Last close As at 05/08/2026
SEK6.71
▲ −0.16 (−2.33%)
Market capitalisation
SEK435m
Research: Healthcare
Mendus’s Q123 report provided an insight into the strategic next steps for its lead cancer vaccine, vididencel (DCOne), as the company pursues a clinical path in the acute myeloid leukaemia (AML) maintenance setting. Following the positive results from the Phase II ADVANCE II study, Mendus intends to initiate a follow-on Phase II study in H223, investigating the combination of vididencel with oral azacitidine (current standard of care, SoC) as an AML maintenance treatment regime. It had previously been reported that Mendus may look to explore vididencel as a maintenance treatment in patients post-hematopoietic stem cell transplantation (HSCT). However, with no maintenance therapy indicated in post-HSCT, to date, and the potential for synergistic efficacy enhancements with SoC oral azacitidine, we view Mendus’s prioritisation of the combination study as a sensible strategic decision. We have adjusted our forecasts, but our valuation of Mendus remains largely unchanged at SEK1.8bn or SEK9.19/share (previously SEK1.8bn or SEK9.07/share).
Written by
Mendus |
Planning the route forward for vididencel in AML |
Q123 results |
Pharma and biotech |
15 May 2023 |
Share price performance
Business description
Next events
Analysts
Mendus is a research client of Edison Investment Research Limited |
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Mendus’s Q123 report provided an insight into the strategic next steps for its lead cancer vaccine, vididencel (DCOne), as the company pursues a clinical path in the acute myeloid leukaemia (AML) maintenance setting. Following the positive results from the Phase II ADVANCE II study, Mendus intends to initiate a follow-on Phase II study in H223, investigating the combination of vididencel with oral azacitidine (current standard of care, SoC) as an AML maintenance treatment regime. It had previously been reported that Mendus may look to explore vididencel as a maintenance treatment in patients post-hematopoietic stem cell transplantation (HSCT). However, with no maintenance therapy indicated in post-HSCT, to date, and the potential for synergistic efficacy enhancements with SoC oral azacitidine, we view Mendus’s prioritisation of the combination study as a sensible strategic decision. We have adjusted our forecasts, but our valuation of Mendus remains largely unchanged at SEK1.8bn or SEK9.19/share (previously SEK1.8bn or SEK9.07/share).
Year |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/21 |
0.0 |
(133.4) |
(0.73) |
0.0 |
N/A |
N/A |
12/22 |
3.4 |
(138.8) |
(0.70) |
0.0 |
N/A |
N/A |
12/23e |
0.0 |
(133.6) |
(0.67) |
0.0 |
N/A |
N/A |
12/24e |
0.0 |
(145.3) |
(0.72) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Combination study next on the AML horizon
Mendus is looking to make further inroads in AML maintenance with the initiation of a Phase II combination study. The company has communicated that the planned study may have potential to expand into a pivotal (registrational) trial. We note that there are limited competitive technologies in the AML maintenance pipeline with ongoing studies primarily focused on repositioning more recently approved AML treatments (venetoclax, azacitidine, gilteritinib), representing an opportunity for vididencel to offer market differentiation, in our view.
Financing on hand provides runway to Q224
Mendus has secured financing commitments worth up to a total of SEK210.0m. The facility consists of a remaining SEK15.0m shareholder loan from Van Herk Investments and SEK195.0m of convertible debt from Negma Group available for drawdown at the discretion of Mendus. With a gross cash position of SEK37.5m at end-Q123 and quarterly operating cash burn of SEK33.5m, the company will likely have to access the debt facility in Q223 to continue to fund its operations. If Mendus fully exercises the committed financing available, we believe it should provide an operating cash runway to Q224, based on our projected burn rates.
Valuation: SEK1.8bn or SEK9.19 per share
Our valuation of Mendus remains relatively unchanged at SEK1.8bn or SEK9.19/share, including net debt of SEK46.0m at end-Q123. The increased net debt position has been offset slightly by rolling our valuation model forward.
Financials
Following the Q123 report, we have updated our financial estimates for Mendus and forecast FY23 operating losses of SEK132m (previously SEK149m), with net cash outflows from operating activities of SEK130m (previously SEK148m). The decrease in operating expenses has been attributed to slightly muted clinical development activities associated with vididencel and ilixadencel, reducing FY23 R&D spend forecast to SEK82.3m, from SEK99.1m. However, we estimate that Mendus’s current quarterly costs are likely to increase in H223 as the company prepares for the initiation of the follow-on Phase II study for vididencel. We therefore expect operating losses to increase in FY24 to SEK136m (previously SEK67.4m), primarily driven by increased R&D expenses to SEK84.4m (previously SEK15.0m) associated with the commencement of the Phase II trial, and forecast operating cash outflows of SEK142m. Changes to our key estimates are summarised in Exhibit 1.
Exhibit 1: Key changes to forecasts
FY23e |
FY24e |
|||||
SEKm |
Old |
New |
Change (%) |
Old |
New |
Change (%) |
Operating Expenses |
(149.3) |
(131.6) |
11.9% |
(67.4) |
(135.8) |
-100.3% |
-- R&D |
(99.1) |
(82.3) |
17.0% |
(15.0) |
(84.4) |
-462.7% |
-- G&A |
(46.1) |
(45.2) |
2.0% |
(47.5) |
(46.5) |
2.0% |
- D&A |
(4.1) |
(4.1) |
0% |
(4.9) |
(4.9) |
0% |
EBIT |
(149.3) |
(131.6) |
11.9% |
(67.4) |
(135.8) |
-100.3% |
Operating cash outflow |
(148.0) |
(130.3) |
12.0% |
(73.4) |
(141.8) |
-93.2% |
Source: Edison Investment Research
As such, if the company fully exercises the committed financing available, we believe it should provide sufficient funds to support its clinical programmes and working capital requirements into Q224. If the entire SEK195.0m of convertible debt is used by Mendus, the ensuing stock conversion, assuming a price of SEK1.50/share, would result in the issue of 130.0m shares, diluting existing shareholders by c 65%. We do not expect Mendus to be fully revenue generating and self-sustaining until 2027, following the launch of vididencel, and we estimate the company will need to raise an additional SEK425.0m in funding, which we account for as illustrative debt in our model. If this is realised through an equity issue at the current market price, it would result in the issuance of 283.3m shares. If we assume full drawdown of the Negma debt facility (SEK195.0m) and our estimated additional funding requirements (SEK425.0m), Mendus would have to issue c 413.3m shares, resulting in our per share valuation decreasing from SEK9.19/share to SEK3.01/share.
Exhibit 2: Financial summary
Accounts: IFRS, Yr end: December, SEK: Thousands |
2020 |
2021 |
2022 |
2023e |
2024e |
Income statement |
|
|
|
|
|
Total revenue |
0 |
31 |
3,375 |
0 |
0 |
Cost of sales |
0 |
0 |
0 |
0 |
0 |
Gross profit |
0 |
31 |
3,375 |
0 |
0 |
SG&A (expenses) |
(37,193) |
(42,498) |
(44,737) |
(45,184) |
(46,540) |
R&D costs |
(47,883) |
(85,796) |
(87,049) |
(82,270) |
(84,373) |
Other income/(expense) |
(65) |
(845) |
(1,134) |
0 |
0 |
Exceptionals and adjustments |
0 |
0 |
0 |
0 |
0 |
Reported EBITDA |
(85,141) |
(129,108) |
(129,545) |
(127,455) |
(130,913) |
Depreciation and amortisation |
(887) |
(992) |
(4,139) |
(4,131) |
(4,939) |
Reported Operating Profit/(loss) |
(86,028) |
(130,100) |
(133,684) |
(131,586) |
(135,851) |
Finance income/(expense) |
(3,220) |
(3,310) |
(5,101) |
(2,026) |
(9,440) |
Other income/(expense) |
0 |
0 |
0 |
0 |
0 |
Exceptionals and adjustments |
0 |
0 |
0 |
0 |
0 |
Reported PBT |
(89,248) |
(133,410) |
(138,785) |
(133,611) |
(145,292) |
Adjusted PBT |
(89,248) |
(133,410) |
(138,785) |
(133,611) |
(145,292) |
Income tax expense |
0 |
0 |
0 |
0 |
0 |
Reported net income |
(89,248) |
(133,410) |
(138,785) |
(133,611) |
(145,292) |
|
|
|
|
|
|
Basic average number of shares, m |
76.2 |
184.0 |
198.3 |
200.4 |
201.3 |
Basic EPS (SEK) |
(1.17) |
(0.73) |
(0.70) |
(0.67) |
(0.72) |
Diluted EPS (SEK) |
(1.17) |
(0.73) |
(0.70) |
(0.67) |
(0.72) |
|
|
|
|
|
|
Balance sheet |
|
|
|
|
|
Property, plant and equipment |
1,705 |
2,109 |
13,899 |
14,588 |
15,191 |
Intangible assets |
532,441 |
532,441 |
532,441 |
532,441 |
532,441 |
Right of use assets |
1,204 |
361 |
26,216 |
26,216 |
26,216 |
Other non-current assets |
677 |
843 |
618 |
618 |
618 |
Total non-current assets |
536,027 |
535,754 |
573,174 |
573,863 |
574,466 |
Cash and equivalents |
167,643 |
155,313 |
41,851 |
48,128 |
97,233 |
Prepaid expenses and accrued income |
4,760 |
10,214 |
1,919 |
1,919 |
1,919 |
Other current assets |
20,230 |
19,702 |
3,442 |
3,442 |
3,442 |
Total current assets |
192,633 |
185,229 |
47,212 |
53,489 |
102,594 |
Non-current loans and borrowings* |
18,982 |
36,666 |
22,844 |
187,844 |
382,844 |
Non-current lease liabilities |
303 |
0 |
23,706 |
23,706 |
23,706 |
Total non-current liabilities |
19,285 |
36,666 |
46,550 |
211,550 |
406,550 |
Trade and other payables |
10,365 |
11,610 |
7,411 |
7,411 |
7,411 |
Current loans and borrowings |
14,879 |
0 |
29,198 |
0 |
0 |
Short-term lease liabilities |
880 |
309 |
2,413 |
2,413 |
2,413 |
Other current liabilities |
22,157 |
15,657 |
20,375 |
20,375 |
20,375 |
Total current liabilities |
48,281 |
27,576 |
59,397 |
30,199 |
30,199 |
Equity attributable to company |
661,094 |
656,743 |
514,440 |
385,604 |
240,312 |
|
|
|
|
|
|
Cashflow statement |
|
|
|
|
|
Operating Profit/(loss) |
(86,028) |
(130,100) |
(133,684) |
(131,586) |
(135,851) |
Depreciation and amortisation |
1,774 |
1,851 |
4,139 |
3,311 |
3,477 |
Other adjustments |
0 |
0 |
0 |
0 |
0 |
Movements in working capital |
27,731 |
(10,089) |
27,030 |
0 |
0 |
Interest paid / received |
(103) |
(140) |
(1,135) |
(2,026) |
(9,440) |
Income taxes paid |
0 |
0 |
0 |
0 |
0 |
Cash from operations (CFO) |
(56,626) |
(138,031) |
(109,331) |
(130,300) |
(141,815) |
Capex |
(464) |
(1,361) |
(12,324) |
(4,000) |
(4,080) |
Acquisitions & disposals net |
0 |
0 |
0 |
0 |
0 |
Other investing activities |
0 |
0 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
157,298 |
(1,361) |
(12,324) |
(4,000) |
(4,080) |
Net proceeds from issue of shares |
51,629 |
128,949 |
0 |
4,775 |
0 |
Movements in debt |
(725) |
(1,922) |
10,925 |
165,000 |
195,000 |
Other financing activities |
0 |
0 |
(2,731) |
(29,198) |
0 |
Cash flow from financing activities |
50,904 |
127,027 |
8,194 |
140,577 |
195,000 |
Increase/(decrease) in cash and equivalents |
153,611 |
(12,330) |
(113,462) |
6,277 |
49,105 |
Cash and equivalents at beginning of period |
14,032 |
167,643 |
155,313 |
41,851 |
48,128 |
Cash and equivalents at end of period |
167,643 |
155,313 |
41,851 |
48,128 |
97,233 |
Net (debt) cash |
133,782 |
118,647 |
(10,191) |
(139,716) |
(285,611) |
Source: Mendus company accounts, Edison Investment Research. Note: *Includes the Van Herk Investments shareholder loan and the Negma Group convertible debt facility which we assume will both be fully drawn down.
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|
Research: Healthcare
Ultimovacs’ Q123 report is largely focused on the upcoming readouts from two of its five ongoing randomised Phase II studies. Results from the NIPU and INITIUM trials in second-line malignant pleural mesothelioma and first-line unresectable metastatic melanoma are expected in Q223 and H223, respectively. In our view, positive results from NIPU and INITIUM would represent the most compelling evidence to date of UV1’s clinical utility for treating solid tumours and the most significant potential catalysts for investor attention in FY23. We also see the slight delay in trial readouts from the INITIUM trial due to lack of disease progression as a potentially encouraging sign for the outcome of the trial; however, we caveat that as the study is blinded, we cannot conclude whether the effect is due to UV1. For more details on the upcoming readouts, see our previous note. We have made minor adjustments to our forecasts, but our valuation of Ultimovacs remains unchanged at NOK8.0bn or NOK234/share; however, it is likely to be materially affected by the NIPU and INITIUM results.