ASIT Biotech’s H1 results statement included an outline of its preparations for the confirmatory Phase III study of its short-course gp-ASIT+ for grass pollen allergy, including the appointment of a single CRO. ASIT’s H118 operating loss was €5.4m, within which R&D comprised €4.5m. End of June net cash of €13.0m and the July convertible bond issue leave ASIT comfortably funded through 2020 in our model.
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ASIT biotech |
Setting the stage for the confirmatory Phase III |
H118 results |
Healthcare equipment and services |
27 September 2018 |
Share price performance
Business description
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ASIT biotech is a research client of Edison Investment Research Limited |
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ASIT Biotech’s H1 results statement included an outline of its preparations for the confirmatory Phase III study of its short-course gp-ASIT+ for grass pollen allergy, including the appointment of a single CRO. ASIT’s H118 operating loss was €5.4m, within which R&D comprised €4.5m. End of June net cash of €13.0m and the July convertible bond issue leave ASIT comfortably funded through 2020 in our model.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0 |
(12.0) |
(0.9) |
0.0 |
N/A |
N/A |
12/18e |
0 |
(13.3) |
(0.9) |
0.0 |
N/A |
N/A |
12/19e |
0 |
(16.1) |
(0.9) |
0.0 |
N/A |
N/A |
12/20e |
0 |
(6.2) |
(0.3) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are both as reported.
H118 results bolstered by recent fund-raising
Operating losses of €5.4m in H118 (versus €6.8m in H117) were predominantly outlays on R&D (€4.5m, or 83% of operating loss) and G&A (€1.3m), and were countered by other operating (grant) income of €0.4m (versus €0.3m in H117). The end of June gross cash balance was €13.5m (€2.1m at end-2017), bolstered by the capital increases and the more recent convertible bond issue, which brought the total raised in the past 12 months to c €25m.
Enhanced confirmatory Phase III design
ASIT has announced improvements to the design of the 600-patient ABT011 confirmatory Phase III study for grass pollen-allergies. It has appointed a single CRO with significant experience of respiratory diseases. The CRO will select more centres and those with a recent history of high pollen counts. The Phase III protocol also limits the number of patients that can be recruited at a single site. This should counter over-recruitment at a single centre during a mild pollen season, as was experienced in the first Phase III study.
Valuation hardly changed
We have updated the cash and share count for the H1 results and increased our forecast of R&D costs in 2018 and 2019 to reflect the investment in the gp-ASIT+, hdm-ASIT+ and pnt-ASIT+ programmes announced at the H118 results. We note the recent €12m convertible bond issue results in 20 equal monthly cash payments (which started in July) and up to a further €4m could be raised by the end of 2019 through exercise of warrants, potentially adding a degree of volatility in the share price. We include an illustrative €7m debt as a place-holder for the expected licensing transaction for gp-ASIT+ ex-Europe in 2020. Overall, our risk-adjusted NPV valuation is lowered slightly from €121m to €118m, with the per-share value dropping from €7.4 to €6.7, taking into account both the higher number of shares in issue and the increased R&D costs.
Exhibit 1: Financial Summary
|
|
|
EUR ('000) |
2015 |
2016 |
2017 |
2018e |
2019e |
2020e |
Year end 31 December |
|
|
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|
INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
4 |
0 |
0 |
0 |
0 |
0 |
Cost of Sales |
|
|
|
(3) |
0 |
0 |
0 |
0 |
0 |
Gross Profit |
|
|
|
1 |
0 |
0 |
0 |
0 |
0 |
General and Administrative Expenses |
|
(947) |
(1,822) |
(1,676) |
(2,547) |
(2,522) |
(2,497) |
||
Research and Development Expenses |
|
(6,691) |
(12,123) |
(10,903) |
(11,500) |
(14,480) |
(4,520) |
||
Other Operating Income |
|
|
(3) |
1,667 |
604 |
789 |
829 |
870 |
|
Reported operating profit |
|
|
(7,640) |
(12,278) |
(11,975) |
(13,258) |
(16,173) |
(6,146) |
|
Net Interest |
|
|
|
(75) |
(60) |
(9) |
(40) |
113 |
(49) |
Profit before tax (as reported) |
|
|
(7,715) |
(12,338) |
(11,984) |
(13,298) |
(16,060) |
(6,196) |
|
Reported tax |
|
|
|
0 |
(1) |
(2) |
(1) |
3 |
1,859 |
Profit after tax (reported) |
|
|
(7,715) |
(12,339) |
(11,986) |
(13,298) |
(16,057) |
(4,337) |
|
Minority interests |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
|
Net income (reported) |
|
|
(7,715) |
(12,339) |
(11,986) |
(13,298) |
(16,057) |
(4,337) |
|
|
|
|
|
|
|
|
|
|
|
Basic average number of shares outstanding |
|
8,504 |
11,219 |
12,806 |
15,694 |
17,507 |
17,507 |
||
EPS - basic, as reported (EUR) |
|
(0.91) |
(1.10) |
(0.94) |
(0.85) |
(0.92) |
(0.25) |
||
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
Non Current Assets |
|
|
506 |
1,770 |
1,837 |
2,008 |
2,136 |
2,044 |
|
Property Plant and equipment, net |
|
494 |
736 |
691 |
693 |
821 |
729 |
||
Other intangible assets |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
|
Other Non Current Assets |
|
|
12 |
1,034 |
1,146 |
1,315 |
1,315 |
1,315 |
|
Current Assets |
|
|
4,968 |
13,785 |
2,448 |
9,851 |
(126) |
9,987 |
|
Cash and cash equivalents |
|
|
4,621 |
13,387 |
2,126 |
9,598 |
(379) |
9,734 |
|
Accounts receivable |
|
|
2 |
3 |
0 |
0 |
0 |
0 |
|
Inventories |
|
|
|
11 |
0 |
0 |
0 |
0 |
0 |
Other current assets |
|
|
334 |
395 |
322 |
253 |
253 |
253 |
|
Current Liabilities |
|
|
6,332 |
2,004 |
2,654 |
5,286 |
4,294 |
2,853 |
|
Accounts payable |
|
|
1,611 |
1,707 |
1,264 |
3,444 |
2,452 |
1,011 |
|
Short term debt and borrowings |
|
4,232 |
12 |
34 |
38 |
38 |
38 |
||
Other current liabilities |
|
|
489 |
285 |
1,356 |
1,804 |
1,804 |
1,804 |
|
Non Current Liabilities |
|
|
0 |
419 |
432 |
446 |
446 |
7,446 |
|
Loans and borrowings |
|
|
0 |
419 |
432 |
446 |
446 |
7,446 |
|
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
|
Equity |
|
|
|
(858) |
13,132 |
1,199 |
6,126 |
(2,731) |
(5,268) |
Common stock / Capital |
|
|
11,625 |
17,506 |
9,989 |
13,125 |
13,125 |
13,125 |
|
Additional paid-in capital / Share premium |
|
0 |
21,957 |
21,957 |
26,958 |
18,101 |
15,564 |
||
Other reserves and surplus |
|
|
(12,483) |
(24,229) |
(28,645) |
(33,957) |
(33,957) |
(33,957) |
|
Other Equity |
|
|
|
0 |
(2,102) |
(2,102) |
0 |
0 |
0 |
CASH FLOW |
|
|
|
|
|
|
|
|
|
Cash Flow from Operations |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(7,715) |
(12,339) |
(11,986) |
(13,298) |
(16,057) |
(4,337) |
|
Depreciation and Amortization |
|
|
80 |
141 |
205 |
176 |
196 |
214 |
|
Interest income/expense |
|
|
75 |
60 |
9 |
40 |
(113) |
49 |
|
Stock-based compensation |
|
|
18 |
0 |
54 |
0 |
0 |
0 |
|
Non Cash Adjustments |
|
|
0 |
11 |
(492) |
0 |
0 |
0 |
|
(Increase) decrease in inventories |
|
3 |
0 |
0 |
0 |
0 |
0 |
||
(Increase) decrease in trade receivables |
|
(819) |
(62) |
74 |
0 |
0 |
0 |
||
(Increase) decrease in other current assets |
|
0 |
(1,016) |
(112) |
69 |
0 |
0 |
||
Increase (decrease) in trade payables |
|
751 |
(492) |
(586) |
2,180 |
(992) |
(1,441) |
||
Net cash used in Operating activities |
|
(7,606) |
(13,697) |
(12,834) |
(10,833) |
(16,966) |
(5,515) |
||
Cash Flow from Investing |
|
|
|
|
|
|
|
|
|
Purchases of fixed assets |
|
|
(372) |
(383) |
(161) |
(265) |
(323) |
(123) |
|
Other Investing Activities |
|
|
1 |
(6) |
0 |
0 |
0 |
0 |
|
Net cash used in Investing activities |
|
(371) |
(389) |
(161) |
(265) |
(323) |
(123) |
||
Cash Flow from Financing |
|
|
|
|
|
|
|
|
|
Change in Debt |
|
|
4,130 |
0 |
0 |
0 |
0 |
7,000 |
|
Change in Capital Stock |
|
|
0 |
22,199 |
0 |
16,900 |
7,200 |
1,800 |
|
Interest paid |
|
|
|
(6) |
(204) |
(10) |
(42) |
(24) |
(24) |
Other Financing Activities |
|
|
33 |
857 |
1,743 |
2 |
137 |
(25) |
|
Net cash used in Financing activities |
|
4,157 |
22,852 |
1,733 |
16,860 |
7,313 |
8,751 |
||
Net Changes in Cash and Cash Equivalent |
|
(3,820) |
8,766 |
(11,262) |
5,761 |
(9,976) |
3,113 |
||
Net cash (debt) at the beginning of the period |
|
8,441 |
4,621 |
12,968 |
1,694 |
9,152 |
(825) |
||
Net cash (debt) at the end of the period |
|
4,621 |
12,968 |
1,694 |
9,152 |
(825) |
2,288 |
||
Source: Company accounts, Edison Investment Research |
|
|
|
|
|
|
|
||
|
|
While volume growth is being achieved in several divisions, some of the factors that affected H1 trading – most notably higher input costs – have not receded as quickly as anticipated. Underlying operational improvements are happening but have not been enough to offset these pressures to date. We have lowered FY18 earnings expectations sharply – slowing the rate of net debt reduction a little – with a flat DPS profile now.