Probiodrug — Update 13 September 2016

Probiodrug — Update 13 September 2016

Probiodrug

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Probiodrug

Combo trial data may boost early R&D

R&D update

Pharma & biotech

13 September 2016

Price

€20.20

Market cap

€150m

Net cash (€m) at end Q216

14.2

Shares in issue

7.4m

Free float

50%

Code

PBD

Primary exchange

Euronext Amsterdam

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.8

3.3

(6.0)

Rel (local)

3.3

0.6

(9.7)

52-week high/low

€26.5

€17.6

Business description

Probiodrug is a German biopharmaceutical company developing its clinical pipeline for the treatment of Alzheimer’s disease. Lead product candidate PQ912 is in Phase IIa. PQ912 is a small molecule inhibitor of glutaminyl cyclase (QC), which is essential for the formation of pGlu-Abeta. Two further products are in preclinical stages.

Next events

Q316 results

10 November 2016

PQ912 first Phase IIa data

End-2016

PQ912 full Phase IIa data

Early 2017

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Lala Gregorek

+44 (0)20 3681 2527

Probiodrug is a research client of Edison Investment Research Limited

Today Probiodrug announced the results from a combination study of its lead Phase IIa product, glutaminylcyclase-inhibitor PQ912, and its specific monoclonal antibody PBD-C06, the company’s second asset in preclinical stage. This is the first preclinical proof-of-concept data and showed an additive effect of this two-pronged approach of inhibiting the formation and increasing the clearance of pyro-glutamyl-Amyloid beta (pGlu-Abeta), the toxic version of amyloid beta, potentially a key pathophysiological component in Alzheimer’s disease (AD). While PQ612 remains Probiodrug’s key asset, the encouraging preclinical findings in the combo study may boost the company’s earlier-stage programme, especially in light of Eli Lilly’s recent data from a Phase I study with a peer compound to PBD-C06 (see our outlook report).

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/14

0.0

(11.4)

(2.35)

0.0

N/A

N/A

12/15

0.0

(13.5)

(1.96)

0.0

N/A

N/A

12/16e

0.0

(14.2)

(1.91)

0.0

N/A

N/A

12/17e

0.0

(11.0)

(1.48)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Additive effect in lowering pGlu-Abeta

The results from the study with PQ912 and PBD-C06 (mouse version) in the double transgenic AD animal model (AppswlhQC) showed an additive effect in lowering pGlu-Abeta as well as total Abeta. The study involved parallel trials with low doses of each of the drugs and then a combination trial at the same doses with the treatment lasting four months. No signs of toxicity were observed. Single agents led to a c 35% reduction in hippocampal pGlu-Abeta load, while the combination treatment significantly reduced plaque load by about 65% with total Abeta reduced as well.

Scope for more combination studies

There is also scope to explore Probiodrug’s products in combination with other compounds targeting AD. For example, the company is also running a preclinical trial with PQ912 in combination with BACE inhibitor. In addition to BACE inhibitors, which act upstream in the Abeta cascade, therapies targeting tau (a misfolded protein that is also a pathological hallmark of AD), acting on downstream effects, could theoretically be another potential combination partner. As they all act via a different approach, Probiodrug’s candidates could be well suited as part of a combination therapy targeting multiple steps in the Abeta cascade.

Valuation: rNPV of €309m or €41.5/share

We maintain our valuation of Probiodrug at €309.1m or €41.5/share. While the combination study results are encouraging, they are still at an early preclinical stage. We will revisit our valuation once the company clarifies further development plans and progresses into the clinic. The upcoming first Phase IIa data due around end-2016 and full readout in early 2017 are the main catalysts in the near term.

Exhibit 1: Financial summary

€000s

2012

2013

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

6

0

0

0

0

0

Cost of Sales

0

0

0

0

0

0

Gross Profit

6

0

0

0

0

0

Research and development

(9,255)

(8,004)

(8,008)

(10,158)

(11,105)

(7,669)

EBITDA

 

 

(10,206)

(9,387)

(11,173)

(13,337)

(14,285)

(11,018)

Operating Profit (before amort. and except.)

(10,521)

(9,675)

(11,241)

(13,363)

(14,311)

(11,044)

Intangible Amortisation

(37)

(26)

(26)

(30)

(30)

(26)

Exceptionals

0

0

0

0

0

0

Other

0

0

0

0

0

0

Operating Profit

(10,558)

(9,701)

(11,267)

(13,393)

(14,342)

(11,070)

Net Interest

(314)

(106)

(170)

(112)

122

17

Profit Before Tax (norm)

 

 

(10,835)

(9,781)

(11,411)

(13,475)

(14,190)

(11,027)

Profit Before Tax (FRS 3)

 

 

(10,872)

(9,807)

(11,437)

(13,505)

(14,220)

(11,053)

Tax

(656)

0

0

0

0

0

Profit After Tax (norm)

(11,491)

(9,781)

(11,411)

(13,475)

(14,190)

(11,027)

Profit After Tax (FRS 3)

(11,528)

(9,807)

(11,437)

(13,505)

(14,220)

(11,053)

Average Number of Shares Outstanding (m)

4.1

4.3

4.9

6.9

7.4

7.4

EPS - normalised (€)

 

 

(2.84)

(2.30)

(2.35)

(1.96)

(1.91)

(1.48)

EPS - normalised and fully diluted (€)

 

(2.84)

(2.30)

(2.35)

(1.96)

(1.91)

(1.48)

EPS - (IFRS) (€)

 

 

(2.85)

(2.30)

(2.35)

(1.97)

(1.91)

(1.49)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

N/A

N/A

N/A

N/A

N/A

EBITDA Margin (%)

N/A

N/A

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

996

425

186

140

84

32

Intangible Assets

67

101

82

56

26

0

Tangible Assets

926

321

101

81

55

29

Investments

3

3

3

3

3

3

Current Assets

 

 

9,009

5,856

21,294

21,726

8,271

3,787

Stocks

18

0

0

0

422

422

Debtors

5

0

0

0

0

0

Cash

7,726

4,421

20,920

21,361

7,484

3,000

Other

1,260

1,435

374

365

365

365

Current Liabilities

 

 

(3,570)

(9,320)

(4,580)

(4,911)

(4,656)

(4,343)

Creditors

(3,570)

(3,974)

(4,580)

(4,911)

(4,656)

(4,343)

Short term borrowings

0

(5,346)

0

0

0

0

Long Term Liabilities

 

 

(1,070)

(1,265)

(929)

(822)

(822)

(6,688)

Long term borrowings

0

0

0

0

0

(5,866)

Other long term liabilities

(1,070)

(1,265)

(929)

(822)

(822)

(822)

Net Assets

 

 

5,365

(4,304)

15,971

16,133

2,877

(7,212)

CASH FLOW

Operating Cash Flow

 

 

(12,090)

(8,477)

(10,540)

(12,149)

(13,998)

(10,367)

Net Interest

22

9

(54)

0

122

17

Tax

28

9

5

2

0

0

Capex

(64)

(4)

(2)

(6)

0

0

Acquisitions/disposals

0

0

0

0

0

0

Financing

9,516

(188)

32,436

12,594

0

0

Dividends

0

0

0

0

0

0

Net Cash Flow

(2,588)

(8,651)

21,845

441

(13,877)

(10,351)

Opening net debt/(cash)

 

 

(10,314)

(7,726)

925

(20,920)

(21,361)

(7,484)

HP finance leases initiated

0

0

0

0

0

0

Other

0

0

0

(0)

0

0

Closing net debt/(cash)

 

 

(7,726)

925

(20,920)

(21,361)

(7,484)

2,866

Source: Edison Investment Research, Probiodrug accounts

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Probiodrug and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
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US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Probiodrug and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Research: TMT

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