Medigene has reported top-line interim data from its Phase I/II clinical trial testing its dendritic cell (DC) vaccine in acute myeloid leukaemia (AML) patients (n=20) who were in complete remission. After a 12-month treatment period, overall survival was 89% (n=18/20) and progression-free survival was 60% (n=12/20). These early data are comparable to those of patients treated with allogeneic stem cell transplants. However, relapses are common in AML and long-term data are needed to determine the sustainability of the responses. We have increased our probability of success for the DC vaccine trial to 30% from 25% previously, in addition to rolling forward our model and updating for FX. We now value Medigene at €470m (€19.16/share) vs €457m (€18.59/share) previously.
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Medigene |
Promising dendritic cell data in AML |
Data update |
Pharma & biotech |
4 January 2019 |
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Medigene has reported top-line interim data from its Phase I/II clinical trial testing its dendritic cell (DC) vaccine in acute myeloid leukaemia (AML) patients (n=20) who were in complete remission. After a 12-month treatment period, overall survival was 89% (n=18/20) and progression-free survival was 60% (n=12/20). These early data are comparable to those of patients treated with allogeneic stem cell transplants. However, relapses are common in AML and long-term data are needed to determine the sustainability of the responses. We have increased our probability of success for the DC vaccine trial to 30% from 25% previously, in addition to rolling forward our model and updating for FX. We now value Medigene at €470m (€19.16/share) vs €457m (€18.59/share) previously.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
9.7 |
(13.4) |
(0.66) |
0.0 |
N/A |
N/A |
12/17 |
11.4 |
(12.4) |
(0.60) |
0.0 |
N/A |
N/A |
12/18e |
10.4 |
(16.3) |
(0.70) |
0.0 |
N/A |
N/A |
12/19e |
11.0 |
(17.1) |
(0.70) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Interim DC data highlight potential
20 patients were treated with Medigene’s autologous (made from the patient’s own cells) DC vaccine. While early, the data from Medigene’s TCR vaccine after the 12-month treatment period are promising. Patients had AML that was positive for the Wilms Tumour-1 (WT-1) antigen in addition to with/without PRAME positivity and were treated monthly (with a higher frequency in the first six weeks) with the DC vaccine that expressed these antigens. To be enrolled in the trial, patients had to have morphologic complete remission (CR) or complete remission with incomplete hematologic recovery (CRi) after initial therapy. While the majority of patients who are diagnosed with AML will go into CR/CRi following initial therapy, most patients will relapse within six months without further treatment. Stem cell transplant remains the gold standard for AML patients in remission. However, many patients are ineligible and are left with less effective maintenance chemotherapy treatment. No treatment related serious adverse events (AEs) were recorded.
MDG1011 TCR trial: Initial data in 2019
Screening patients is ongoing in Medigene’s first TCR trial and it has manufactured the first MDG1011 TCR therapy. Although strict enrolment criteria (eg PRAME+ and HLA-A*02:01+) mean that only 10–20% of potential patients are eligible for treatment, we continue to forecast initial Phase I data in 2019.
Valuation: €470m (€19.16/share)
We value Medigene at €470m (€19.16/share) vs €457m (€18.59/share) previously. We have increased our probability of success for the DC vaccine trial to 30% from 25% previously, in addition to rolling forward our model and updating for FX. Our valuation is based on an rNPV of its TCR, DC and legacy assets in addition to deal metrics for the bluebird bio partnership and legacy asset, Veregen. For more detail on our valuation, please see our outlook note, TCR enters the clinic.
Exhibit 1: Financial summary
€'000s |
2016 |
2017 |
2018e |
2019e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
9,749 |
11,375 |
10,409 |
11,018 |
of which: Veregen revenues (royalties/milestones/supply) |
3,048 |
2,790 |
1,433 |
1,582 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
3,155 |
0 |
0 |
0 |
||
Non-cash income (Eligard) |
2,493 |
3,699 |
3,699 |
3,699 |
||
Bluebird bio partnership |
1,053 |
4,886 |
5,278 |
5,738 |
||
Cost of sales |
(1,402) |
(1,621) |
(553) |
(613) |
||
Gross profit |
8,347 |
9,754 |
9,856 |
10,405 |
||
Selling, general & administrative spending |
(10,025) |
(8,266) |
(7,186) |
(7,395) |
||
R&D expenditure |
(11,538) |
(14,877) |
(20,084) |
(21,691) |
||
Other operating spending |
0 |
0 |
0 |
0 |
||
Operating profit |
(8,974) |
(13,389) |
(17,414) |
(18,680) |
||
Goodwill & intangible amortisation |
(525) |
(524) |
(523) |
(522) |
||
Exceptionals |
4,242 |
0 |
0 |
0 |
||
Share-based payment |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(12,371) |
(12,122) |
(16,666) |
(17,933) |
Operating Profit (before amort. and except.) |
|
|
(12,691) |
(12,865) |
(16,891) |
(18,158) |
Net interest |
(1,009) |
(1,434) |
(691) |
(478) |
||
Other (forex gains/losses; associate profit/loss) |
263 |
1,884 |
1,278 |
1,546 |
||
Profit Before Tax (norm) |
|
|
(13,437) |
(12,415) |
(16,304) |
(17,090) |
Profit before tax (reported) |
|
|
(9,720) |
(12,939) |
(16,827) |
(17,612) |
Tax |
228 |
(634) |
(101) |
(101) |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(13,209) |
(13,049) |
(16,405) |
(17,191) |
||
Profit after tax (reported) |
(9,492) |
(13,573) |
(16,928) |
(17,713) |
||
Average number of shares outstanding (m) |
20.0 |
21.6 |
23.4 |
24.6 |
||
EPS - normalised (c) |
|
|
(66.20) |
(60.42) |
(70.03) |
(70.01) |
EPS - Reported (€) |
|
|
(0.48) |
(0.63) |
(0.72) |
(0.72) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
47,742 |
48,595 |
47,460 |
47,357 |
Intangible assets & goodwill |
35,767 |
36,292 |
35,769 |
35,247 |
||
Tangible assets |
3,323 |
4,329 |
4,717 |
5,136 |
||
Other non-current assets |
8,652 |
7,974 |
6,974 |
6,974 |
||
Current assets |
|
|
63,973 |
63,342 |
78,717 |
58,829 |
Stocks |
7,866 |
7,724 |
7,724 |
7,724 |
||
Debtors |
1,175 |
1,699 |
680 |
680 |
||
Cash |
52,630 |
51,724* |
68,119* |
48,230* |
||
Other |
2,302 |
2,195 |
2,195 |
2,195 |
||
Current liabilities |
|
|
(11,966) |
(9,808) |
(8,699) |
(8,699) |
Trade accounts payable |
(973) |
(725) |
(798) |
(798) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Deferred income |
(3,575) |
(3,575) |
(3,495) |
(3,495) |
||
Other |
(7,418) |
(5,508) |
(4,406) |
(4,406) |
||
Long-term liabilities |
|
|
(21,157) |
(15,962) |
(20,379) |
(17,042) |
Pension provisions |
(408) |
(405) |
(405) |
(405) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(2,395) |
(3,672) |
(3,672) |
(3,672) |
||
Deferred revenues (Eligard non-cash income & bluebird bio) |
(18,354) |
(11,885) |
(16,302) |
(12,965) |
||
Net assets |
|
|
78,592 |
86,167 |
97,099 |
80,446 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(3,611) |
(20,729) |
(15,987) |
(19,465) |
Net interest |
(45) |
(45) |
109 |
322 |
||
Tax |
(102) |
(75) |
(101) |
(101) |
||
Capex |
(1,677) |
(1,533) |
(613) |
(644) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
10,537 |
480 |
1,242 |
0 |
||
Equity financing |
(77) |
19,329 |
30,078 |
0 |
||
Other |
846 |
1,667 |
1,667 |
0 |
||
Net cash flow |
5,871 |
(906) |
16,395 |
(19,888) |
||
Opening net debt/(cash) |
|
|
(46,759) |
(52,630) |
(51,724) |
(68,119) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(52,630) |
(51,724) |
(68,119) |
(48,230) |
Source: Company accounts, Edison Investment Research. Note: *Cash consists of cash in addition to both long- and short-term time deposits.
|
|
Research: Healthcare
On 7 December 2018 Cantargia reached an important milestone – the completion of the Phase I part of its Phase I/IIa CANFOUR study with nidanilimab in solid tumours. Patients are now being screened for the Phase IIa part of the study and we expect the first patient to be recruited in the coming weeks, with top-line data expected in early 2020. Cantargia also recently presented fresh pre-clinical data at an antibody conference that support the rationale for developing nidanilimab in combination with chemotherapy. Our valuation has increased to SEK2.28bn or SEK34.5/share reflecting the increased probability of success for nidanilimab.