Pharnext — Potential licensing deals could add confidence

Pharnext (PAR: ALPHA)

Last close As at 17/05/2024

EUR0.10

0.03 (42.86%)

Market capitalisation

1m

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Research: Healthcare

Pharnext — Potential licensing deals could add confidence

Pharnext announced that it is in the final stages of signing a licensing agreement for its lead asset PXT3003. Management indicated that the non-binding bids for the asset are c €400m, with roughly 10% of potential total deal value to be received upfront. It expects to receive the first binding offers on 29 September and plans to conclude the transaction by the end of October. As a reminder, PXT3003 targets a rare genetic peripheral nerve disorder and is in the Phase III PREMIER trial with preliminary data expected in Q423. Although preliminary at this stage, the announcement should provide confidence in the upcoming data readout and regulatory events, given the potential partners likely had access to insight that is not available in the public domain. Furthermore, if a licensing deal is secured, the upfront payment (licensing fees) will likely add to the company’s revenue base (potentially in FY23/FY24) and could alleviate its dependency on the OCEANE BSA convertible debt facility, which we view as a primary overhang on the shares.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Pharnext

Potential licensing deals could add confidence

Licensing update

Pharma and biotech

25 September 2023

Price

€1.09

Market cap

€0.85m

US$1.10/€

Pro forma net debt (€m) at 31 December 2022

17.8

Shares in issue (at 18 September 2023)

0.78m

Free float

N/A

Code

ALPHA

Primary exchange

Euronext Paris

Secondary exchange

OTC Pink

Share price performance

Business description

Pharnext is an advanced clinical-stage biopharmaceutical company developing novel therapies for neurodegenerative diseases lacking curative and/or disease-modifying treatments. Its lead programme is PXT3003 for Charcot-Marie-Tooth disease type 1A and is currently in advanced Phase III clinical trials, with top-line data expected in Q423. PXT3003 originated from Pharnext’s Pleotherapy R&D approach.

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Zoe Karamanoli

+44 (0)20 3077 5700

Jitisha Malhotra

+44 (0)20 3077 5700

Pharnext is a research client of Edison Investment Research Limited

Pharnext announced that it is in the final stages of signing a licensing agreement for its lead asset PXT3003. Management indicated that the non-binding bids for the asset are c €400m, with roughly 10% of potential total deal value to be received upfront. It expects to receive the first binding offers on 29 September and plans to conclude the transaction by the end of October. As a reminder, PXT3003 targets a rare genetic peripheral nerve disorder and is in the Phase III PREMIER trial with preliminary data expected in Q423. Although preliminary at this stage, the announcement should provide confidence in the upcoming data readout and regulatory events, given the potential partners likely had access to insight that is not available in the public domain. Furthermore, if a licensing deal is secured, the upfront payment (licensing fees) will likely add to the company’s revenue base (potentially in FY23/FY24) and could alleviate its dependency on the OCEANE BSA convertible debt facility, which we view as a primary overhang on the shares.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(c)

P/E
(x)

Yield
(%)

12/21

3.6

(30.6)

(1.0)

0.0

N/A

N/A

12/22

2.3

(38.5)

(0.2)

0.0

N/A

N/A

12/23e

1.9

(24.7)

(35.8)**

0.0

N/A

N/A

12/24e

8.9

(13.2)

(19.1)**

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Adjusted for 1:10,000 stock consolidation.

In the spring, Pharnext initiated a partner search and management announced that it has received several non-binding offers from pharma companies to obtain the commercial rights to PXT3003. According to management, the non-binding bids received to date are estimated to have a total value of €400m, which includes an upfront payment of approximately 10% of the total value of each licence. The company anticipates receiving first binding offers on 29 September, after which management plans to review the offers and select one or more partners with the intention of signing a definitive agreement and conclude the transaction by end-October.

As a reminder, the pivotal Phase III PREMIER trial was a 15-month international study to evaluate the efficacy and safety of PXT3003 versus placebo in patients with mild-to-moderate Charcot-Marie-Tooth Disease type 1A. It enrolled a total of 387 patients across locations in the United States, Europe, Canada and Israel.

We believe the expected Q423 readout of the PREMIER trial is a key catalyst for the stock, which will likely coincide with the announced closure of the licensing agreement for its lead asset PXT3003. If clinical development is successful and regulatory approval is achieved, PXT3003 will be the first therapy approved for the indication and will have orphan drug market exclusivity in the United States and Europe.

General disclaimer and copyright

This report has been commissioned by Pharnext and prepared and issued by Edison, in consideration of a fee payable by Pharnext. Edison Investment Research standard fees are £60,000 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.

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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.

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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.

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London │ New York │ Frankfurt

20 Red Lion Street

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United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Pharnext and prepared and issued by Edison, in consideration of a fee payable by Pharnext. Edison Investment Research standard fees are £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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