Nicox — Revising NCX-470 forecasts after Mont Blanc

Nicox (Euronext Growth: ALCOX)

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Research: Healthcare

Nicox — Revising NCX-470 forecasts after Mont Blanc

Following positive Mont Blanc NCX-470 Phase III results, Nicox is actively exploring commercial partnerships for NCX-470 in both the US and Japanese markets. We believe this is a sound strategy as effective commercial positioning will be key in differentiating NCX-470 from other prostaglandin F2α analogue (PGA) drugs, given that despite meeting the primary efficacy endpoint, NCX-470 did not demonstrate statistical superiority vs latanoprost in Mont Blanc. We have adjusted our rNPV to €190.4m (vs €236.2m previously) as, while we have raised our US probability of success (PoS) estimate to 75% (from 50%), we have also reduced our peak sales forecasts as the level of NCX-470’s relative IOP reduction to latanoprost in the Mont Blanc study was not as high as we had expected.

Written by

Pooya Hemami

Analyst - Healthcare

Healthcare

Nicox

Revising NCX-470 forecasts after Mont Blanc

NCX-470 update

Pharma and biotech

10 November 2022

Price

€1.95

Market cap

€84m

$1/€

Net cash (€m) at 30 September 2022

5.0

Shares in issue

43.3m

Free float

86%

Code

COX

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.6)

(11.9)

(46.5)

Rel (local)

(12.8)

(10.5)

(40.5)

52-week high/low

€3.2

€1.7

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.

Next events

Start NCX-470 clinical studies aiming to show retinal cell or perfusion benefits

H123

Analysts

Pooya Hemami
OD MBA CFA

+1 646 653 7026

Soo Romanoff

+44 (0)20 3077 5700

Nicox is a research client of Edison Investment Research Limited

Following positive Mont Blanc NCX-470 Phase III results, Nicox is actively exploring commercial partnerships for NCX-470 in both the US and Japanese markets. We believe this is a sound strategy as effective commercial positioning will be key in differentiating NCX-470 from other prostaglandin F2α analogue (PGA) drugs, given that despite meeting the primary efficacy endpoint, NCX-470 did not demonstrate statistical superiority vs latanoprost in Mont Blanc. We have adjusted our rNPV to €190.4m (vs €236.2m previously) as, while we have raised our US probability of success (PoS) estimate to 75% (from 50%), we have also reduced our peak sales forecasts as the level of NCX-470’s relative IOP reduction to latanoprost in the Mont Blanc study was not as high as we had expected.

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)

(0.36)

0.0

N/A

N/A

12/23e

7.3

(17.5)

(0.40)

0.0

N/A

N/A

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

Seeking to show NCX-470’s retinal health effects

To strengthen NCX-470’s positioning, Nicox aims 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 two clinical studies (to start in H123) and additional non-clinical activities to work towards this objective.

Revising NCX-470 market assumptions

While NCX-470 met the primary efficacy analysis in Mont Blanc, it did not show statistical superiority and its relative IOP-lowering improvement vs latanoprost was 1.0mmHg, lower than the c 1.5mmHg we had assumed in our forecasts. As IOP reduction remains the key efficacy criteria by which glaucoma therapeutics are typically judged, we have lowered our peak US sales forecasts by c 33% to reflect our revised assessment of NCX-470’s IOP-lowering competitive profile. However, the successful demonstration of retinal cell benefits from the company’s new clinical programme could prompt us to review our forecasts.

Valuation: Small revision following Q322 update

The effect of lower peak NCX-470 sales estimates is offset by increases in our PoS estimates for NCX-470, as we believe Mont Blanc met the required thresholds for the first (of two) pivotal studies to support US market registration. We now assume PoS in the US and Chinese markets of 75% (from 50% previously) and 60% in Europe (from 35% previously). We now obtain an rNPV valuation for Nicox of €190.4m (versus €236.2m previously). After including Q322 net cash of €5.0m, we obtain an equity value of €195.4m, or €4.52 per basic share (€4.36 fully diluted), down from €5.58 previously (€5.29 fully diluted).

Seeking to differentiate NCX-470 following Mont Blanc

Nicox’s Mont Blanc Phase III study of NCX-470 0.1% met the primary efficacy endpoint of demonstrating non-inferiority to latanoprost 0.005% for the reduction in IOP in patients with open-angle glaucoma (OAG) or ocular hypertension (OHTN).

As a reminder, NCX-470 is a second clinical-stage compound based on the company’s proprietary NO-donating platform that combines a nitric oxide (NO)-donating molecule with an established PGA drug which, as explained below, provides an additional mechanism for the drug to reduce IOP. The technology has already been applied successfully in a first commercial glaucoma drug, Vyzulta, developed by Nicox and out-licensed to and commercialised by Bausch + Lomb. Latanoprost is one of the most frequently prescribed PGA drugs used to treat elevated IOP and, to our knowledge, Mont Blanc is the first registration trial whereby a monotherapy drug candidate was able to show statistical non-inferiority to a PGA drug. Given the favourable safety profile also shown, we believe these results bode well for the product’s likelihood of obtaining FDA approval, provided the second Phase III study, Denali, demonstrates similar efficacy parameters (Nicox expects results after 2024).

However, Mont Blanc did not meet the secondary endpoint of demonstrating statistical superiority to latanoprost, although NCX-470 showed statistically superior IOP reduction (p<0.049) at four of the six time points and numerically greater IOP reduction at all six time points. Altogether, the extent of NCX-470’s difference versus latanoprost does not appear to be as substantial as that shown in the earlier Dolomites Phase II study, which we believe may restrain current expectations surrounding the product’s differentiated positioning compared to the leading PGA drugs.

To this end, Nicox recently announced a refined development strategy for NCX-470 where it will seek to build on previously reported preclinical retinal data to help demonstrate that, in addition to lowering IOP (currently the only proven approach to managing glaucoma), NCX-470 may improve retinal perfusion or retinal cell health (which are subject to damage in glaucoma patients) and thereby provide a supplemental therapeutic benefit in this population. Nicox is now also actively exploring commercial partnerships for NCX-470 in both the US and Japanese markets. We believe that effective commercial positioning will be key in differentiating NCX-470 from other PGA drugs and, with potential FDA approval at least a few years away (we forecast in 2027), we believe that the company’s decision to start looking for a capable marketing partner is sound. We note that NCX-470 is one of the very few, if any, late-stage therapeutic assets available for licensing in the glaucoma space (please see our 26 October note for a selected summary of the current development pipeline of topical glaucoma drug candidates).

Review of Mont Blanc data

The Mont Blanc Phase III study began in mid-2020 and enrolled 691 patients with OAG or OHTN. Following the initial adaptive design phase of the study, subjects were randomised to take either NCX-470 (0.1% concentration) or latanoprost (0.005%) once daily in both eyes for three months. The primary endpoint is the mean IOP reduction from a time-matched baseline at 8am and 4pm time points at weeks two and six and month three visits.

Exhibit 1: Mont Blanc study design

Source: Nicox presentation, November 2022. Note: 1This schematic diagram reflects the dosage arms that continued in the trial and do not include the NCX 470 0.065% dose, which was only in the adaptive design portion of the study.

The IOP-lowering effect from baseline in the 691-patient study was 8.0–9.7mmHg for NCX-470 versus 7.1–9.4mmHg for latanoprost (reduction in time-matched IOP at 8am and 4pm across visits at week two, week six and month three). The difference in IOP reduction between NCX 470 and latanoprost was up to 1.0mmHg in favour of NCX-470.

Exhibit 2: NCX-470 0.1% IOP lowering compared to latanoprost 0.005% in Mont Blanc

Source: Nicox presentation, November 2022

Exhibit 3: Distribution of mean treatment difference of NCX-470 vs latanoprost in mmHg in Mont Blanc study

Source: Nicox presentation, November 2022

While NCX-470 showed statistical non-inferiority versus latanoprost, meeting the primary efficacy analysis, it failed to meet statistical superiority to latanoprost in a pre-specified secondary efficacy analysis of time-matched change from baseline IOP. NCX 470 was numerically superior to latanoprost at all time points and statistically significant (p<0.049) at four of six time points.

The Dolomites Phase II trial showed that NCX-470 (at 0.065%) delivered up to 1.4mmHg increased IOP reduction versus latanoprost, meeting statistically superiority criteria. In our recent note, we had estimated that a relative difference of at least c 1.5mmHg versus latanoprost in Mont Blanc would have enabled NCX-470 to solidly distinguish itself effectively against other glaucoma monotherapy drugs on the basis of IOP reduction.

While NCX-470 showed trends of a superior IOP-lowering effect versus latanoprost in Mont Blanc (such as numerically superior IOP reduction at all six time points), the top-line results did not differentiate NCX-470’s IOP-lowering competitive profile as a monotherapy drug by as much as we had anticipated, such as in comparison to latanoprostene bunod (Vyzulta) and bimatoprost.

Nicox reported that NCX-470 was well tolerated, with the most common adverse event being ocular hyperemia (11.9% of cases versus 3.3% of latanoprost patients), which is not surprising as NCX-470 (at 0.065%) also showed a c 10pp increase in the rate of ocular hyperemia versus the latanoprost arm in Dolomites. There were no serious ocular adverse events in Mont Blanc and the NCX-470 study discontinuation rate (4.3%) was lower than that in the latanoprost arm (5.1%). Given the favourable safety profile and the demonstration of non-inferiority of latanoprost, the trial met the efficacy requirements for approval in the United States, although confirmatory results from the second Phase III study (Denali) and long-term (12-month) safety data from that study will be needed for US approval.

Seeking to demonstrate and leverage retinal health benefits

To strengthen NCX-470’s competitive profile versus other PGAs and topical drug treatments, Nicox is seeking to demonstrate that the drug, likely because of its NO-release properties, may protect the retinal ganglion cells susceptible to glaucomatous damage through IOP-independent mechanisms such as improved retinal perfusion, as discussed in our prior note.

As stated previously, current approved glaucoma treatments are designed to reduce IOP, which may not fully prevent retinal ganglion cell degeneration and thus progression of the condition in many patients, particularly those with normal tension glaucoma (NTG). Certain IOP-independent risk factors, including ischemia (inadequate blood supply) or inadequate retinal perfusion, may contribute to optic nerve or retinal cell damage (particularly in NTG), and NO is known to be a potent vasodilator. We have already highlighted the exploratory preclinical study reported by Nicox whereby an endothelin-1 induced ischemia/reperfusion model in rabbits was used to mimic glaucoma pathophysiology. The results suggest that NCX 470 may improve ocular perfusion and retinal function in damaged eyes compared to vehicle and may therefore have protective properties not related to its effect on IOP.

To expand on these data, Nicox plans to conduct a series of non-clinical studies and two new clinical studies to explore the activity of NCX 470 in the retina. One clinical study will assess the effect of NCX 470 on ocular perfusion pressure through episcleral venous pressure and optical coherence tomography (OCT) measurements of retinal vessels in which NCX 470’s ability to lower episcleral venous pressure as well as enhance outflow through the trabecular meshwork (TM) will be assessed. We note that conventional PGA drugs exert IOP-lowering effects through the uveoscleral pathway and are not expected to have significant effects on the TM.

A separate clinical study will evaluate retinal blood vessel density using OCT angiography (a validated imaging technique) to fully understand NCX-470’s effects on retinal blood flow. Together, these studies are designed to help demonstrate that, in addition to lowering IOP, NCX-470 may also provide beneficial effects in terms of improving retinal perfusion, as has been observed in preclinical models. The company believes that as well as relaxing blood vessels and improving blood flow, NO could inhibit inflammatory cytokines and reduce oxidative stress (which are other contributors to glaucomatous damage).

We believe these clinical studies will be relatively short, as the relevant endpoints and clinical features will likely be measurable within 30 days of initial patient dosing, and only c 15–50 patients will likely be needed for each trial (given comparable retinal vasculature studies conducted on latanoprostene bunod, phenylephrine and netarsudil, and an OCT angiography study performed on latanoprostene bunod and timolol).

The two clinical studies are planned to start in H123, but the company reports that they are not expected to be completed by the end of its current cash runway (which it currently projects into Q423).

NCX-470 financial forecasts

We are reassessing our view of NCX-470’s commercial sales uptake to reflect the Mont Blanc data. Our prior forecasts assumed that in its pivotal study programme, NCX-470 would at least match the Dolomites data in terms of relative improvement versus latanoprost (given that Dolomites had tested a lower drug concentration) and demonstrate statistical superiority. While it is possible that Denali may yet show stronger effects, we assume the most likely outcome is that the Denali results will be similar to Mont Blanc.

Mont Blanc showed a 1.0mmHg relative improvement in IOP reduction versus latanoprost and we note that the company’s internal research (see slide 24) estimated peak US sales of $200m for a product with 1.25mmHg superior reduction to latanoprost. Given the results from Mont Blanc, we are reducing our peak US net sales estimate (in 2032) from $386m to $257m. As explained in our Outlook report published on 19 May 2022, we previously estimated that NCX-470 at its peak would account for 3% of US glaucoma drop bottle prescriptions (estimated at 55m in 2019 by IQVIA) and we have reduced this peak share estimate to 2%.

Exhibit 4: Financial forecasts for NCX-470

2027e

2028e

2029e

2030e

2031e

US market

Estimated number of glaucoma drop bottles dispensed per year (000)

75,271

78,282

81,413

84,670

88,057

Market share for NCX-470 (%)

0.22

0.37

0.62

1.05

1.77

Estimated price per bottle ($), net of discounts/rebates

110.00

115.50

121.28

127.34

133.71

Net sales ($000)

17,958

33,141

61,162

112,872

208,304

ex-US markets

Net sales for Europe and regions not covered by Ocumension agreement (€000)

0

11,231

20,727

38,252

70,592

Net licence & royalty revenue from Ocumension for China (€000)

164

308

580

1,091

2,279

Assumed $/€ rate

1.00

1.00

1.00

1.00

1.00

Worldwide total NCX-470 related revenue (€000)

18,122

44,681

82,468

152,215

281,176

Source: Edison Investment Research

While the existing preclinical data, which suggest improved retinal cell health or perfusion benefit, are promising, we believe it is currently premature to assume that the (non-human) data would carry much influence with prescribers (ophthalmologists and optometrists) yet. As it stands, relative IOP reduction and relative safety/tolerability remain the key criteria by which glaucoma therapeutics are assessed and valued in the community.

Further human data to be developed supporting non-IOP benefit would be needed, in our view, for NCX-470 to solidly distinguish itself from PGA drugs such as Vyzulta, Lumigan, and newer drugs such as Omlonti (discussed here), and Rocklatan. We believe Nicox’s strategy to develop these data is very sensible and, should the upcoming data readouts provide evidence of benefit on retinal health and/or perfusion, we may reassess our commercial NCX-470 sales estimates.

Financials and valuation

We have increased our total R&D cost estimates covering years 2023 through 2025 by €4m, to reflect the additional non-clinical and clinical activities the company plans to perform to demonstrate NCX-470’s potential non-IOP mediated benefits on retinal vasculature and cell health. We now assume FY23e and FY24e normalised PBT losses of €17.5m and €23.7m, versus our prior estimates of €16.4m and €21.5m, respectively.

Nicox reported €25.6m in cash and equivalents at 30 September, and we continue to calculate Q322 net cash of €5.0m, excluding lease liabilities. Nicox estimates that it is financed until mid-November 2023 (or mid-December 2023 assuming extension of the interest-only period of the existing Kreos debt), based on the development of NCX-470 alone.

We continue to expect the company will require €85m in added funding before the anticipated launch of NCX-470 (which we forecast in 2027). Our projections do not include any potential proceeds from the exercise of options or warrants which, if exercised, would lower our funding forecasts accordingly.

We have also updated our model to reflect $/€ exchange rate parity (versus $0.98/€, previously). While we have lowered our peak NCX-470 sales estimates, the effect on our valuation is significantly offset by increases in our PoS estimates for NCX-470, as we believe that Mont Blanc met the required thresholds for the first (of two) pivotal studies to support market registration in the US. We now assume PoS in the US and Chinese markets of 75% (from 50% previously) and 60% in Europe (from 35% previously).

Exhibit 5: Nicox SA rNPV assumptions

Product contribution

Indication

Stage

NPV
(€m)

PoS

rNPV
(€m)

rNPV/basic share (€)

Launch year

Peak sales (€m)**

NCX-470 (net of R&D and SG&A costs) in US market

Glaucoma

Phase III ongoing

139.3

75%

101.3

2.34

2027

257

NCX-470 (net of R&D and SG&A costs) in Europe and unpartnered regions

Glaucoma

Phase III

75.8

60%

44.2

1.02

2028

130

NCX-470 license fees from Ocumension (China and other)

Glaucoma

Phase III ongoing

6.7

75%

4.8

0.11

2027

2.9*

NCX-4251 (net of R&D and SG&A costs) sales and licence fees/royalties

Dry eye disease

Phase IIb

155.1

25%

38.7

0.89

2028

84*

Vyzulta royalties from Bausch + Lomb

Glaucoma

Commercial

41.0

100%

41.0

0.95

2017

11.1*

Zerviate royalties from Eyevance and others

Allergic conjunctivitis

Commercial

27.6

100%

27.6

0.64

2020

6.7*

Corporate costs

(67.0)

100%

(67.0)

(1.55)

Total

378.5

190.4

4.40

Net cash (Q322) excluding lease liabilities

5.0

5.0

0.12

Total equity value

383.5

195.4

4.52

Basic shares outstanding (000)

43,251

Outstanding options and warrants (000)

6,142

FD shares outstanding (000)

49,393

Source: Edison Investment Research. Note: *Reflects net licence and royalties received by Nicox and not commercial sales by licensee. **Peak projected sales shown for 2032 except for Vyzulta, where peak anticipated royalties are shown for 2030.

Following these changes, we now obtain an rNPV valuation for Nicox of €190.4m (versus €236.2m previously). After including Q322 net cash of €5.0m, we obtain an equity value of €195.4m, or €4.52 per basic share (down from €5.58 previously). After considering the potential dilutive effect of options and warrants and their effects on net cash, our fully diluted valuation would be €4.36 (versus €5.29 previously) per fully diluted share.

Exhibit 6: Financial summary

€’000s

2018

2019

2020

2021

2022e

2023e

2024e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

4,717

8,260

14,423

8,583

5,193

7,298

9,704

Cost of Sales

(690)

(1,405)

(1,516)

(1,350)

(1,592)

(1,750)

(2,161)

Gross Profit

4,027

6,855

12,907

7,233

3,601

5,548

7,543

General & Administrative

(9,506)

(7,666)

(6,677)

(7,000)

(7,905)

(8,269)

(11,543)

Net Research & Development

(15,491)

(16,883)

(11,991)

(17,194)

(15,063)

(13,336)

(16,136)

Amortisation of intangible assets

0

(659)

(1,252)

(1,205)

(423)

(798)

(778)

Operating profit before exceptionals

(20,970)

(18,353)

(7,013)

(18,166)

(19,790)

(16,856)

(20,914)

EBITDA

 

 

(20,718)

(17,230)

(5,270)

(16,505)

(18,979)

(15,751)

(19,868)

Depreciation & other

(252)

(464)

(491)

(456)

(388)

(307)

(268)

Operating Profit (before amort. and except.)

(20,970)

(17,694)

(5,761)

(16,961)

(19,367)

(16,057)

(20,136)

Exceptionals including asset impairment

302

(6,115)

(6,621)

(30,658)

(11,631)

0

0

Other

0

0

0

(1,159)

0

0

0

Operating Profit

(20,668)

(23,809)

(12,382)

(48,778)

(30,998)

(16,057)

(20,136)

Net Interest

2,390

1,690

(4,436)

1,419

2,057

(1,460)

(3,574)

Profit Before Tax (norm)

 

 

(18,580)

(16,004)

(10,197)

(15,542)

(17,310)

(17,517)

(23,710)

Profit Before Tax (FRS 3)

 

 

(18,278)

(22,778)

(18,070)

(48,564)

(29,364)

(18,316)

(24,489)

Tax

(113)

3,856

(28)

3,644

1,679

0

0

Profit After Tax and minority interests (norm)

(18,693)

(12,148)

(10,225)

(13,057)

(15,631)

(17,517)

(23,710)

Profit After Tax and minority interests (FRS 3)

(18,391)

(18,922)

(18,098)

(44,920)

(27,685)

(18,316)

(24,489)

Average Basic Number of Shares Outstanding (m)

29.6

30.3

33.7

37.5

43.4

44.0

44.6

EPS - normalised (€)

 

 

(0.63)

(0.40)

(0.30)

(0.35)

(0.36)

(0.40)

(0.53)

EPS - normalised and fully diluted (€)

 

(0.63)

(0.40)

(0.30)

(0.35)

(0.36)

(0.40)

(0.53)

EPS - (IFRS) (€)

 

 

(0.62)

(0.62)

(0.54)

(1.20)

(0.64)

(0.42)

(0.55)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

112,498

110,660

89,745

66,871

61,043

60,121

59,317

Intangible Assets

71,397

72,120

64,848

39,974

32,127

31,329

30,550

Tangible Assets

25,628

27,517

24,829

26,660

28,759

28,634

28,608

Investments in long-term financial assets

15,473

11,023

68

237

158

158

158

Current Assets

 

 

26,092

32,146

52,521

47,738

26,487

34,851

36,852

Short-term investments

0

0

0

0

0

0

0

Cash

22,059

28,102

47,195

41,970

21,038

28,937

30,809

Other

4,033

4,044

5,326

5,768

5,448

5,914

6,043

Current Liabilities

 

 

(8,069)

(9,828)

(15,404)

(8,000)

(7,981)

(6,677)

(5,280)

Creditors

(8,069)

(7,751)

(10,115)

(8,000)

(7,981)

(6,677)

(5,280)

Short term borrowings

0

(2,077)

(5,289)

0

0

0

0

Long Term Liabilities

 

 

(16,868)

(23,681)

(26,027)

(31,057)

(28,846)

(54,846)

(80,846)

Long term borrowings

0

(9,045)

(12,687)

(20,520)

(20,196)

(46,196)

(72,196)

Other long term liabilities

(16,868)

(14,636)

(13,340)

(10,537)

(8,650)

(8,650)

(8,650)

Net Assets

 

 

113,653

109,297

100,835

75,552

50,703

33,449

10,043

CASH FLOW

Operating Cash Flow

 

 

(21,533)

(17,741)

(956)

(19,900)

(22,986)

(16,459)

(20,311)

Net interest and financing income (expense)

2,390

1,690

(4,436)

1,419

2,057

(1,460)

(3,574)

Tax

0

0

0

0

0

0

0

Net Operating Cash Flow

(19,143)

(16,051)

(5,392)

(18,481)

(20,929)

(17,919)

(23,886)

Capex

(268)

(95)

(20)

(8)

(82)

(182)

(243)

Acquisitions/disposals

0

0

0

0

37

0

0

Financing

0

11,290

13,321

13,804

186

0

0

Dividends

0

0

0

0

0

0

0

Net Cash Flow

(19,411)

(4,856)

7,909

(4,685)

(20,788)

(18,101)

(24,128)

Opening net debt/(cash)

 

 

0

(37,532)

(28,003)

(29,287)

(21,687)

(1,000)

17,101

HP finance leases initiated

0

0

0

0

0

0

0

Other

56,943

(4,673)

(6,625)

(2,915)

101

0

0

Closing net debt/(cash)

 

 

(37,532)

(28,003)

(29,287)

(21,687)

(1,000)

17,101

41,229

Lease debt

N/A

1,527

1,099

986

1,297

1,297

1,297

Closing net debt/(cash) inclusive of IFRS 16 lease debt

(37,532)

(26,476)

(28,188)

(20,701)

297

18,398

42,526

Source: company reports, Edison Investment Research


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

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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.

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

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

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

General disclaimer and copyright

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.

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

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

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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Media and Games Invest’s (MGI’s) recent EGM confirmed that the group can now proceed with its relocation to Sweden, set for January 2023, and the associated improvements to corporate governance, which should remove potential barriers to investment. Q322 results are scheduled for 15 November and, as with Q222, we would expect there to be a benefit from new publishers coming on board with an offset from a more testing economic backdrop. The inclusion of recent acquisition Dataseat from July will begin to step up the proportion of revenues and earnings generated from the demand-side. MGI’s valuation remains well below peers.

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