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Research: Healthcare
Quantum Genomics has reported the results of the Phase IIb QUORUM study at the European Society of Cardiology. Unfortunately, the primary endpoint of change from baseline in the left ventricular ejection fraction (LVEF) after a 12-week treatment was missed, with essentially no difference between the firibastat 500mg BID arm and the ramipril 5mg BID arm (there was a slight trend in favour of ramipril with a p-value of 0.789). The company noted a trend in firibastat’s favour in patients with an LVEF of less than 50%, but this was also not significant. The company has stated it is moving forward into Phase III in severe patients.
Written by
Quantum Genomics |
Phase IIb QUORUM results |
Development update |
Pharma & biotech |
9 September 2021 |
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Quantum Genomics is a research client of Edison Investment Research Limited |
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Quantum Genomics has reported the results of the Phase IIb QUORUM study at the European Society of Cardiology. Unfortunately, the primary endpoint of change from baseline in the left ventricular ejection fraction (LVEF) after a 12-week treatment was missed, with essentially no difference between the firibastat 500mg BID arm and the ramipril 5mg BID arm (there was a slight trend in favour of ramipril with a p-value of 0.789). The company noted a trend in firibastat’s favour in patients with an LVEF of less than 50%, but this was also not significant. The company has stated it is moving forward into Phase III in severe patients.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
0.0 |
(10.8) |
(0.53) |
0.0 |
N/A |
N/A |
12/20 |
1.2 |
(13.9) |
(0.50) |
0.0 |
N/A |
N/A |
12/21e |
0.8 |
(20.8) |
(0.65) |
0.0 |
N/A |
N/A |
12/22e |
0.0 |
(22.5) |
(0.68) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Some trends in favour of firibastat
While the study failed to meet the primary endpoint, there were a couple of trends in favour of firibastat. In patients with LVEF of less than 50%, LVEF increased by 5.32 ± 1.67% in the firibastat 500mg twice a day (BID) arm versus 3.51 ± 1.64% under ramipril. Also, blood pressure effects limited the ability to increase dosing to the target level in 32% of ramipril cases, but in only 19% of those in the firibastat 500mg BID arm (patients in all arms started at half the targeted dosing for the first two weeks).
Moving on to Phase III
Quantum Genomics has stated that it will be moving forward with a Phase III in severe patients and that any protocol will be finalised with a pharmaceutical partner. Management has stated that a partnership is possible over the next six months.
Phase III FRESH study data by year-end
The pivotal FRESH study is a three-month, 500-patient study comparing firibastat to placebo in difficult-to-treat or resistant hypertension patients who are already on treatments from two or three anti-hypertensive classes (firibastat or placebo will be added on top of the current treatment) yet still have systolic automated office blood pressure (AOBP) above 140mmHg. The primary endpoint will be a change from baseline in systolic AOBP. Data are expected by the end of 2021. Our views on this programme have not changed following the QUORUM results.
Valuation: €832m or €30.96 per share
We have lowered our valuation to €832m or €30.96 per share, from €982m or €36.53 per share following the QUORUM results. We now project a launch year of 2027, as we believe it will take time to finalise the protocol and launch the pivotal study (which we forecast to occur in late 2022 or 2023).
Firibastat in heart failure
Quantum Genomics has reported the results of the 295-patient Phase IIb QUORUM study. Patients were enrolled within 72 hours of suffering acute myocardial infarction (AMI), commonly referred to as a heart attack. The primary endpoint was the change from baseline in LVEF after a 12-week treatment. Patients were randomised to receive targeted doses of either 100mg of firibastat BID, 500mg of firibastat BID or 5mg of ramipril BID. Patients in all arms started at half the targeted dosing for the first two weeks. There was effectively no difference between the arms in the 229-patient modified intent-to-treat population (patients who had at least one dose of drug with at least one post-baseline LVEF assessed by magnetic resonance imaging (MRI)).
Exhibit 1: QUORUM study primary endpoint
Arm |
Change from baseline in LVEF (%) |
p-value |
Firibastat 100mg BID |
5.62 ± 1.16 |
N/A |
Firibastat 500mg BID |
5.31 ± 1.11 |
p=0.789 |
Ramipril 5mg BID |
5.66 ± 1.12 |
Source: Quantum Genomics
While the study failed to meet the primary endpoint, Quantum Genomics highlighted a couple of trends in favour of firibastat. In patients with LVEF of less than 50%, LVEF increased by 5.32 ± 1.67% in the firibastat 500mg BID arm versus 3.51 ± 1.64% under ramipril. This trend was not statistically significant and it is unknown whether the difference was clinically meaningful. Also, blood pressure effects limited the ability to increase dosing to targeted levels in 32% of ramipril cases but only in 19% of patients in the firibastat 500mg BID arm (note that patients started at 250mg BID in the first two weeks in this arm).
The safety profile between the arms was similar (see Exhibit 2) with a higher rate of events in the firibastat 500mg BID arm mainly due to allergic skin reactions. There were 10 allergic skin reactions (one serious) that were viewed as related or potentially related to treatment in patients receiving firibastat 500mg BID and five reactions (one serious) in patients receiving ramipril.
Exhibit 2: QUROUM study safety results
Arm |
Number of patients with any adverse events |
Number of patients with related adverse events |
Number of patients with serious related adverse events |
Firibastat 100mg BID |
49 (50%%) |
15 (16%) |
0 |
Firibastat 500mg BID |
63 (64%) |
21 (21%) |
1 (1%) |
Ramipril 5mg BID |
54 (55%) |
15 (15%) |
1 (1%) |
Source: Quantum Genomics
Quantum Genomics has stated that it will be moving forward with a Phase III in severe patients and that any protocol will be finalised with a potential pharmaceutical partner. It is unclear what the protocol might look like and if ramipril will remain the control arm. Feedback from the FDA will be extremely important prior to the start of Phase III. Also, the company has stated they will not proceed into Phase III without a pharmaceutical partner. Management has stated that a partnership is possible over the next six months.
Valuation
We have lowered our valuation to €832m or €30.96 per share, from €982m or €36.53 per share following the QUORUM results. We now project a launch year of 2027 (from 2024, previously) in this indication, as we believe it will take time to finalise the protocol and launch the pivotal study (which we forecast to occur in late 2022 or 2023). Note that we will revisit these and other assumptions if the company receives validation from a major pharmaceutical company. Importantly, we have made no changes to our forecasts related to the hypertension programme.
Exhibit 3: Quantum Genomics valuation table
Product |
Main Indication |
Location |
Status |
Prob. of success |
Launch year |
Peak sales ($m) |
Patent protection |
rNPV |
||||||
Firibastat |
Hypertension |
US |
Phase III |
50% |
2024 |
1,043 |
2031 |
515 |
||||||
Firibastat |
Hypertension |
Europe |
Phase III |
50% |
2024 |
901 |
2031 |
440 |
||||||
Firibastat |
Development costs |
|
|
|
|
(187) |
||||||||
Firibastat |
Heart failure |
US |
Phase IIb |
20% |
2027 |
387 |
2031 |
63 |
||||||
Firibastat |
Heart failure |
Europe |
Phase IIb |
20% |
2027 |
464 |
2031 |
75 |
||||||
Firibastat |
Development costs |
(101) |
||||||||||||
Total |
|
|
|
|
|
|
|
805 |
||||||
Net cash at 31 December 2020 (€m) |
27 |
|||||||||||||
Total firm value (€m) |
832 |
|||||||||||||
Total shares (1 May 2021) (m) |
26.89 |
|||||||||||||
Value per basic share (€) |
30.96 |
|||||||||||||
Source: Edison Investment Research
Financials
Quantum had €27.1m in net cash at the end of 2020. In February, the company announced that Orient EuroPharma, the previously announced partner for South-East Asia (specifically, Taiwan, Malaysia, the Philippines, Singapore, Vietnam, Indonesia, Myanmar and Cambodia), Australia and New Zealand, acquired an €870,000 equity stake in Quantum Genomics. In April, the company announced €3m in non-dilutive funding. BNP bank issued a €1.5m loan guaranteed by the French government with a maturity of 12 months at an interest rate of 0.25%. The company has the option to amortise the amount over five years. BPI France also issued a €1.5m R&D and innovation loan for a period of 7.6 years with 0.72% interest. Repayments are scheduled to begin on 31 December 2023. The company is expected to release H121 results on 6 October 2021.
We forecast €17m in additional financing to the end of 2021, which we model as illustrative debt. The need for additional funding past this point will depend on the company’s ability to sign additional partnerships. Assuming no meaningful partnerships, we model a financing need of an additional €50m after 2021 to cover the company’s expenditures through to profitability.
Exhibit 4: Financial summary
€000s |
2019 |
2020 |
2021e |
2022e |
||
Year end 31 December |
PCG |
PCG |
PCG |
PCG |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
0 |
1,203 |
800 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
1,203 |
800 |
0 |
||
EBITDA |
|
|
(10,760) |
(13,858) |
(20,772) |
(22,477) |
Operating Profit (before amort. and except.) |
|
|
(10,760) |
(13,858) |
(20,772) |
(22,477) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Other |
(0) |
0 |
0 |
0 |
||
Exceptionals |
123 |
178 |
0 |
0 |
||
Operating Profit |
(10,637) |
(13,679) |
(20,772) |
(22,477) |
||
Net Interest |
0 |
0 |
0 |
0 |
||
Other |
11 |
(5) |
0 |
31 |
||
Profit Before Tax (norm) |
|
|
(10,760) |
(13,858) |
(20,772) |
(22,477) |
Profit Before Tax (FRS 3) |
|
|
(10,626) |
(13,684) |
(20,772) |
(22,446) |
Tax |
1,547 |
2,148 |
2,700 |
2,922 |
||
Deferred tax |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(9,213) |
(11,710) |
(18,072) |
(19,555) |
||
Profit After Tax (FRS 3) |
(9,078) |
(11,537) |
(18,072) |
(19,524) |
||
Average Number of Shares Outstanding (m) |
17.5 |
23.5 |
27.8 |
28.9 |
||
EPS - normalised (€) |
|
|
(0.53) |
(0.50) |
(0.65) |
(0.68) |
EPS - FRS 3 (€) |
|
|
(0.52) |
(0.49) |
(0.65) |
(0.68) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
884 |
1,454 |
1,859 |
2,166 |
Intangible Assets |
360 |
760 |
760 |
760 |
||
Tangible Assets |
27 |
27 |
431 |
739 |
||
Other |
497 |
667 |
667 |
667 |
||
Current Assets |
|
|
14,222 |
33,498 |
32,891 |
38,028 |
Stocks |
333 |
1,747 |
1,747 |
1,747 |
||
Debtors |
2,486 |
4,328 |
4,328 |
4,328 |
||
Cash |
11,164 |
27,153 |
26,546 |
31,683 |
||
Other |
239 |
270 |
270 |
270 |
||
Current Liabilities |
|
|
(4,061) |
(6,758) |
(6,756) |
(6,756) |
Creditors |
(4,060) |
(6,756) |
(6,756) |
(6,756) |
||
Short term borrowings |
(1) |
(2) |
0 |
0 |
||
Long Term Liabilities |
|
|
(874) |
(1,059) |
(18,059) |
(43,059) |
Long term borrowings |
(6) |
(5) |
(17,005) |
(42,005) |
||
Other long term liabilities |
(869) |
(1,054) |
(1,054) |
(1,054) |
||
Net Assets |
|
|
10,171 |
27,135 |
9,934 |
(9,621) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(10,665) |
(11,958) |
(18,065) |
(19,451) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(118) |
(411) |
(411) |
(411) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
7,382 |
28,501 |
870 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
(232) |
(143) |
0 |
0 |
||
Net Cash Flow |
(3,633) |
15,989 |
(17,606) |
(19,862) |
||
Opening net debt/(cash) |
|
|
(14,783) |
(11,157) |
(27,146) |
(9,541) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
||
Other |
7 |
(1) |
1 |
0 |
||
Closing net debt/(cash) |
|
|
(11,157) |
(27,146) |
(9,541) |
10,322 |
Source: company reports, Edison Investment Research
|
|
Research: Energy & Resources
Canacol Energy’s H121 production averaged 176.3mmscfd, demonstrating its continued resilience as Colombia recovers from COVID-19, and was above the midpoint of management’s full year production guidance of 153–190mmscfd. In August, sales were 186mmscfd. The 2021 drilling programme of up to 12 wells is well underway at an estimated capex of US$98–140m, and has delivered a discovery at Aguas Vivas 1, which encountered the thickest net pay for the company to date. Canacol targets a reserves replacement ratio (RRR) of 200% annually, which we estimate requires an active drilling programme of c 12–16 wells per year over the next five years (assuming a 70% success rate), and discovering gas outside the current core producing acreage. Meanwhile, a new gas pipeline will open up the interior market in Colombia from 2024.