Quantum Genomics — Phase IIb QUORUM results

Quantum Genomics (PAR: ALQGC)

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Research: Healthcare

Quantum Genomics — Phase IIb QUORUM results

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.

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Written by

Maxim Jacobs

Healthcare

Quantum Genomics

Phase IIb QUORUM results

Development update

Pharma & biotech

9 September 2021

Price

€5.12

Market cap

€138m

Net cash (€m) at 31 December 2020

27.1

Shares in issue

26.9m

Free float

67%

Code

ALQGC

Primary exchange

Euronext Paris

Secondary exchange

OTCQX

Share price performance

%

1m

3m

12m

Abs

7.5

34.0

121.4

Rel (local)

9.3

31.5

66.6

52-week high/low

€5.9

€2.2

Business description

Quantum Genomics is a biopharmaceutical company developing firibastat, a brain aminopeptidase A inhibitor for treating hypertension and heart failure. Its mechanism is implicated in the 25% of patients resistant to treatment. The Phase III programme will consist of two trials, one of which should readout by the end of 2021.

Next events

FRESH study results in hypertension

YE21

Analysts

Maxim Jacobs

+1 646 653 7027

Jyoti Prakash

+91 981 880 393

Quantum Genomics is a research client of Edison Investment Research Limited

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*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

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
(€m
)

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


General disclaimer and copyright

This report has been commissioned by Quantum Genomics and prepared and issued by Edison, in consideration of a fee payable by Quantum Genomics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

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Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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London +44 (0)20 3077 5700

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New York +1 646 653 7026

1185 Avenue of the Americas

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Quantum Genomics and prepared and issued by Edison, in consideration of a fee payable by Quantum Genomics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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