Acarix has competed a rights issue of 28.67m shares at SEK1.50/share to raise SEK43m before expenses. The proceeds will fund a programme of market development and clinical trials. The process for German public reimbursement is underway. In the UK, NICE has carried out a technical assessment enabling a dialogue to start. Acarix is now developing a US market entry strategy and assessing the likely FDA trial needs.
Written by
Acarix |
Rights funding completed |
Rights Issue |
Healthcare equipment |
6 November 2019 |
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Acarix is a research client of Edison Investment Research Limited |
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Acarix has competed a rights issue of 28.67m shares at SEK1.50/share to raise SEK43m before expenses. The proceeds will fund a programme of market development and clinical trials. The process for German public reimbursement is underway. In the UK, NICE has carried out a technical assessment enabling a dialogue to start. Acarix is now developing a US market entry strategy and assessing the likely FDA trial needs.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.64 |
(30.74) |
(1.29) |
0.0 |
N/A |
N/A |
12/18 |
1.02 |
(42.25) |
(1.83) |
0.0 |
N/A |
N/A |
12/19e |
2.62 |
(43.33) |
(1.56) |
0.0 |
N/A |
N/A |
12/20e |
4.11 |
(44.65) |
(0.86) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Average shares in issue changed in October 2019.
Rights issue completed
The rights issue raised SEK43m before expenses from 28.67m new shares. The fresh cash will help develop a broader base of CADScor users. A solid user base is crucial for increased high-margin patch sales and the key to profit. The new cash will also support further clinical developments, as one weakness in the Acarix case has been limited data (although high-quality) based on Danish experience alone. Acarix needs further clinical and economic data to drive growth in CADScor adoption. It will be interesting, in our view, to see if the cash raised is enough to start clinical development in the US after investing in marketing in Germany and ongoing trials. Acarix’s intention was to raise SEK52m gross.
Developing the market
Acarix has filed a new randomised 2,000-patient clinical trial (FILTER-SCAD) to look at prospective outcomes. This Danish trial (NCT04121949) is listed as active but not recruiting, with data possible from 2021.The study will compare CADScor to standard evaluation over 12 months. A meta-analysis of completed studies using 2,245 patients was published in July 2019. In May 2019, the UK health service published an innovation review of CADScor. Acarix has also indicated that it plans to discuss with the US FDA which trials will be required for a US approval. It will also look to recruit US marketing partners to support a future market entry. We do not include US trial costs in the 2020 forecast as the timeline remains unclear.
Valuation: Revised 2020 value SEK7.23 per share
Acarix had SEK39m cash on 30 June 2019, with an H119 cash outflow of SEK18.7m. The rights issue in effect covers our forecast 2019 cash outflow, so year-end cash should be about level with December 2018 depending on costs. Our valuation assumes 2020 German reimbursement with strong sales from 2021; the sales team is being enlarged. Sales might develop in other European countries. We also assume US sales from 2023, so initial development of a US strategy is very encouraging. Our indicative value, adjusted for debt and minor working capital changes, is rebased to 1 January 2020 and is now SEK374m (SEK369m) or SEK7.23 per share after the rights issue dilution (formerly SEK16). Our forecasts will be reviewed after Q3 sales are reported.
Exhibit 1: Financial summary
SEK000s |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 Dec |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
638 |
1,024 |
2,623 |
4,105 |
Cost of Sales |
(208) |
(316) |
(577) |
(874) |
||
Gross Profit |
430 |
708 |
2,046 |
3,232 |
||
EBITDA |
|
|
(29,499) |
(41,028) |
(41,959) |
(43,273) |
Operating Profit (before amort. and except.) |
|
|
(30,743) |
(42,523) |
(43,454) |
(44,768) |
Intangible Amortisation |
(1,261) |
(1,430) |
(1,430) |
(1,430) |
||
Exceptionals |
- |
- |
- |
- |
||
Operating Profit |
(32,004) |
(43,953) |
(44,884) |
(46,198) |
||
Other |
- |
- |
- |
- |
||
Net Interest |
7 |
273 |
120 |
120 |
||
Profit Before Tax (norm) |
|
|
(30,736) |
(42,250) |
(43,334) |
(44,648) |
Profit Before Tax (FRS 3) |
|
|
(30,736) |
(42,250) |
(43,334) |
(44,648) |
Tax |
960 |
- |
- |
- |
||
Profit After Tax (norm) |
(29,776) |
(42,250) |
(43,334) |
(44,648) |
||
Profit After Tax (FRS 3) |
(29,776) |
(42,250) |
(43,334) |
(44,648) |
||
Average Number of Shares Outstanding (m) |
23.0 |
23.0 |
27.8 |
51.7 |
||
EPS - normalised (ore) |
|
|
(129.31) |
(183.48) |
(155.85) |
(86.37) |
EPS - FRS 3 (ore) |
|
|
(129.31) |
(183.48) |
(155.85) |
(86.37) |
Dividend per share (ore) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
67.4 |
69.1 |
78.0 |
78.7 |
||
EBITDA Margin (%) |
(4,624) |
(4,007) |
(1,600) |
(1,054) |
||
Operating Margin (before GW and except.) (%) |
(4,819) |
(4,153) |
(1,657) |
(1,091) |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
25,191 |
23,696 |
22,201 |
20,706 |
Intangible Assets |
20,351 |
18,921 |
17,491 |
16,061 |
||
Tangible Assets |
0 |
0 |
0 |
0 |
||
Acquired rights |
4,840 |
4,775 |
4,710 |
4,645 |
||
Current Assets |
|
|
108,865 |
71,501 |
68,362 |
25,705 |
Stocks |
1,945 |
2,625 |
2,625 |
2,625 |
||
Debtors |
2,468 |
3,857 |
3,857 |
3,857 |
||
Cash |
103,457 |
65,019 |
61,880 |
19,223 |
||
Other |
995 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(5,118) |
(7,321) |
(7,321) |
(7,817) |
Creditors |
(1,464) |
(2,504) |
(2,504) |
(3,000) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Short term leases |
0 |
0 |
0 |
0 |
||
Other |
(3,653) |
(4,816) |
(4,816) |
(4,816) |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
0 |
Long term borrowings |
0 |
0 |
0 |
0 |
||
Long term leases |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
128,939 |
87,876 |
83,242 |
38,594 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(41,506) |
(39,586) |
(41,959) |
(42,777) |
Net Interest |
7 |
273 |
120 |
120 |
||
Tax |
960 |
977 |
0 |
0 |
||
Capex |
(2,984) |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
1,203 |
0 |
43,000 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
(4,300) |
0 |
||
Net Cash Flow |
(42,320) |
(38,336) |
(3,139) |
(42,657) |
||
Opening net debt/(cash) |
|
|
(145,895) |
(103,457) |
(65,019) |
(61,881) |
HP finance leases initiated |
- |
- |
- |
- |
||
Other |
(118) |
(102) |
- |
- |
||
Closing net debt/(cash) |
|
|
(103,457) |
(65,019) |
(61,881) |
(19,223) |
Source: Acarix accounts, Edison Investment Research forecasts
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