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Research: Healthcare
Selvita
Written by
Selvita |
SEL24 moves to clinic; Nodthera established |
R&D pipeline news |
Pharma & biotech |
22 August 2016 |
Share price performance
Business description
Next events
Analysts
Selvita is a research client of Edison Investment Research Limited |
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Selvita announced last week that the FDA has accepted the initial new drug application (IND) for its lead R&D project SEL24, which can now proceed to Phase I/II in acute myeloid leukaemia (AML) patients. This is the first of Selvita’s R&D assets to be tested in the clinical study that the company intends to begin in Q416, in line with our expectations (H216), while the design of the trial has not yet been disclosed. Upcoming H116 report to be released on 30 August will provide an update on the company’s operational performance. Our valuation is under review.
Year end |
Revenue (PLNm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
41.6 |
5.4 |
0.56 |
0.0 |
43.9 |
N/A |
12/15 |
56.1 |
7.6 |
0.84 |
0.0 |
29.3 |
N/A |
12/16e |
66.9 |
5.8 |
0.44 |
0.0 |
55.9 |
N/A |
12/17e |
76.5 |
8.7 |
0.63 |
0.0 |
39.0 |
N/A |
Note: *PBT and EPS are normalised, excluding exceptional items and share-based payments.
First-in-class, most advanced, dual PIM/FLT3 inhibitor
SEL24 is a first-in-class compound with a dual mechanism of action to target two kinases, namely PIM (1, 2 and 3 isoforms) and FLT3 mutants, which have been shown to be important in the development of AML and other haematological malignancies. With its mechanism of action, SEL24 is the first compound to progress to Phase I/II. Selvita said previously that the FDA asked for supplemental preclinical information, which now has been delivered and shows a good working relationship between the company and the regulatory agency, in our view.
Innovative asset financing with Nodthera
In July 2016, Selvita, together with Epidarex Capital announced the formation of a new company, Nodthera, headquartered in Edinburgh, Scotland. Nodthera centres on NLRP3 inflammasome inhibitors, a first-in-class technology developed internally by Selvita. While it is still at an early preclinical stage with few details released, inflammasome’s role in immune system response and its modulation is an emerging field that has potential across several indications with high unmet need, such as cancers and non-malignant diseases like diabetes, rheumatoid arthritis and Alzheimer’s disease. Epidarex is a specialist, early-stage life sciences investor and we find the solution to carve out the asset and fund the research together with specialist investors as innovative with the potential to speed up the preclinical development in Selvita’s portfolio.
Valuation: PLN363m or PLN27.0/share under review
Our previous valuation of Selvita was PLN363m or PLN27.0/share and assigned a probability of success of 7.5% for SEL24 to reach the market, which is now under review. We look forward to H116 results due shortly and will revise our forecasts and valuation subsequently.
Exhibit 1: Financial summary
PLN'000s |
2013 |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
21,914 |
41,557 |
56,077 |
66,862 |
76,456 |
of which: Services (research outsourcing) |
9,812 |
16,121 |
25,612 |
33,279 |
41,598 |
||
Innovation pipeline funding |
3,241 |
12,744 |
15,416 |
17,817 |
18,320 |
||
Subsidies |
8,688 |
12,430 |
14,700 |
15,424 |
16,195 |
||
EBITDA |
|
|
(146) |
7,626 |
10,235 |
9,262 |
12,792 |
Operating Profit (before GW and except.) |
|
(2,228) |
5,272 |
6,802 |
5,823 |
8,729 |
|
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals/Other |
0 |
0 |
(4,729) |
(5,860) |
(583) |
||
Operating Profit |
(2,228) |
5,272 |
2,073 |
(37) |
8,146 |
||
Net Interest |
(198) |
155 |
748 |
14 |
10 |
||
Exceptionals/Other |
0 |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(2,427) |
5,427 |
7,550 |
5,838 |
8,739 |
Profit Before Tax (reported) |
|
|
(2,427) |
5,427 |
2,821 |
(22) |
8,156 |
Tax |
(19) |
(45) |
(5) |
0 |
(245) |
||
Deferred tax |
0 |
468 |
3,417 |
0 |
0 |
||
Profit After Tax (norm) |
(2,445) |
5,850 |
10,962 |
5,838 |
8,495 |
||
Profit After Tax (reported) |
(2,445) |
5,850 |
6,233 |
(22) |
7,912 |
||
Average Number of Shares Outstanding (m) |
10.5 |
10.5 |
13.1 |
13.3 |
13.4 |
||
EPS - normalised (PLN) |
|
|
(0.23) |
0.56 |
0.84 |
0.44 |
0.63 |
EPS - reported (PLN) |
|
|
(0.23) |
0.56 |
0.48 |
(0.00) |
0.59 |
Dividend per share (PLN) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
7,067 |
9,494 |
16,718 |
18,279 |
17,716 |
Intangible Assets |
282 |
331 |
2,274 |
2,274 |
2,274 |
||
Tangible Assets |
4,932 |
6,845 |
8,597 |
10,158 |
9,595 |
||
Other |
1,854 |
2,318 |
5,847 |
5,847 |
5,847 |
||
Current Assets |
|
|
11,191 |
17,310 |
48,524 |
40,639 |
48,332 |
Stocks |
391 |
706 |
1,174 |
1,158 |
1,142 |
||
Debtors |
5,161 |
10,314 |
17,961 |
17,961 |
17,961 |
||
Cash |
5,418 |
4,878 |
28,807 |
20,937 |
28,646 |
||
Other |
221 |
1,411 |
582 |
582 |
582 |
||
Current Liabilities |
|
|
(11,401) |
(15,271) |
(16,319) |
(16,315) |
(16,560) |
Creditors |
(3,481) |
(6,055) |
(3,927) |
(3,927) |
(3,927) |
||
Provisions |
(2,104) |
(2,801) |
(3,327) |
(3,327) |
(3,327) |
||
Deferred revenues |
(5,455) |
(4,617) |
(7,384) |
(7,384) |
(7,384) |
||
Short term borrowings |
(161) |
(91) |
(33) |
(33) |
(33) |
||
Other |
(200) |
(1,708) |
(1,648) |
(1,643) |
(1,888) |
||
Long Term Liabilities |
|
|
(3,454) |
(2,278) |
(2,043) |
(2,043) |
(2,043) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Deferred revenues |
(3,222) |
(2,010) |
(1,513) |
(1,513) |
(1,513) |
||
Other long term liabilities |
(232) |
(268) |
(529) |
(529) |
(529) |
||
Net Assets |
|
|
3,403 |
9,254 |
46,880 |
40,561 |
47,445 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(7,198) |
(4,902) |
(16,430) |
(18,288) |
(4,987) |
Net Interest |
0 |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
(4) |
0 |
||
Capex |
(2,167) |
(3,610) |
(5,190) |
(5,000) |
(3,500) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
0 |
0 |
27,314 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other (incl. subsidies) |
9,567 |
7,972 |
18,354 |
15,424 |
16,195 |
||
Net Cash Flow |
202 |
(540) |
24,049 |
(7,868) |
7,708 |
||
Opening net debt/(cash) |
|
|
(5,192) |
(5,257) |
(4,787) |
(28,773) |
(20,904) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
0 |
||
Other |
(137) |
71 |
(63) |
(1) |
0 |
||
Closing net debt/(cash) |
|
|
(5,257) |
(4,787) |
(28,773) |
(20,904) |
(28,612) |
Source: Edison Investment Research, Selvita
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