Nicox — Q4 highlights confirm continued Vyzulta growth

Nicox (PAR: COX)

Currency in EUR

Last close As at 25/01/2023

EUR0.86

−0.18 (−17.31%)

Market capitalisation

EUR56m

Research: Healthcare

Nicox — Q4 highlights confirm continued Vyzulta growth

Nicox has provided a preliminary Q422 update, reporting a c 38% y-o-y increase in FY22 net royalty payments to €3.3m, including a c 100% y-o-y elevation in Q422 net royalties to €1.0m. Nicox receives recurring royalty revenue from the sales of two out-licensed commercial-stage products, Vyzulta (latanoprostene bunod) and Zerviate (topical cetirizine), and we believe this yearly increase is largely due to strengthened Vyzulta-related revenue, as total US Vyzulta prescriptions grew 25% in Q422 (vs 37% in Q322 and c 40% in H122). Nicox also reiterated that it expects to report top-line results in 2025 for Denali, its second Phase III study of lead candidate NCX-470 in patients with open-angle glaucoma or ocular hypertension, and to start two Phase IIIb studies in H123, including one assessing the drug’s possible retinal health benefits. The company continues to expect that funds on hand (€27.7m at end FY22) will be sufficient to maintain operations into Q224, based on the development of NCX-470 alone.

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Written by

Pooya Hemami

Healthcare

Nicox

Q4 highlights confirm continued Vyzulta growth

Q422 initial results

Pharma and biotech

19 January 2023

Price

€1.10

Market cap

€55m

Estimated net cash (€m) at 31 December 2022

7.2

Shares in issue

50.1m

Free float

79%

Code

COX

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

Business description

France-based Nicox develops therapeutics for the treatment of ocular conditions. Its lead candidate NCX-470 is in Phase III studies for the treatment of glaucoma, and it is advancing NCX-4251 for dry eye disease. Nicox also receives licence revenue for its FDA-approved drugs Vyzulta and Zerviate.

Analysts

Pooya Hemami, OD MBA CFA

+1 643 653 7026

Soo Romanoff

+44 (0)20 3077 5700

Nicox is a research client of Edison Investment Research Limited.

Nicox has provided a preliminary Q422 update, reporting a c 38% y-o-y increase in FY22 net royalty payments to €3.3m, including a c 100% y-o-y elevation in Q422 net royalties to €1.0m. Nicox receives recurring royalty revenue from the sales of two out-licensed commercial-stage products, Vyzulta (latanoprostene bunod) and Zerviate (topical cetirizine), and we believe this yearly increase is largely due to strengthened Vyzulta-related revenue, as total US Vyzulta prescriptions grew 25% in Q422 (vs 37% in Q322 and c 40% in H122). Nicox also reiterated that it expects to report top-line results in 2025 for Denali, its second Phase III study of lead candidate NCX-470 in patients with open-angle glaucoma or ocular hypertension, and to start two Phase IIIb studies in H123, including one assessing the drug’s possible retinal health benefits. The company continues to expect that funds on hand (€27.7m at end FY22) will be sufficient to maintain operations into Q224, based on the development of NCX-470 alone.

Year end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/20

14.4

(10.2)

(0.30)

0.0

N/A

N/A

12/21

8.6

(15.5)

(0.35)

0.0

N/A

N/A

12/22e

5.2

(17.3)

(0.33)

0.0

N/A

N/A

12/23e

7.3

(17.4)

(0.34)

0.0

N/A

N/A

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

As stated in a previous note, we believe that positive Mont Blanc NCX-470 Phase III results bode well for the drug’s likelihood of obtaining FDA approval (which we forecast in 2027) and that the Denali study is likely to lead to similar results. To strengthen NCX-470’s positioning, Nicox is aiming to build on previously reported preclinical retinal data to help demonstrate that, in addition to lowering intraocular pressure (IOP), NCX-470 may improve retinal perfusion and/or retinal cell health and thereby provide a supplemental therapeutic benefit in patients with glaucoma. The company is planning to start two clinical studies in H123, with one trial aiming to assess the drug’s effects on retinal blood flow using OCT-angiography the other assessing its ability to reduce episcleral venous pressure and enhance aqueous humor outflow through the trabecular meshwork.

As part of Nicox’s arrangement with Vyzulta global licensee Bausch + Lomb, it is entitled to tiered net royalties of 6–12% on net sales, which takes into account the Vyzulta-related royalties that Nicox must pay to Pfizer. Nicox has not yet reported FY22 gross royalties (or gross revenue) or the amount of royalty revenue it paid to Pfizer in FY22, but we note that in FY21 it paid €1.35m in royalties to Pfizer (€1.52m in FY20).

Nicox reported gross cash of €27.7m at 31 December 2022 (vs €25.6m at end September), boosted by the €10m (€8.9m net) private placement announced last November. Its debt position is little changed as it reported gross debt of €20.5m at end FY22, consisting of €18.7m Kreos Capital loan and €1.8m French State-guaranteed loan .

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This report has been commissioned by Nicox and prepared and issued by Edison, in consideration of a fee payable by Nicox. 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.

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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 2023 Edison Investment Research Limited (Edison).

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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.

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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.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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United Kingdom

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1185 Avenue of the Americas

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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

1185 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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