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Research: Healthcare
Phase IIb data from the QUORUM study in heart failure (HF) patients will be presented at the European Society of Cardiology meeting, which will be held virtually from 27–30 August. If positive, we believe this data may be truly transformational for the company and we would expect partnership discussions to intensify with some of the global players in the cardiovascular space.
Written by
Maxim Jacobs
Quantum Genomics |
Potentially transformational data in August |
Development update |
Pharma & biotech |
12 July 2021 |
Share price performance
Business description
Next events
Analysts
Quantum Genomics is a research client of Edison Investment Research Limited |
Phase IIb data from the QUORUM study in heart failure (HF) patients will be presented at the European Society of Cardiology meeting, which will be held virtually from 27–30 August. If positive, we believe this data may be truly transformational for the company and we would expect partnership discussions to intensify with some of the global players in the cardiovascular space.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
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.
The Phase IIb QUORUM study
The Phase IIb QUORUM study enrolled 295 subjects from 35 centres within 72 hours of suffering acute myocardial infarction (AMI), commonly referred to as a heart attack. The primary endpoint will be the change from baseline in the left ventricular ejection fraction (LVEF) after a three-month treatment. Patients either received 100mg of firibastat twice a day (BID), 500mg of firibastat BID or 5mg of ramipril BID.
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.
Pivotal REFRESH study has enrolled first patient
Quantum Genomics recently announced that the first patient has been enrolled in the REFRESH pivotal Phase III study, which is designed to recruit 750 patients with difficult-to-treat or resistant hypertension. The study will test a 1,000mg once-daily formulation of firibastat (compared to two 250mg capsules BID in the FRESH study) and includes a six-month safety follow-up period (following the initial three-month treatment period) for all patients and 12-month follow up for 100 patients. The primary endpoint will be the change in systolic AOBP from baseline. Efficacy data is expected in mid-2023.
Valuation: €982m or €36.53 per share
We maintain our valuation of €982m or €36.53 per share. We expect to revisit our valuation following the QUORUM data in August. If positive, our valuation could have a significant uplift. For instance, changing our 20% probability of success (PoS) for the HF programme to 50% (in line with the hypertension PoS) would yield a new valuation for the company of approximately €1.4bn or €52.50 per share.
Awaiting QUORUM data in August
Quantum Genomics is going to present data from the Phase IIb QUORUM study at the European Society of Cardiology meeting, which will be held virtually from 27–30 August. The QUORUM study is assessing the safety and efficacy of Quantum’s drug firibastat compared to ramipril, an angiotensin-converting enzyme inhibitor, in 295 subjects enrolled within 72 hours of suffering AMI, who were treated with primary percutaneous coronary intervention (within 24 hours of the AMI) and have reduced LVEF. There are three arms in this randomised, double-blind, active-controlled study with patients receiving either 100mg of firibastat BID, 500mg of firibastat BID or 5mg of ramipril BID. The primary endpoint is the change from baseline in LVEF after a three-month treatment. Secondary endpoints will include cardiac events, functional status and change in heart failure biomarkers. If trial results are positive, we believe this data may be truly transformational for the company and would expect partnership discussions to intensify with some of the global players in the cardiovascular space. Note that the Novartis drug Entresto, which is approved for heart failure, had $2.5bn in sales in 2020 and is expected to achieve $5.5bn in sales by 2026 (according to Evaluate Pharma).
We are also expecting data from the pivotal FRESH study by the end of the year. It is a three-month, 500-patient study comparing 500mg BID of 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 AOBP above 140mmHg. The primary endpoint will be a change from baseline in systolic AOBP.
The company also recently announced that the first patient in the REFRESH study was enrolled. REFRESH is being conducted in 750 patients with difficult-to-treat or resistant hypertension. The study will test a 1,000mg once-daily formulation of firibastat (compared to two 250mg capsules BID in the FRESH study) and includes a six-month safety follow-up period (following the initial three-month treatment period) for all patients and 12-month follow up for 100 patients. The primary endpoint will be the change in systolic AOBP from baseline. Efficacy data is expected in mid-2023.
Valuation
We are currently maintaining our valuation of €982m or €36.53 per share, with the hypertension indication currently accounting for almost 80% of our valuation, with less than 20% coming from the heart failure indication due to the lack of previous data. We expect to revisit this following the QUORUM data in August. If the data are positive, our valuation could have a significant uplift. For instance, changing our 20% probability of success for the heart failure programme to 50% (in line with the probability applied in hypertension) would yield a new valuation for the company of approximately €1.4bn or €52.50 per share (heart failure would be 44% of the value of the company). Positive data from the FRESH study (expected by the end of the year) would affect our valuation even further.
Exhibit 1: Quantum Genomics valuation table
Product |
Main indication |
Local |
Status |
Probability of success |
Launch year |
Peak sales ($m) |
Patent protection |
rNPV |
||||
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% |
2024 |
$539 |
2031 |
131 |
||||
Firibastat |
Heart failure |
Europe |
Phase IIb |
20% |
2024 |
$645 |
2031 |
157 |
||||
Firibastat |
Development costs |
(101) |
||||||||||
Total |
|
|
|
|
|
|
|
955 |
||||
Net cash at 31 December 2020 (€m) |
27 |
|||||||||||
Total firm value (€m) |
982 |
|||||||||||
Total shares (1 May 2021) (m) |
26.9 |
|||||||||||
Value per basic share (€) |
36.53 |
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.
We forecast €17m in additional financing to the end of 2021 (previously €20m), which we model as illustrative debt. The need for additional funding past this point will depend on the QUORUM and FRESH data and 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 2: 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 |
35,891 |
41,028 |
Stocks |
333 |
1,747 |
1,747 |
1,747 |
||
Debtors |
2,486 |
4,328 |
4,328 |
4,328 |
||
Cash |
11,164 |
27,153 |
29,546 |
34,683 |
||
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) |
(21,059) |
(46,059) |
Long term borrowings |
(6) |
(5) |
(20,005) |
(45,005) |
||
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
|
|
Research: Metals & Mining
On 3 June, Alkane revealed the fruits of its labours at Roswell and San Antonio by announcing an updated mine plan at Tomingley extending its life at least into 2031 (cf 2023 previously), while simultaneously expanding its throughput rate from c 1Mtpa to 1.5Mtpa. From 50-60koz pa in FY22–23, production is expected to almost double to 107.5koz pa in the period FY25–27 at an all-in sustaining cost of c A$1,400/oz and a capital cost of A$87m (representing a capital intensity of US$888 per average annual ounce of production). Although output is scheduled to drop back to c 60koz pa after FY27, the implementation of the Roswell underground extension would see it recovered back up to the 100koz pa level once again in FY28–31. Approval for the project is being targeted for Q3 CY22.
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