Medigene continued its positive momentum in H119 announcing a new partnership (Roivant/Cytovant), expansion of its internal pipeline (MDG1021), sale of a legacy asset (Veregen) and progression of a partnered product (Bluebird MAGE-A4). Patient enrolment in Medigene’s MDG1011 trial in multiple myeloma (MM), acute myeloid leukaemia (AML) and myelodysplastic syndromes (MDS) is ongoing and we forecast initial data in H120. The company reiterated its FY19 financial guidance of an EBITDA loss of €23–28m. We value Medigene at €458m (€18.65/share).
Written by
Medigene |
Positive momentum continued in H119 |
Trading update |
Pharma & biotech |
7 August 2019 |
Share price performance
Business description
Next events
Analyst
Medigene is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||
Medigene continued its positive momentum in H119 announcing a new partnership (Roivant/Cytovant), expansion of its internal pipeline (MDG1021), sale of a legacy asset (Veregen) and progression of a partnered product (Bluebird MAGE-A4). Patient enrolment in Medigene’s MDG1011 trial in multiple myeloma (MM), acute myeloid leukaemia (AML) and myelodysplastic syndromes (MDS) is ongoing and we forecast initial data in H120. The company reiterated its FY19 financial guidance of an EBITDA loss of €23–28m. We value Medigene at €458m (€18.65/share).
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
8.9 |
(15.1) |
(0.72) |
0.0 |
N/A |
N/A |
12/18 |
7.8 |
(16.5) |
(0.70) |
0.0 |
N/A |
N/A |
12/19e |
10.7 |
(25.9) |
(1.05) |
0.0 |
N/A |
N/A |
12/20e |
9.7 |
(24.7) |
(1.01) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
H119 financials: Guidance unchanged for FY19
Revenues from Immunotherapies grew 47% y-o-y to €4.9m (H118: €3.4m) as a result of the progression of the bluebird partnership and the new Roivant/Cytovant partnership. As expected, R&D expenses increased in H119 by 26% to €10.9m (H118: €8.7m) due to the advancing pipeline, in particular the clinical development of MDG1011. Administrative expenses increased 20% y-o-y to €4.1m (H118: €3.4m) due to changes in management structure. Medigene confirmed its revenue (€10–11m), R&D expenditure (€24–29m) and EBITDA (loss of €23–28m) guidance for the year. We continue to forecast a FY19 net loss of €26.4m and a cash runway into 2021. Medigene reported net cash as of 30 June 2019 of €65.3m.
Positive progression on partners and assets in H119
Medigene continues the enrolment of its MDG1011 Phase I/II clinical trial. In an effort to accelerate patient enrolment, new treatment centres are being added, AML enrolment criteria has been broadened and earlier leukapheresis of patients is being undertaken. We believe initial data is possible in H120. The company has announced that new asset MDG1021 (HA-1 targeting TCR) will start its clinical programme in 2020 (sponsored by Medigene and conducted by partners at Leiden University Medical Center). Additionally in H119 a new partnership was announced with Roivant/Cytovant (total deal terms >$1bn). Medigene has granted Roivant/Cytovant an exclusive licence in select Asian regions to an NY-ESO-1 targeting TCR and a WT-1 & PRAME dendritic cell (DC) vaccine. An additional discovery agreement has been made covering TCRs for two undisclosed targets.
Valuation: €458m (€18.65/share)
We value Medigene at €458m (€18.65/share) vs €460m (€18.72/share). We have rolled forward our model and updated for net cash. Our model includes MDG1011, AML DC vaccine, deal metrics for the bluebird bio collaboration, the Roivant/Cytovant collaboration and Imlygic royalties. For a full overview of our valuation please see our June outlook note, New assets, new partnerships.
Exhibit 1: Financial summary
€'000s |
2016 |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
9,749 |
8,882 |
7,754 |
10,725 |
9,739 |
of which: Veregen revenues (royalties/milestones/supply) |
3,048 |
2,790 |
1,596 |
987 |
0 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
3,155 |
0 |
0 |
0 |
0 |
||
Non-cash income (Eligard) |
2,493 |
1,206 |
178 |
0 |
0 |
||
Bluebird bio partnership |
1,053 |
4,886 |
5,980 |
5,738 |
5,739 |
||
Cytovant partnership |
0 |
0 |
4,000 |
4,000 |
|||
Cost of sales |
(1,402) |
(1,621) |
(849) |
(275) |
0 |
||
Gross profit |
8,347 |
7,261 |
6,905 |
10,450 |
9,739 |
||
Selling, general & administrative spending |
(10,025) |
(8,266) |
(7,613) |
(11,451) |
(7,333) |
||
R&D expenditure |
(11,538) |
(14,877) |
(17,117) |
(27,387) |
(29,578) |
||
Other operating spending |
0 |
0 |
0 |
0 |
0 |
||
Operating profit |
(8,974) |
(15,882) |
(17,825) |
(28,388) |
(27,173) |
||
Goodwill & intangible amortisation |
(525) |
(524) |
(523) |
(522) |
(521) |
||
Exceptionals |
4,242 |
0 |
0 |
0 |
0 |
||
Share-based payment |
0 |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(12,371) |
(14,615) |
(16,253) |
(27,641) |
(26,426) |
Operating Profit (before amort. and except.) |
|
|
(12,691) |
(15,358) |
(17,302) |
(27,866) |
(26,652) |
Net interest |
(1,009) |
(435) |
74 |
467 |
74 |
||
Other (forex gains/losses; associate profit/loss) |
263 |
672 |
747 |
1,546 |
1,849 |
||
Profit Before Tax (norm) |
|
|
(13,437) |
(15,121) |
(16,481) |
(25,853) |
(24,728) |
Profit before tax (reported) |
|
|
(9,720) |
(15,645) |
(17,004) |
(26,375) |
(25,249) |
Tax |
228 |
(344) |
(45) |
(45) |
(45) |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(13,209) |
(15,465) |
(16,526) |
(25,898) |
(24,773) |
||
Profit after tax (reported) |
(9,492) |
(15,989) |
(17,049) |
(26,420) |
(25,294) |
||
Average number of shares outstanding (m) |
20.0 |
21.5 |
23.7 |
24.6 |
24.6 |
||
EPS - normalised (c) |
|
|
(66.20) |
(71.93) |
(69.82) |
(105.46) |
(100.88) |
EPS - Reported (€) |
|
|
(0.48) |
(0.74) |
(0.72) |
(1.08) |
(1.03) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||
Fixed assets |
|
|
47,742 |
48,595 |
67,394 |
82,206 |
82,572 |
Intangible assets & goodwill |
35,767 |
36,292 |
36,225 |
42,903 |
42,382 |
||
Tangible assets |
3,323 |
4,329 |
4,261 |
5,097 |
5,984 |
||
Other non-current assets |
8,652 |
7,974 |
26,908 |
34,206 |
34,206 |
||
Current assets |
|
|
63,973 |
63,342 |
62,196 |
45,629 |
16,242 |
Stocks |
7,866 |
7,724 |
7,298 |
0 |
0 |
||
Debtors |
1,175 |
1,699 |
787 |
787 |
787 |
||
Cash |
52,630 |
51,724 |
51,408 |
42,139 |
12,752 |
||
Other |
2,302 |
2,195 |
2,703 |
2,703 |
2,703 |
||
Current liabilities |
|
|
(11,966) |
(8,124) |
(8,821) |
(8,821) |
(8,821) |
Trade accounts payable |
(973) |
(725) |
(1,358) |
(1,358) |
(1,358) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Deferred income |
(3,575) |
(3,575) |
(3,474) |
(3,474) |
(3,474) |
||
Other |
(7,418) |
(3,824) |
(3,989) |
(3,989) |
(3,989) |
||
Long-term liabilities |
|
|
(21,157) |
(10,315) |
(13,344) |
(10,007) |
(6,669) |
Pension provisions |
(408) |
(405) |
(414) |
(414) |
(414) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(2,395) |
(4,548) |
(4,246) |
(4,246) |
(4,246) |
||
Deferred revenues (Eligard non-cash income & bluebird bio) |
(18,354) |
(5,362) |
(8,684) |
(5,347) |
(2,009) |
||
Net assets |
|
|
78,592 |
93,498 |
107,425 |
109,007 |
83,325 |
CASH FLOW |
|||||||
Operating cash flow |
|
|
(3,611) |
(20,729) |
(10,013) |
(9,430) |
(29,102) |
Net interest |
(45) |
(45) |
(26) |
1,267 |
874 |
||
Tax |
(102) |
(75) |
(103) |
(45) |
(45) |
||
Capex |
(1,677) |
(1,533) |
(1,010) |
(1,061) |
(1,114) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
10,537 |
480 |
537 |
0 |
0 |
||
Equity financing |
(77) |
19,329 |
29,923 |
0 |
0 |
||
Other |
846 |
1,667 |
(19,624) |
0 |
0 |
||
Net cash flow |
5,871 |
(906) |
(316) |
(9,269) |
(29,387) |
||
Opening net debt/(cash) |
|
|
(46,759) |
(52,630) |
(51,724) |
(51,408) |
(42,139) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
0 |
0 |
0 |
(0) |
0 |
||
Closing net debt/(cash) |
|
|
(52,630) |
(51,724) |
(51,408) |
(42,139) |
(12,752) |
Source: Medigene accounts Edison Investment Research
|
|
Australis Capital recently reported financial results for its first year of operations. The year was characterized by a vigorous pace of deals to rapidly construct a major cannabis operator. The company now has multiple brands, access to retail spaces and supporting technology, and multiple industry partnerships and is close to completing its acquisition of Green Therapeutics (by the end of 2019), which will provide Australis with additional brands and the production it needs to launch.