Probiodrug
Written by
Probiodrug |
Private placement to extend cash runway |
Private placement |
Pharma & biotech |
10 November 2015 |
Share price performance
Business description
Next events
Analysts
Probiodrug is a research client of Edison Investment Research Limited |
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Probiodrug has announced a capital raise of €13.5m from a private placement of 0.68m new shares; we estimate net proceeds of €12.9m. These funds should ensure Probiodrug can move swiftly ahead with future development plans for lead product PQ912 once data from the ongoing Phase IIa SAPHIR trial become available around mid-2016. Furthermore, the improved financial position should ensure Probiodrug can negotiate any deal terms, if a partner is sought, from a position of strength. Our rNPV is increased to €234m with inclusion of these new funds.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/13 |
0.0 |
(9.8) |
(2.30) |
0.0 |
N/A |
N/A |
12/14 |
0.0 |
(11.4) |
(2.35) |
0.0 |
N/A |
N/A |
12/15e |
0.0 |
(14.1) |
(1.98) |
0.0 |
N/A |
N/A |
12/16e |
0.0 |
(13.3) |
(1.78) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items.
Capital raise completed
The private placement of 676,589 new shares at a price of €20/share (0% discount to the closing price on 5 November) raised gross proceeds of €13.5m. The company reports that there was strong demand from international institutional investors. The issued shares represent c 10% of the currently issued share capital.
Proceeds should provide cash runway into 2017
We estimate the net proceeds to be €12.9m; our model suggests that this should be sufficient to fund operations into 2017 (vs mid-2016 previously). Importantly, this incorporates the key milestone of the SAPHIR initial readout in mid-2016 which, if positive, could trigger a partnership. The funds raised will afford Probiodrug a stronger negotiating position with any potential future partner.
Funds to develop pipeline beyond PQ912
In addition to supporting the further clinical development of lead candidate PQ912, Probiodrug intends to use the proceeds to advance development of the preclinical pipeline, PBC-C06 and PQ1565. Like PQ912, these products are directed at pGlu-Abeta, a toxic variant of amyloid-beta, implicated as an initiating and sustaining factor in the AD pathological cascade. Part of this will include preclinical studies to assess combination approaches using its products, building on recent research suggesting a synergistic effect on Abeta clearance using combinations of therapies.
Valuation: Risk-adjusted NPV of €234m
Our rNPV has increased to €234m (vs €218m previously) with the addition of estimated net proceeds of €12.9m to end-H115 cash. On a per share basis, our valuation is slightly diluted to €31.5/share (vs €32) due to the increased share count. We assume increased R&D spend in FY15/16 (€10.7m and €9.8m vs €8.3m and €8.4m) taking advantage of available funds. We now forecast end-FY15 net cash of €21.1m (vs €10.4m), with a consequent increase to interest income from 2016. Our main underlying valuation assumptions are otherwise unchanged.
Financial summary
Exhibit 1: Financial summary
EUR'000s |
2011 |
2012 |
2013 |
2014 |
2015e |
2016e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
21 |
6 |
0 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
21 |
6 |
0 |
0 |
0 |
0 |
||
Research and development |
(13,229) |
(9,255) |
(8,004) |
(8,087) |
(10,652) |
(9,835) |
||
EBITDA |
|
|
(13,856) |
(10,206) |
(9,387) |
(11,173) |
(13,969) |
(13,540) |
Operating Profit (before amort. and except.) |
(14,225) |
(10,521) |
(9,675) |
(11,241) |
(14,003) |
(13,573) |
||
Intangible Amortisation |
(44) |
(37) |
(26) |
(26) |
(25) |
(25) |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(14,269) |
(10,558) |
(9,701) |
(11,267) |
(14,028) |
(13,599) |
||
Net Interest |
8 |
(314) |
(106) |
(170) |
(50) |
299 |
||
Profit Before Tax (norm) |
|
|
(14,217) |
(10,835) |
(9,781) |
(11,411) |
(14,053) |
(13,275) |
Profit Before Tax (FRS 3) |
|
|
(14,261) |
(10,872) |
(9,807) |
(11,437) |
(14,078) |
(13,300) |
Tax |
6 |
(656) |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(14,211) |
(11,491) |
(9,781) |
(11,411) |
(14,053) |
(13,275) |
||
Profit After Tax (FRS 3) |
(14,255) |
(11,528) |
(9,807) |
(11,437) |
(14,078) |
(13,300) |
||
Average Number of Shares Outstanding (m) |
3.5 |
4.1 |
4.3 |
4.9 |
7.1 |
7.4 |
||
EPS - normalised (EUR) |
|
|
(4.09) |
(2.84) |
(2.30) |
(2.35) |
(1.98) |
(1.78) |
EPS - normalised and fully diluted (EUR) |
|
(4.09) |
(2.84) |
(2.30) |
(2.35) |
(1.98) |
(1.78) |
|
EPS - (IFRS) (EUR) |
|
|
(4.10) |
(2.85) |
(2.30) |
(2.35) |
(1.98) |
(1.79) |
Dividend per share (EUR) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
100.0 |
100.0 |
n/a |
n/a |
n/a |
n/a |
||
EBITDA Margin (%) |
-65981.0 |
-170100.0 |
n/a |
n/a |
n/a |
n/a |
||
Operating Margin (before GW and except.) (%) |
-67738.1 |
-175350.0 |
n/a |
n/a |
n/a |
n/a |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
8,061 |
996 |
425 |
186 |
131 |
72 |
Intangible Assets |
6,794 |
67 |
101 |
82 |
57 |
31 |
||
Tangible Assets |
1,264 |
926 |
321 |
101 |
71 |
38 |
||
Investments |
3 |
3 |
3 |
3 |
3 |
3 |
||
Current Assets |
|
|
11,032 |
9,009 |
5,856 |
21,294 |
21,459 |
9,165 |
Stocks |
18 |
18 |
0 |
0 |
0 |
0 |
||
Debtors |
1 |
5 |
0 |
0 |
0 |
0 |
||
Cash |
10,314 |
7,726 |
4,421 |
20,920 |
21,085 |
8,791 |
||
Other |
699 |
1,260 |
1,435 |
374 |
374 |
374 |
||
Current Liabilities |
|
|
(3,136) |
(3,570) |
(9,320) |
(4,580) |
(4,905) |
(4,844) |
Creditors |
(3,136) |
(3,570) |
(3,974) |
(4,580) |
(4,905) |
(4,844) |
||
Short term borrowings |
0 |
0 |
(5,346) |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(1,012) |
(1,070) |
(1,265) |
(929) |
(929) |
(929) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(1,012) |
(1,070) |
(1,265) |
(929) |
(929) |
(929) |
||
Net Assets |
|
|
14,945 |
5,365 |
(4,304) |
15,971 |
15,756 |
3,464 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
(14,404) |
(12,090) |
(8,477) |
(10,540) |
(12,636) |
(12,593) |
Net Interest |
39 |
22 |
9 |
(54) |
(50) |
299 |
||
Tax |
44 |
28 |
9 |
5 |
0 |
0 |
||
Capex |
(84) |
(64) |
(4) |
(2) |
(4) |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Financing |
18,658 |
9,516 |
(188) |
32,436 |
12,855 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
4,253 |
(2,588) |
(8,651) |
21,845 |
165 |
(12,294) |
||
Opening net debt/(cash) |
|
|
(6,061) |
(10,314) |
(7,726) |
925 |
(20,920) |
(21,085) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(10,314) |
(7,726) |
925 |
(20,920) |
(21,085) |
(8,791) |
Source: Edison Investment Research, Probiodrug accounts. Note: The negative net interest in 2015e relates to interest on potential late payment obligations of back taxes (relating to 2004); the company has filed a lawsuit contesting the back taxes.
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