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Research: Healthcare
Paion is well positioned to commercialise Remimazolam in 2019 for procedural sedation (via partner Cosmo Pharmaceuticals in the US) and general anaesthesia (Japan); successful Phase III studies confirmed an excellent safety profile and shorter procedure times than midazolam. Paion is conducting additional Phase I studies to further assess abuse potential of remimazolam, which will guide its scheduling under the Controlled Substances Act in the US. Cosmo has advised that it expects to file for US approval in H218 vs prior guidance of a mid-2018 filing. The recent €8m capital raise has extended the funding runway for current activities to at least H219. We adjust our valuation to €245m (vs €240m) or €4.02/share.
Written by
Paion |
Remimazolam set for commercialisation in 2019 |
H117 update |
Pharma & biotech |
14 August 2017 |
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Paion is well positioned to commercialise Remimazolam in 2019 for procedural sedation (via partner Cosmo Pharmaceuticals in the US) and general anaesthesia (Japan); successful Phase III studies confirmed an excellent safety profile and shorter procedure times than midazolam. Paion is conducting additional Phase I studies to further assess abuse potential of remimazolam, which will guide its scheduling under the Controlled Substances Act in the US. Cosmo has advised that it expects to file for US approval in H218 vs prior guidance of a mid-2018 filing. The recent €8m capital raise has extended the funding runway for current activities to at least H219. We adjust our valuation to €245m (vs €240m) or €4.02/share.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
0.1 |
(34.0) |
(55.7) |
0.0 |
N/A |
N/A |
12/16 |
4.3 |
(24.3) |
(36.4) |
0.0 |
N/A |
N/A |
12/17e |
5.9 |
(16.4) |
(21.2) |
0.0 |
N/A |
N/A |
12/18e |
3.5 |
(12.9) |
(17.7) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding, exceptionals and share-based payments.
Abuse studies ongoing, US filing expected H218
Paion is undertaking additional Phase I studies to assess whether remimazolam can be abused intranasally and whether it could be used as a knock-out cocktail in combination with alcohol. Paion expects that the FDA will classify remimazolam as a lower-abuse-potential schedule IV drug under the Controlled Substance Act, the same classification as midazolam. Paion has clarified the expected timeline for a potential US filing by partner Cosmo, with filing expected in H218 vs prior guidance of mid-2018. Encouragingly, Canadian regulators have advised partner Pharmascience that the current data package is adequate for filing in that country, without any further data from the current abuse potential trials.
Japan filing likely mid-2018, GA Phase I underway
Paion is preparing for a potential mid-2018 filing for remimazolam for general anaesthesia (GA) in Japan, and is in ongoing discussions as it seeks to partner in the Japanese market. It has initiated a Phase I trial to collect data to aid the design of an EU Phase III study for GA in general surgery patients. Paion expects the Phase III programme to cost €20-25m – the recent €8m capital raise will contribute to this funding requirement and will enable it to accelerate Phase III preparations. The Phase III could start in 2018, subject to securing the additional funding.
Valuation: Adjusted to €245m or €4.02 per share
Our valuation is increased to €245m (from €240m) due to the €8m capital raise in July, partly offset by a modest reduction in forecast sales of remimazolam in 2019 due to an anticipated launch date later in the course of the year. The increased share count sees valuation per share decline to €4.02/share (vs €4.13/share). H117 results confirmed that Paion is trimming expenditure in line with guidance; end-H117 cash of €27.1m combined with the €8m capital raise extends Paion’s cash reach into H219 (without considering potential milestone payments).
Exhibit 1: Financial summary
€'000s |
2014 |
2015 |
2016 |
2017e |
2018e |
||
Year end 31 December |
|||||||
PROFIT & LOSS |
|||||||
Revenue |
|
|
3,456 |
61 |
4,262 |
5,874 |
3,500 |
Cost of sales |
(4) |
0 |
0 |
0 |
0 |
||
Gross profit |
3,452 |
61 |
4,262 |
5,874 |
3,500 |
||
R&D expenditure |
(11,799) |
(29,385) |
(23,408) |
(19,000) |
(13,000) |
||
General, administrative & selling |
(3,702) |
(5,729) |
(5,129) |
(3,800) |
(3,914) |
||
Other |
411 |
965 |
(807) |
51 |
51 |
||
Operating profit |
(11,639) |
(34,088) |
(25,082) |
(16,875) |
(13,363) |
||
Depreciation and amortisation |
(93) |
0 |
(759) |
(500) |
(400) |
||
Share-based payments |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
EBITDA |
|
|
(11,546) |
(34,088) |
(24,323) |
(16,375) |
(12,963) |
Operating profit (before GW and except) |
|
(11,546) |
(34,088) |
(24,323) |
(16,375) |
(12,963) |
|
Net interest |
(66) |
42 |
21 |
20 |
20 |
||
Profit before tax (norm) |
|
|
(11,612) |
(34,046) |
(24,302) |
(16,355) |
(12,943) |
Profit before tax (reported) |
|
|
(11,704) |
(34,046) |
(25,061) |
(16,855) |
(13,343) |
Tax |
2,468 |
5,834 |
4,944 |
3,990 |
2,145 |
||
Profit after tax (norm) |
(9,143) |
(28,212) |
(19,359) |
(12,365) |
(10,798) |
||
Profit after tax (reported) |
(9,236) |
(28,212) |
(20,118) |
(12,865) |
(11,198) |
||
Average number of shares outstanding (m) |
39.9 |
50.7 |
53.2 |
58.4 |
61.1 |
||
EPS - normalised (c) |
|
|
(22.9) |
(55.7) |
(36.4) |
(21.2) |
(17.7) |
EPS - reported (c) |
|
|
(23.2) |
(55.7) |
(37.8) |
(22.0) |
(18.3) |
Dividend per share (c) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Gross margin (%) |
NA |
NA |
NA |
NA |
NA |
||
EBITDA margin (%) |
NA |
NA |
NA |
NA |
NA |
||
Operating margin (before GW and except.) (%) |
NA |
NA |
NA |
NA |
NA |
||
BALANCE SHEET |
|||||||
Fixed assets |
|
|
3,516 |
3,417 |
2,855 |
2,355 |
1,955 |
Intangible assets |
3,440 |
3,362 |
2,688 |
2,313 |
2,013 |
||
Tangible assets |
76 |
56 |
167 |
42 |
-58 |
||
Refund from assumption of dev costs |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Current assets |
|
|
63,032 |
40,051 |
35,128 |
29,187 |
18,389 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
467 |
0 |
0 |
25 |
25 |
||
Cash |
58,912 |
32,680 |
30,111 |
24,145 |
13,347 |
||
Other |
3,653 |
7,371 |
5,017 |
5,017 |
5,017 |
||
Current liabilities |
|
|
(3,924) |
(7,901) |
(13,040) |
(7,266) |
(7,266) |
Trade payables |
(3,338) |
(7,332) |
(6,353) |
(6,353) |
(6,353) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Provisions |
(306) |
(224) |
(555) |
(555) |
(555) |
||
Finance lease liabilities |
0 |
0 |
0 |
0 |
0 |
||
Other current liabilities |
(254) |
(305) |
(359) |
(359) |
(359) |
||
Current deferred income |
(26) |
(39) |
(5,774) |
0 |
0 |
||
Long-term liabilities |
|
|
(17) |
(6) |
0 |
0 |
0 |
Long-term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Provisions |
0 |
0 |
0 |
0 |
0 |
||
Long-term deferred income |
(17) |
(6) |
0 |
0 |
0 |
||
Deferred taxes |
0 |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
62,607 |
35,562 |
24,943 |
24,276 |
13,078 |
CASH FLOW |
|||||||
Operating cash flow |
|
|
(12,044) |
(28,212) |
(17,135) |
(22,174) |
(12,963) |
Net interest |
(66) |
43 |
19 |
20 |
20 |
||
Tax |
0 |
2,575 |
5,529 |
3,990 |
2,145 |
||
Capex |
0 |
0 |
7 |
0 |
0 |
||
Purchase of intangibles |
(26) |
(33) |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
(199) |
0 |
0 |
||
Equity Financing |
57,618 |
22 |
9,212 |
12,198 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Net cash flow |
45,482 |
(25,605) |
(2,567) |
(5,966) |
(10,798) |
||
Opening net debt/(cash) |
|
|
(13,292) |
(58,912) |
(32,680) |
(30,111) |
(24,145) |
Effect of exchange rate changes |
(72) |
(66) |
(2) |
0 |
0 |
||
Other |
210 |
-560 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(58,912) |
(32,680) |
(30,111) |
(24,145) |
(13,347) |
Source: Edison Investment Research, Paion accounts
|
|
Research: Investment Companies
BlackRock Greater Europe Investment Trust (BRGE) aims to generate capital growth from a relatively concentrated portfolio invested across the greater European region. In June 2017, it was announced that Stefan Gries would replace Vincent Devlin as co-manager. He will continue to adopt BRGE’s flexible bottom-up stock selection approach, drawing on the wider resources of BlackRock’s European and emerging markets equity teams, but is reducing the number of holdings and intends opportunistically to make fuller use of the emerging European allocation. The trust is referenced against the FTSE World Europe ex-UK index and its NAV total return has outperformed over three and 10 years and is broadly in line over five years, while lagging over the last 12 months. Although the primary aim is capital growth, BRGE has a progressive dividend policy. Its current dividend yield is 1.7%, which is in line with its peer group average.