9) |
0.0 |
N/A |
N/A |
12/15e |
0.0 |
(33.8) |
(55.9) |
0.0 |
N/A |
N/A |
12/16e |
1.0 |
(30.8) |
(52.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items and share-based payments.
Pre-NDA meeting Q116; potential Japan filing H216
Paion has made good progress towards a potential regulatory filing in Japan since it regained the rights from Ono to remimazolam. The Japanese regulator (PMDA) accepts that drug manufactured by Paion in Europe is equivalent to that used by Ono in its clinical trials. A Japanese CRO is preparing the draft dossier for a pre-NDA meeting with the PMDA that is expected to take place in Q116. If the regulator does not require any additional evaluation to be completed, Paion could potentially file for approval in Japan in H216. However, there is still some uncertainty about the outcome in light of Ono’s decision not to file for approval, possibly related to high plasma levels observed in an ICU sedation study. Positive feedback from the PMDA could also be a catalyst to help conclude discussions with potential partners in Japan.
Phase III trials on track, results in 2016
Initial recruitment in the three Phase III remimazolam trials was moderate as expected, as sites are trained and brought up to speed, but the overall recruitment timetable remains on track. The US colonoscopy trial should complete recruitment in Q116 with data in mid-2016, while the US bronchoscopy study should complete in 2016. Results from the EU general anaesthesia trial are expected before the end of 2016. Paion expects to file for approval in 2017 in the US (procedural sedation) and Europe (general anaesthesia) if the trials are successful. Remimazolam offers a superior safety profile to gold-standard propofol in general anaesthesia and increased patient throughput or reduced patient supervision in procedural sedation.
Valuation: Raised to €230m; trials fully funded
Our sum-of-the-parts DCF valuation is €230m or €4.55/share (vs €224m) after rolling forward our DCF model to 2016, offset by modest increases in expenses in line with FY15 guidance. Cash at 30 September of €40.5m is sufficient to complete the Phase III studies, but the company states that a further €10m may be required for launch preparations and the Japan filing dossier, which may dilute our valuation per share. Paion is evaluating the prospect of self-commercialisation, which could lead to 45% profit margins in some regions, subject to further fundraising.
Exhibit 1: Financial summary
€000s |
2013 |
2014 |
2015e |
2016e |
||
Year end 31 December |
||||||
PROFIT & LOSS |
||||||
Revenue |
|
|
4,228 |
3,456 |
0 |
1,000 |
Cost of sales |
0 |
(4) |
0 |
0 |
||
Gross profit |
4,228 |
3,452 |
0 |
1,000 |
||
R&D expenditure |
(4,583) |
(11,799) |
(28,000) |
(25,000) |
||
General, administrative & selling |
(3,314) |
(3,702) |
(6,000) |
(7,000) |
||
Other |
860 |
411 |
50 |
51 |
||
Operating profit |
(2,810) |
(11,639) |
(33,950) |
(30,949) |
||
Depreciation and amortisation |
(390) |
(93) |
(100) |
(100) |
||
Share-based payments |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(2,420) |
(11,546) |
(33,850) |
(30,849) |
Operating profit (before GW and except) |
|
(2,420) |
(11,546) |
(33,850) |
(30,849) |
|
Net interest |
(170) |
(66) |
50 |
50 |
||
Profit before tax (norm) |
|
|
(2,590) |
(11,612) |
(33,800) |
(30,799) |
Profit before tax (reported) |
|
|
(2,980) |
(11,704) |
(33,900) |
(30,899) |
Tax |
768 |
2,468 |
5,500 |
4,375 |
||
Profit after tax (norm) |
(1,822) |
(9,143) |
(28,300) |
(26,424) |
||
Profit after tax (reported) |
(2,212) |
(9,236) |
(28,400) |
(26,524) |
||
Average number of shares outstanding (m) |
25.4 |
39.9 |
50.7 |
50.7 |
||
EPS - normalised (c) |
|
|
(7.2) |
(22.9) |
(55.9) |
(52.2) |
EPS - reported (c) |
|
|
(8.7) |
(23.2) |
(56.1) |
(52.4) |
Dividend per share (c) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
Gross margin (%) |
N/A |
N/A |
N/A |
N/A |
||
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 |
|
|
3,583 |
3,516 |
3,416 |
3,316 |
Intangible assets |
3,494 |
3,440 |
3,365 |
3,290 |
||
Tangible assets |
89 |
76 |
51 |
26 |
||
Refund from assumption of dev costs |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Current assets |
|
|
14,433 |
63,032 |
38,140 |
11,717 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
467 |
25 |
25 |
||
Cash |
13,292 |
58,912 |
33,115 |
6,692 |
||
Other |
1,141 |
3,653 |
5,000 |
5,000 |
||
Current liabilities |
|
|
(4,659) |
(3,924) |
(6,157) |
(6,157) |
Trade payables |
(1,914) |
(3,338) |
(5,400) |
(5,400) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Provisions |
(2,508) |
(306) |
(500) |
(500) |
||
Finance lease liabilities |
0 |
0 |
0 |
0 |
||
Other current liabilities |
(225) |
(254) |
(235) |
(235) |
||
Current deferred income |
(11) |
(26) |
(22) |
(22) |
||
Long-term liabilities |
|
|
(28) |
(17) |
(8) |
(8) |
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Provisions |
0 |
0 |
0 |
0 |
||
Long-term deferred income |
(28) |
(17) |
(8) |
(8) |
||
Deferred taxes |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
13,329 |
62,607 |
35,391 |
8,868 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(1,746) |
(12,044) |
(31,346) |
(30,849) |
Net interest |
(170) |
(66) |
50 |
50 |
||
Tax |
75 |
0 |
5,500 |
4,375 |
||
Capex |
0 |
0 |
0 |
0 |
||
Purchase of intangibles |
(5) |
(26) |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
(7,164) |
57,618 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Net cash flow |
(9,010) |
45,482 |
(25,796) |
(26,424) |
||
Opening net debt/(cash) |
|
|
(22,336) |
(13,292) |
(58,912) |
(33,116) |
Effect of exchange rate changes |
(130) |
(72) |
0 |
0 |
||
Other |
96 |
210 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(13,292) |
(58,912) |
(33,116) |
(6,691) |
Source: Edison Investment Research, company accounts
|