Context Therapeutics — Q122 progress in line with development strategy

Context Therapeutics (NASDAQ: CNTX)

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Research: Healthcare

Context Therapeutics — Q122 progress in line with development strategy

Context Therapeutics’ Q122 results were broadly in line with recent trends as the company progresses on its development strategy. The operating loss stood at $3.4m, up from $0.8m in Q121 but in line with the Q421 figure of $3.1m. While the R&D expenses ($1.4m) were lower than our estimates, we expect these costs to go up in the coming quarters as the clinical pipeline progresses. The cash burn rate was $3.9m and the company ended Q122 with net cash of $45.7m, which we estimate to be sufficient to fund operations into 2024, based on our projected FY22e and FY23e burn rates of $13.7m and $23.7m, respectively. We see the upcoming ASCO presentation on ONA-XR monotherapy data from the ongoing Phase II study in granulosa cell tumor (GCT) of the ovary as a potential catalyst alongside anticipated read-outs from the other three clinical programs in 2022. Our valuation is largely unchanged at $133.5m ($8.36/share).

Jyoti Prakash

Written by

Jyoti Prakash

Analyst, Healthcare

Healthcare

Context Therapeutics

Q122 progress in line with development strategy

Q122 update

Pharma & biotech

26 May 2022

Price

$2.02

Market cap

$32m

Net cash ($m) at 31 March 2022

45.7

Shares in issue

15.97m

Free float

67%

Code

CNTX

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

21.1

8.9

N/A

Rel (local)

30.8

20.1

N/A

52-week high/low

US$7.5

US$1.3

Business description

Context Therapeutics is a clinical-stage women’s oncology company. Lead candidate ONA-XR is a ‘full’ progesterone receptor antagonist currently being evaluated in three Phase II clinical trials in hormone-driven breast, endometrial and ovarian cancer. Preliminary data from the Phase II PR+ recurrent endometrial cancer trial is expected in mid-2022. The other asset is a bi-specific monoclonal antibody, CLDN6xCD3, currently undergoing preclinical development.

Next events

Data presentations at ASCO

June 2022

Recurrent endometrial cancer Phase II preliminary data

Mid-2022

Analyst

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Soo Romanoff

+44 (0)20 3077 5700

Context Therapeutics is a research client of Edison Investment Research Limited

Context Therapeutics’ Q122 results were broadly in line with recent trends as the company progresses on its development strategy. The operating loss stood at $3.4m, up from $0.8m in Q121 but in line with the Q421 figure of $3.1m. While the R&D expenses ($1.4m) were lower than our estimates, we expect these costs to go up in the coming quarters as the clinical pipeline progresses. The cash burn rate was $3.9m and the company ended Q122 with net cash of $45.7m, which we estimate to be sufficient to fund operations into 2024, based on our projected FY22e and FY23e burn rates of $13.7m and $23.7m, respectively. We see the upcoming ASCO presentation on ONA-XR monotherapy data from the ongoing Phase II study in granulosa cell tumor (GCT) of the ovary as a potential catalyst alongside anticipated read-outs from the other three clinical programs in 2022. Our valuation is largely unchanged at $133.5m ($8.36/share).

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/20

0.0

(3.2)

(9.28)

0.0

N/A

N/A

12/21

0.0

(10.6)

(3.74)

0.0

N/A

N/A

12/22e

0.0

(16.8)

(1.05)

0.0

N/A

N/A

12/23e

0.0

(23.8)

(1.49)

0.0

N/A

N/A

Note: *PBT and EPS are normalized, excluding exceptional items.

Pipeline update

While the Q122 report did not provide specific information on the progression across individual portfolio assets, timelines for key data readouts have remained broadly unchanged, with the exception of the Phase Ib program evaluating ONA-XR as first line treatment for metastatic breast cancer (mBC), which is now expected to read-out in H222 (versus mid-2022 previously). As a reminder, the company recently presented positive pre-clinical data at the American Association for Cancer Research (AACR), highlighting ONA-XR’s potential as a combination treatment with various therapeutic classes, such as checkpoint inhibitors and inhibitors of the AURKA/STAT3 oncogenic axis (refer to our note for more details).

Upcoming catalysts

In addition to the data read-outs for the four ongoing trials in 2022, the upcoming presentation at the American Society of Clinical Oncology (ASCO) on results from the monotherapy portion of the Phase II trial in GCT of the ovary could be another potential catalyst for the stock. While ONA-XR has largely been positioned thus far as a candidate for combination therapy, positive therapeutic efficacy as monotherapy could create a potentially larger market opportunity in the space. Selection of the final development candidate for the pre-clinical CLDN6xCD3 program (expected by end-2022) could be another key value driver.

Valuation: $133.5m or $8.36 per basic share

After adjusting for the Q122 results and cash balance of $45.7m, our valuation is largely unchanged at $133.5m (or $8.36 per basic share), from $134.1m previously. We continue to view the company as sufficiently capitalized to fund operations into 2024 and needing to raise $110m in funds between FY24 and FY26 (in the absence of partnering/licensing deals) before becoming profitable.

Exhibit 1: Financial summary

$000s

2020

2021

2022e

2023e

2024e

Year end 31 December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

INCOME STATEMENT

Revenue

 

 

0

0

0

0

0

Cost of Sales

0

0

0

0

0

Gross Profit

0

0

0

0

0

Research and Development Expenses

(1,642)

(6,893)

(10,536)

(15,804)

(29,576)

Sales, General and Administrative Expenses

(931)

(3,633)

(7,266)

(8,719)

(9,591)

EBITDA

 

 

(2,572)

(10,526)

(17,802)

(24,523)

(39,167)

Operating profit (before amort. and excepts.)

 

(2,572)

(10,526)

(17,802)

(24,523)

(39,167)

Amortisation of acquired intangibles

0

0

0

0

0

Exceptionals

0

0

0

0

0

Share-based payments

0

0

0

0

0

Reported operating profit

(2,572)

(10,526)

(17,802)

(24,523)

(39,167)

Net Interest

(661)

(64)

994

719

245

Joint ventures & associates (post tax)

0

0

0

0

0

Exceptionals

9,878

133

0

0

0

Profit Before Tax (norm)

 

 

(3,233)

(10,590)

(16,808)

(23,804)

(38,923)

Profit Before Tax (reported)

 

 

6,644

(10,457)

(16,808)

(23,804)

(38,923)

Reported tax

0

0

0

0

0

Profit After Tax (norm)

(3,233)

(10,590)

(16,808)

(23,804)

(38,923)

Profit After Tax (reported)

6,644

(10,457)

(16,808)

(23,804)

(38,923)

Minority interests

0

0

0

0

0

Discontinued operations

0

0

0

0

0

Net income (normalised)

(3,233)

(10,590)

(16,808)

(23,804)

(38,923)

Net income (reported)

6,644

(10,457)

(16,808)

(23,804)

(38,923)

Average Number of Shares Outstanding (m)

0

3

16

16

16

EPS - basic normalised ($)

 

 

(9.28)

(3.74)

(1.05)

(1.49)

(2.44)

EPS - normalised fully diluted ($)

 

 

(9.28)

(3.74)

(1.05)

(1.49)

(2.44)

EPS - basic reported ($)

 

 

19.07

(3.69)

(1.05)

(1.49)

(2.44)

Dividend ($)

0

0

0

0

0

BALANCE SHEET

Fixed Assets

 

 

118

0

0

0

0

Intangible Assets

0

0

0

0

0

Tangible Assets

0

0

0

0

0

Investments & other

118

0

0

0

0

Current Assets

 

 

350

51,306

36,594

12,888

14,942

Stocks

0

0

0

0

0

Debtors

0

0

0

0

0

Cash & cash equivalents

341

49,686

35,946

12,240

14,294

Other

9

1,620

648

648

648

Current Liabilities

 

 

(9,548)

(3,033)

(5,130)

(5,228)

(6,205)

Creditors

(2,708)

(1,826)

(3,089)

(2,978)

(3,330)

Tax and social security

0

0

0

0

0

Short term borrowings

(5,884)

0

0

0

0

Other

(956)

(1,207)

(2,042)

(2,250)

(2,875)

Long Term Liabilities

 

 

(69)

0

0

0

(40,000)

Long term borrowings

(69)

0

0

0

(40,000)

Other long term liabilities

0

0

0

0

0

Net Assets

 

 

(9,150)

48,272

31,464

7,660

(31,263)

Convertible preferred stock

(7,771)

0

0

0

0

Minority interests

0

0

0

0

0

Shareholders' equity

 

 

(16,921)

48,272

31,464

7,660

(31,263)

CASH FLOW

Operating Cash Flow

(2,572)

(10,526)

(17,802)

(24,523)

(39,167)

Working capital

1,318

(2,225)

3,069

98

976

Exceptional & other

219

3,951

994

719

245

Tax

0

0

0

0

0

Net operating cash flow

 

 

(1,035)

(8,799)

(13,739)

(23,706)

(37,946)

Capex

0

(250)

0

0

0

Acquisitions/disposals

0

0

0

0

0

Net interest

0

0

0

0

0

Equity financing

0

58,394

0

0

0

Dividends

0

0

0

0

0

Other

0

0

0

0

0

Net Cash Flow

(1,035)

49,345

(13,739)

(23,706)

(37,946)

Opening net debt/(cash)

 

 

21,742

13,384

(49,686)

(35,946)

(12,240)

FX

0

0

0

0

0

Other non-cash movements

9,393

13,725

0

0

0

Closing net debt/(cash)

 

 

13,384

(49,686)

(35,946)

(12,240)

25,706

Source: Context Therapeutics reports, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Context Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Context Therapeutics. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Context Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Context Therapeutics. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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