e-Therapeutics’ (ETX) interim numbers demonstrate tight cost control and focus on the rationalised pipeline, with continued investment into the Network-Driven Drug Discovery platform. In the near term, we should see positive data to support out-licensing of its immuno-oncology projects. The company is well-positioned in the ‘big data’ space and has initiated a robust business development plan, which we expect to bear fruit in the coming year.
e-Therapeutics |
Sailing a steady course |
Interim results |
Pharma & biotech |
4 October 2017 |
Share price performance
Business description
Next events
Analysts
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e-Therapeutics’ (ETX) interim numbers demonstrate tight cost control and focus on the rationalised pipeline, with continued investment into the Network-Driven Drug Discovery platform. In the near term, we should see positive data to support out-licensing of its immuno-oncology projects. The company is well-positioned in the ‘big data’ space and has initiated a robust business development plan, which we expect to bear fruit in the coming year.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
01/16 |
0.0 |
(11.1) |
(3.3) |
0.0 |
N/A |
N/A |
01/17 |
0.0 |
(13.4) |
(3.9) |
0.0 |
N/A |
N/A |
01/18e |
0.0 |
(7.7) |
(2.3) |
0.0 |
N/A |
N/A |
01/19e |
0.0 |
(7.2) |
(2.1) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Focus on key pipeline projects continues
Following a strategic review in July 2017, resources are being invested in two immuno-oncology programmes: checkpoint signalling modulation and tryptophan catabolism. Although relatively immature, the company believes they are the most commercially interesting projects and is working to generate early pre-clinical data for active marketing by year-end. ETX continues to invest in its Network Drug Discovery platform and develop network models in other complex diseases.
Well positioned in this space
The term ‘big data’ has become a buzzword recently but it is widely hoped that the application of big data analytics can streamline the pharmaceutical R&D process to better identify new potential drug candidates (McKinsey article, April 2013). With new CEO Ray Barlow we believe ETX is well-equipped to deliver on its key business development strategy and deliver partnerships.
Valuation: Tight cost control
Total H1 R&D spend was £2.7m (H117: £6.5m), a result of cutting back discovery projects and winding down the clinical study (two patients remain with ongoing costs of 40k/month). The operating loss was £3.7m (H117: £7.6m excluding goodwill write-off). Cash at the half year stands at £12.4m (end FY17: £14m) and cash burn is down to £1.55m for the period (H117: £3.8m). Only minor changes to our financial numbers mean that the company continues to be funded into 2019.
Exhibit 1: Financial summary
£'000s |
2016 |
2017 |
2018e |
2019e |
||
Year ending 31 January |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
R&D |
(9,965) |
(10,911) |
(5,988) |
(5,500) |
||
G&A |
(1,375) |
(2,614) |
(1,800) |
(1,700) |
||
EBITDA |
|
|
(11,267) |
(13,469) |
(7,743) |
(7,164) |
Operating profit (before amort. and except.) |
|
(11,340) |
(13,525) |
(7,788) |
(7,200) |
|
Share-based payment |
(215) |
(99) |
(120) |
(100) |
||
Operating profit |
(11,555) |
(16,429) |
(7,908) |
(7,300) |
||
Net interest |
271 |
132 |
50 |
40 |
||
Profit before tax (adjusted) |
|
|
(11,069) |
(13,393) |
(7,738) |
(7,160) |
Profit before tax (as reported FRS3) |
|
|
(11,284) |
(16,297) |
(7,858) |
(7,260) |
Tax |
2,464 |
3,073 |
1,500 |
1,400 |
||
Profit after tax (norm.) |
(8,605) |
(10,320) |
(6,238) |
(5,760) |
||
Profit after tax (as reported) |
(8,820) |
(13,224) |
(6,358) |
(5,860) |
||
Average number of shares outstanding (m) |
264.4 |
267.1 |
268.4 |
268.4 |
||
EPS - adj. (p) |
|
|
(3.3) |
(3.9) |
(2.3) |
(2.1) |
EPS - as reported (p) |
|
|
(3.3) |
(5.0) |
(2.4) |
(2.2) |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
||
EBITDA margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating margin (before GW and except) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
804 |
207 |
247 |
296 |
Intangible assets |
740 |
156 |
159 |
166 |
||
Tangible assets |
64 |
51 |
89 |
131 |
||
Current assets |
|
|
28,783 |
17,724 |
10,093 |
4,389 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
3,941 |
3,749 |
1,800 |
1,800 |
||
Cash |
24,842 |
13,975 |
8,293 |
2,589 |
||
Other |
0 |
0 |
0 |
0 |
||
Current liabilities |
|
|
(1,156) |
(1,951) |
(915) |
(915) |
Creditors |
(1,156) |
(1,951) |
(915) |
(915) |
||
Other creditors |
0 |
0 |
0 |
0 |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Long-term liabilities |
|
|
0 |
0 |
0 |
0 |
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Deferred taxation |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
||
Net assets |
|
|
28,431 |
15,980 |
9,425 |
3,770 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(11,204) |
(11,711) |
(8,656) |
(7,164) |
Net interest |
329 |
194 |
91 |
45 |
||
Tax |
2,027 |
2,570 |
2,968 |
1,500 |
||
Capex |
(6) |
(22) |
(60) |
(60) |
||
Purchase of intangibles |
(138) |
(143) |
(25) |
(25) |
||
Acquisitions/disposals |
0 |
(1,768) |
0 |
0 |
||
Financing |
12 |
13 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Net cash flow |
(8,980) |
(10,867) |
(5,682) |
(5,704) |
||
Opening net debt/(cash) |
|
|
(33,822) |
(24,842) |
(13,975) |
(8,293) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(24,842) |
(13,975) |
(8,293) |
(2,589) |
Source: Edison Investment Research, e-Therapeutics accounts
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