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Research: Healthcare
Quantum Genomics recently announced that it has enrolled the first patient in the 294-patient Phase IIb QUORUM study of firibastat in heart failure. Separately, following a successful pharmacokinetic study, it has have selected a controlled release version of firibastat that will allow for once-a-day dosing (though the QUORUM study will still use the twice-a-day formulation). Successfully developing a once daily formulation should make the program more attractive to partners. As a reminder, the company is currently in discussions with a number of potential partners for the firibastat programme following the strong NEW-HOPE data.
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Quantum Genomics |
Progress in heart failure and controlled release |
Development update |
Pharma & biotech |
13 June 2019 |
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Quantum Genomics is a research client of Edison Investment Research Limited |
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Quantum Genomics recently announced that it has enrolled the first patient in the 294-patient Phase IIb QUORUM study of firibastat in heart failure. Separately, following a successful pharmacokinetic study, it has have selected a controlled release version of firibastat that will allow for once-a-day dosing (though the QUORUM study will still use the twice-a-day formulation). Successfully developing a once daily formulation should make the program more attractive to partners. As a reminder, the company is currently in discussions with a number of potential partners for the firibastat programme following the strong NEW-HOPE data.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.0 |
(10.3) |
(0.93) |
0.0 |
N/A |
N/A |
12/18 |
0.0 |
(13.6) |
(0.94) |
0.0 |
N/A |
N/A |
12/19e |
0.0 |
(17.6) |
(0.88) |
0.0 |
N/A |
N/A |
12/20e |
0.0 |
(23.1) |
(1.12) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalized, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
QUORUM study in heart failure initiated
The QUORUM study will enrol 294 subjects from 40 centres in the US and Europe 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. Patient recruitment has now initiated, with results in H220.
Controlled-release formulation successful
Quantum has developed a controlled-release formulation of firibastat that would allow it to be administered once a day (currently twice a day). In a 12-subject pharmacokinetic study, the once daily controlled release formulation had similar drug exposure levels to the twice daily version. Besides being more convenient for patients, the once daily formulation is more attractive to partners.
Phase III hypertension study coming in H219
The company is preparing to follow up the positive NEW-HOPE data of firibastat in patients with hypertension with a Phase III trial, which is expected to begin in H219. As a reminder, in the 256-patient NEW-HOPE trial, patients saw a statistically significant reduction from baseline (p<0.0001) in systolic automated office blood pressure (AOBP) of 9.7mmHg.
Valuation: €860m or €51.76 per share
We have slightly adjusted our valuation of Quantum Genomics. While our total valuation of the company of €860m has not changed, our per-share valuation has declined from €52.43 per share to €51.76 per share, due to an increase in total shares outstanding. Quantum had €14.8m in cash at end 2018 and has utilized an additional €2.6m of its equity line since then (as of the most recent disclosure from 30 April 2019).
Progressing on schedule
Quantum Genomics announced that it has enrolled the first patient in its Phase IIb trial in heart failure. The QUORUM study will assess the safety and efficacy of Quantum’s drug firibastat compared to ramipril, an angiotensin-converting enzyme (ACE) inhibitor, in 294 subjects enrolled within 72 hours of suffering AMI, who were treated with primary percutaneous coronary intervention and have reduced LVEF. There will be three arms in this randomized, double-blind, active-controlled study with patients receiving either 100mg of firibastat twice a day, 500mg of firibastat twice a day or 5mg of ramipril twice a day. The primary endpoint will be 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. The subjects will be recruited from 40 centres in the US and Europe, and trial results are expected in H220.
The company is also preparing to follow up the positive NEW-HOPE data of firibastat in patients with hypertension with a Phase III trial, which is expected to begin in H219. As a reminder, the NEW-HOPE trial completed enrolment faster than expected, enrolling 256 patients (254 included in the intent-to-treat analysis) in just 10 months. NEW-HOPE focused enrolment on hypertensive overweight (BMI 25–45kg/m2) patients (65% of patients were obese), with a primary endpoint of change from baseline in systolic AOBP at week eight. Patients saw a statistically significant reduction from baseline (p<0.0001) in AOBP of 9.7mmHg.
The results are in the vicinity of many of the standards of care (see Exhibit 1), but with a differentiated mechanism, which could be especially helpful in treating those currently not well controlled. Needless to say, there are a number of potential partners interested in this programme and discussions with them are ongoing, according to the company.
Exhibit 1: Competitor efficacy table
Drug |
Class |
Company (originator) |
Peak sales (all indications) |
Duration |
Reduction in systolic blood pressure (mmHg) |
Firibastat |
BAPAI |
Quantum Genomics |
N/A |
8 weeks |
9.7 |
Diovan (valsartan) |
ARB |
Novartis |
$6.0bn (2010) |
8 weeks |
5.6–9 |
Vasotec (enalapril) |
ACE inhibitor |
Merck |
$2.5bn (1996) |
4 weeks |
10–14 |
Norvasc (amlodipine) |
Calcium channel blocker |
Pfizer |
$4.9bn (2006) |
8 weeks |
12.1–16 |
Source: Quantum Genomics, FDA, company filings, Liu et al, (2010) Tolerability and effectiveness of (S)-amlodipine compared with racemic amlodipine in hypertension; Current therapeutic research, clinical and experimental 71, 1-29; Ruilope et al. (2010) Blood-pressure reduction with LCZ696, a novel dual-acting inhibitor of the angiotensin II receptor and neprilysin, Lancet; 375: 1255-66.
Valuation
We have slightly adjusted our valuation of Quantum Genomics. While our total valuation of the company of €860m has not changed, our per-share valuation has declined from €52.43 per share to €51.76 per share, due to an increase in total shares outstanding.
Exhibit 2: Quantum Genomics valuation
Product |
Main indication |
Local |
Status |
Prob. of success |
Launch year |
Peak sales ($m) |
Patent protection |
rNPV |
Firibastat (QGC001) |
Hypertension |
US |
Phase Il |
50% |
2023 |
$1,110 |
2031 |
€441.40 |
Firibastat (QGC001) |
Hypertension |
Europe |
Phase Il |
50% |
2023 |
$959 |
2031 |
€374.49 |
Firibastat (QGC001) |
Development costs |
|
|
|
|
(€140.35) |
||
Firibastat (QGC001) |
Heart failure |
US |
Phase IIb |
20% |
2023 |
$574 |
2031 |
€112.71 |
Firibastat (QGC001) |
Heart failure |
Europe |
Phase IIb |
20% |
2023 |
$687 |
2031 |
€133.73 |
Firibastat (QGC001) |
Development costs |
(€76.53) |
||||||
Total |
|
|
|
|
|
|
|
€845.44 |
Net cash (31 December 2018) (€m) |
€14.78 |
|||||||
Total firm value (€m) |
€860.22 |
|||||||
Total shares (30 April 2019) (m) |
16.62 |
|||||||
Value per basic share (€m) |
€51.76 |
|||||||
Source: Edison Investment Research
Financials
Quantum ended 2018 with €14.8m in cash and investments. In March 2018, it announced an equity line of credit with Kepler Cheuvreux, and has approximately €6.5m of the original €24m line remaining after drawing down an additional €2.6m after the end of the year (as of 30 April). The company has stated that it believes the equity line will fund its clinical trials through to the end of 2019, although we expect it to raise €10m in additional capital (either through a partnership or equity raise) by the end of the year (but far more if through a partnership).
Exhibit 3: Financial summary
€000s |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
PCG |
PCG |
PCG |
PCG |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(10,292) |
(13,598) |
(16,792) |
(20,879) |
Operating Profit (before amort. and except.) |
(10,292) |
(13,598) |
(16,792) |
(20,879) |
||
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Operating Profit |
(10,292) |
(13,598) |
(16,792) |
(20,879) |
||
Net Interest |
0 |
0 |
(801) |
(2,201) |
||
Other |
(239) |
150 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(10,292) |
(13,598) |
(17,593) |
(23,080) |
Profit Before Tax (FRS 3) |
|
|
(10,531) |
(13,448) |
(17,593) |
(23,080) |
Tax |
1,150 |
1,458 |
2,287 |
3,000 |
||
Deferred tax |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(9,142) |
(12,140) |
(15,306) |
(20,080) |
||
Profit After Tax (FRS 3) |
(9,381) |
(11,990) |
(15,306) |
(20,080) |
||
Average Number of Shares Outstanding (m) |
9.9 |
12.8 |
17.3 |
18.0 |
||
EPS - normalised (c) |
|
|
(93.45) |
(93.94) |
(88.49) |
(111.62) |
EPS - FRS 3 (€) |
|
|
(0.95) |
(0.94) |
(0.88) |
(1.12) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
439 |
626 |
636 |
644 |
Intangible Assets |
91 |
0 |
0 |
0 |
||
Tangible Assets |
52 |
24 |
34 |
42 |
||
Other |
296 |
602 |
602 |
602 |
||
Current Assets |
|
|
13,478 |
17,855 |
15,139 |
12,551 |
Stocks |
189 |
422 |
422 |
422 |
||
Debtors |
2,197 |
2,636 |
2,636 |
2,636 |
||
Cash |
11,089 |
14,797 |
12,081 |
9,494 |
||
Other |
3 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(4,572) |
(5,764) |
(5,764) |
(5,764) |
Creditors |
(4,571) |
(5,762) |
(5,762) |
(5,762) |
||
Short term borrowings |
(1) |
(2) |
(2) |
(2) |
||
Long Term Liabilities |
|
|
(474) |
(849) |
(10,849) |
(28,349) |
Long term borrowings |
(19) |
(12) |
(10,012) |
(27,512) |
||
Other long term liabilities |
(454) |
(837) |
(837) |
(837) |
||
Net Assets |
|
|
8,871 |
11,868 |
(838) |
(20,918) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(7,977) |
(10,901) |
(15,300) |
(20,071) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
32 |
(16) |
(16) |
(16) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
7,733 |
15,071 |
2,600 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
104 |
(446) |
0 |
0 |
||
Net Cash Flow |
(108) |
3,708 |
(12,716) |
(20,087) |
||
Opening net debt/(cash) |
|
|
(11,179) |
(11,069) |
(14,783) |
(2,067) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
||
Other |
(2) |
6 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(11,069) |
(14,783) |
(2,067) |
18,021 |
Source: Quantum Genomics accounts, Edison Investment Research
|
|
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