Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Healthcare
CASI announced on 19 November 2020 that its partner Juventas has initiated pivotal studies of the CD19 CAR-T product CNCT19 for the treatment of B-cell non-Hodgkin lymphoma (B-NHL). The clinical study will be run by Juventas at its expense, which will be supported by its recent $65m financing round, and the two companies will subsequently co-market in China if the product is approved. Juventas has guided towards potential approval in Q422.
Written by
CASI Pharmaceuticals |
Pivotal CAR-T study initiated |
Clinical update |
Pharma & biotech |
23 November 2020 |
Share price performance
Business description
Next events
Analyst
CASI Pharmaceuticals is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||
CASI announced on 19 November 2020 that its partner Juventas has initiated pivotal studies of the CD19 CAR-T product CNCT19 for the treatment of B-cell non-Hodgkin lymphoma (B-NHL). The clinical study will be run by Juventas at its expense, which will be supported by its recent $65m financing round, and the two companies will subsequently co-market in China if the product is approved. Juventas has guided towards potential approval in Q422.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
0.0 |
(20.0) |
(0.24) |
0.00 |
N/A |
N/A |
12/19 |
4.1 |
(36.5) |
(0.39) |
0.00 |
N/A |
N/A |
12/20e |
14.4 |
(31.0) |
(0.28) |
0.00 |
N/A |
N/A |
12/21e |
25.3 |
(23.3) |
(0.18) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Study on the heels of contract renegotiation
The partnership with Juventas was recently renegotiated at the behest of an investor in the most recent financing round to make it a more robust, standalone entity (see our earlier note). This shifted much of the financial responsibility of the program onto Juventas; CASI was originally obligated to pay a ¥70m milestone on entering pivotal studies. The two companies will co-market the product in China and have an undisclosed profit split. CASI is also a 16% shareholder of Juventas.
Moving to Phase II, but Phase I still running
Few details have been released regarding the B-NHL study. In China, a Phase II study is sufficient for approval of cell therapies, so we assume it will be relatively small (n<100). We should note that the Phase I dosing study for B-NHL is still ongoing (as well as for its other indication, acute lymphoblastic leukemia, B-ALL).
Record Evomela sales and higher guidance
CASI reported $4.2m in sales of Evomela in Q320 with a gross margin of 56.5%. This is the first quarter following the transition of manufacturing to a low-cost supplier, and CASI appears to be ramping up marketing efforts. The company raised guidance for the year to $14m in sales (from $10m previously), which we believe is achievable.
Valuation: Increased to $425m or $3.43 per share
We have increased our valuation to $425m or $3.43 per share, from $380m or $3.07. We have removed our COVID-19 risk adjustment, which had reduced valuations by 10% to account for unforeseen risks of COVID-19. We no longer believe this level of adjustment is required based on the ongoing pace of development activity since the start of the pandemic. Our valuation of Evomela is up by about 10% on the new sales trajectory, and the increased revenue has allowed us to reduce our future financing requirement to $55m from $65m.
Pivotal CAR-T program started in China
The move to initiate the pivotal Phase II of the CNCT19 study in B-NHL was taken because, according to CASI, positive results were seen in the ongoing Phase I B-NHL study by Juventas in China. The Phase I is a dosing study, so it is unclear at this time if a finalized dose of the product has been determined. The company has previously guided that the Phase I studies for B-NHL and B-ALL should be completed by Q121. We also expect the B-ALL pivotal study to be initiated shortly by Juventas.
Under a program to encourage the development of regenerative and cell therapies in China, the National Medical Products Administration (NMPA) will review these products following only two clinical studies: a Phase I dosing and pharmacokinetics study followed by a pivotal Phase II study. We do not have any information on how the Phase II B-NHL study will be run but, based on this guidance, we believe that it can be done with a relatively small patient population, presumably under 100. CASI has reiterated Juventas guidance that it believes it is targeting marketing approval in Q422, and a small patient population is likely required for the study to meet this aggressive timeline.
CASI previously restructured its agreement with Juventas in an effort to make the latter a more viable standalone company because it was raising cash to run pivotal studies. That financing has been completed and Juventas has successfully raised $65m to support these programs. The new agreement substantially shifts the financial responsibility of supporting Juventas away from CASI and onto Juventas shareholders. Juventas is responsible for the development costs associated with CNCT19, which has not changed, but under the new agreement CASI will no longer be obliged to pay development milestones associated with the program, but instead Juventas’s development program will be supported internally with its own fund-raising activities.
As a reminder, the current CEO of CASI, Wei-wu He, is a founder and current chairman of Juventas.
New guidance and financial update
The company reported record revenue of $4.2m in Q320, which was almost entirely attributable to sales of Evomela. This is a sequential increase of 59% over Q220 sales ($2.7m). The company increased guidance to $14m in sales for 2020 from $10m previously. We believe following the Q320 results that this is very reasonable, and only implies revenue of $3.7m in Q420, which is roughly the average on a quarterly basis for the year to date. We have increased our FY20 Evomela revenue estimates to $14.3m (from $11.5m) because we are similarly encouraged.
The margins on Evomela have also increased dramatically to 56.5% from a negligible 4.6% in Q220. The increase in margin is because the company has transitioned to a long-term supplier for Evomela. The original approval of the drug was associated with a different manufacturer. However, that manufacturer decided to wind down its operations as the drug was being launched. CASI was forced to subsidize the manufacturer to stay open until it could get the replacement manufacturer up and running and obtain the necessary regulatory clearances. This process has been completed, so we expect the margins to remain higher going forward.
We also suspect that some of the increase in sales is a result of an increased marketing push following the transition to a new manufacturer. Marketing costs increased to $2.1m from $1.6m in Q220 and are roughly twice what they were in Q319 when the drug was launched. Operational costs (ex-COGS) totalled $10.2m, before a $10.8m non-cash expense associated with the Juventas renegotiation. Our forecast non-adjusted operating loss for 2020 has increased to $44.3m (from $39.5m) on account of this non-cash charge (offset by increased sales). Other changes to our model have little net impact.
The company ended the quarter with $76.4m in cash and marketable investments, and we calculate pro forma cash of $64.4m after the $12m in transactions associated with BI-1206 (see below). We expect the company to need an additional $55m (from $65m previously) to reach profitability in 2024. We have lowered this financing requirement from previous estimates on account of the increased revenue estimates.
Valuation
We have increased our valuation to $425m or $3.43 per share, from $380m or $3.07. The biggest factor driving this increase is that we have removed our COVID-19 risk adjustment, which had reduced all component valuations by 10%. We have removed this parameter because both the company’s commercial and development programs are progressing faster than our expectations, even for non-pandemic times. Although COVID-19 uncertainty remains, the near-term impacts of the disease have been included in our model in other ways. Additionally, our valuation for Evomela has increased to reflect the improved sales trajectory. Additionally we have updated for new cash, and rolled our NPVs forward.
We have not increased our probability of success for CNCT19 because no data has been reported from the ongoing Phase I clinical study.
Exhibit 1: Valuation of CASI
Portfolio |
Asset |
Region |
Peak sales ($m) |
Margins |
Clinical risk adjustment |
Value ($m) |
Hematology |
Evomela |
China |
35.4 |
49% |
100% |
80.06 |
Marqibo |
China |
9.2 |
56% |
90% |
7.85 |
|
Zevalin |
China |
25.5 |
64% |
90% |
43.70 |
|
Thiotepa |
China |
8.8 |
39% |
90% |
4.64 |
|
CID-103 |
China & US & Europe |
766.6 |
59% |
5% |
14.48 |
|
CNCT19 |
China |
306.2 |
up to 50% profit share |
10% |
25.95 |
|
BI-1206 |
China |
249.9 |
59% |
10% |
17.25 |
|
Other products |
ANDA portfolio |
China & US |
142.0 |
47% |
100% |
175.64 |
Octreotide LAI |
China |
15.7 |
41% |
80% |
12.31 |
|
Total |
381.87 |
|||||
Net cash and equivalents (Q320 + BI-1206 deal) ($m) |
64.39 |
|||||
Noncontrolling interest |
(21.27) |
|||||
Total firm value ($m) |
424.98 |
|||||
Total shares (m) |
123.94 |
|||||
Value per basic share ($) |
3.43 |
|||||
Dilutive warrants and options (m) |
15.91 |
|||||
Value per diluted share ($) |
3.35 |
|||||
Source: CASI Pharmaceuticals reports, Edison Investment Research
Exhibit 2: Financial summary
$'000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 December |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
||
INCOME STATEMENT |
||||||
Revenue |
|
|
0.0 |
4,131.0 |
14,439.7 |
25,293.5 |
Cost of Sales |
0.0 |
(3,935.0) |
(9,332.3) |
(6,288.7) |
||
Gross Profit |
0.0 |
196.0 |
5,107.4 |
19,004.8 |
||
EBITDA |
|
|
(19,402.4) |
(37,495.0) |
(33,690.6) |
(22,564.0) |
Normalised operating profit |
|
|
(19,767.9) |
(38,098.0) |
(34,192.6) |
(23,348.9) |
Amortisation of acquired intangibles |
(1,305.4) |
(1,550.0) |
(1,511.9) |
(1,511.9) |
||
Exceptionals |
0.0 |
0.0 |
(1,087.0) |
0.0 |
||
Share-based payments |
(6,118.1) |
(7,310.0) |
(7,478.0) |
(7,478.0) |
||
Reported operating profit |
(27,191.4) |
(46,958.0) |
(44,269.5) |
(32,338.8) |
||
Net Interest |
(280.1) |
1,062.0 |
854.0 |
0.0 |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
534.0 |
2,292.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(20,048.1) |
(36,502.0) |
(31,046.6) |
(23,348.9) |
Profit Before Tax (reported) |
|
|
(27,471.6) |
(45,362.0) |
(41,123.5) |
(32,338.8) |
Reported tax |
0.0 |
0.0 |
0.0 |
6,467.8 |
||
Profit After Tax (norm) |
(20,048.1) |
(36,502.0) |
(31,046.6) |
(23,348.9) |
||
Profit After Tax (reported) |
(27,471.6) |
(45,362.0) |
(41,123.5) |
(25,871.1) |
||
Minority interests |
0.0 |
(670.0) |
(403.0) |
0.0 |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
(20,048.1) |
(37,172.0) |
(31,449.6) |
(23,348.9) |
||
Net income (reported) |
(27,471.6) |
(46,032.0) |
(41,526.5) |
(25,871.1) |
||
Basic average number of shares outstanding (m) |
85 |
96 |
110 |
130 |
||
EPS - basic normalised (c) |
|
|
(23.65) |
(38.74) |
(28.48) |
(17.93) |
EPS - diluted normalised (c) |
|
|
(23.65) |
(38.74) |
(28.48) |
(17.93) |
EPS - basic reported (c) |
|
|
(32.41) |
(47.98) |
(37.61) |
(19.87) |
Dividend (c) |
0.00 |
0.00 |
0.00 |
0.00 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
20,845.4 |
41,130.0 |
62,826.0 |
60,913.0 |
Intangible Assets |
18,784.7 |
16,895.0 |
18,015.0 |
16,503.1 |
||
Tangible Assets |
1,750.6 |
985.0 |
11,773.0 |
11,372.0 |
||
Investments & other |
310.0 |
23,250.0 |
33,038.0 |
33,038.0 |
||
Current Assets |
|
|
92,564.6 |
61,501.0 |
57,526.3 |
41,023.8 |
Stocks |
0.0 |
4,542.0 |
3,068.1 |
2,067.5 |
||
Debtors |
0.0 |
1,293.0 |
2,373.6 |
4,157.8 |
||
Cash & cash equivalents |
85,117.0 |
54,246.0 |
49,992.5 |
32,777.5 |
||
Other |
7,447.6 |
1,420.0 |
2,092.0 |
2,021.0 |
||
Current Liabilities |
|
|
(3,873.9) |
(7,947.0) |
(6,813.9) |
(6,791.5) |
Creditors |
(968.0) |
(5,113.0) |
(3,955.9) |
(3,933.5) |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
(1,499.5) |
0.0 |
0.0 |
0.0 |
||
Other |
(1,406.4) |
(2,834.0) |
(2,858.0) |
(2,858.0) |
||
Long Term Liabilities |
|
|
(73.6) |
(1,019.0) |
(4,962.0) |
(4,962.0) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other long term liabilities |
(73.6) |
(1,019.0) |
(4,962.0) |
(4,962.0) |
||
Net Assets |
|
|
109,462.5 |
93,665.0 |
108,576.4 |
90,183.3 |
Minority interests |
0.0 |
20,670.0 |
21,271.0 |
21,271.0 |
||
Shareholders' equity |
|
|
109,462.5 |
72,995.0 |
87,305.4 |
68,912.3 |
CASH FLOW |
||||||
Op Cash Flow before WC and tax |
(19,402.4) |
(37,495.0) |
(33,690.6) |
(22,564.0) |
||
Working capital |
(9,780.4) |
4,452.0 |
(1,435.9) |
(806.0) |
||
Exceptional & other |
598.9 |
9,800.0 |
13,800.2 |
6,467.8 |
||
Tax |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net operating cash flow |
|
|
(28,583.9) |
(23,243.0) |
(21,326.3) |
(16,902.2) |
Capex |
(1,131.1) |
(7,053.0) |
(11,290.0) |
(383.8) |
||
Acquisitions/disposals |
(20,642.4) |
(21,005.0) |
(21,978.0) |
0.0 |
||
Net interest |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
92,269.8 |
3,545.0 |
45,922.0 |
0.0 |
||
Dividends |
912.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
20,000.0 |
2,195.0 |
71.0 |
||
Net Cash Flow |
42,824.4 |
(27,756.0) |
(6,477.3) |
(17,215.1) |
||
Opening net debt/(cash) |
|
|
(41,991.7) |
(83,617.5) |
(54,245.5) |
(49,992.3) |
FX |
(1,197.5) |
(1,328.0) |
587.0 |
0.0 |
||
Other non-cash movements |
(1.0) |
(288.0) |
1,637.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(83,617.5) |
(54,245.5) |
(49,992.3) |
(32,777.2) |
Source: CASI Pharmaceuticals reports, Edison Investment Research
|
|
Research: Investment Companies
Marble Point Loan Financing (MPLF) is a closed-end fund that invests in leveraged loans mostly by buying the equity tranches in collateralised loan obligations (CLOs) managed by Marble Point Credit Management (Marble Point). The experienced credit investment team employs a conservative, disciplined approach. Unlike most of its peers, MPLF marks its portfolio to market, which resulted in considerable NAV volatility during the pandemic. NAV halved during Q120 but subsequently rose by nearly 50%. However, although loan defaults have risen in its underlying portfolio, cash flow generation has remained strong. After suspending its dividend in April 2020, reinstated it in August and the shares now offer a yield of 15.1%.