NeuroVive Pharmaceutical — Several R&D events within cash reach

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Research: Healthcare

NeuroVive Pharmaceutical — Several R&D events within cash reach

The combined net proceeds of SEK108m from a rights issue and direct placement completed in Q119 ensure NeuroVive Pharmaceutical’s operations will be funded well into 2020. Potential near-term share price catalysts include initial results from the KL1333 Phase Ia/b, a non-dilutive financing solution to enable the start of the NeuroSTAT Phase II clinical trial, the publication of in vivo data for NV354 and the an out-licensing of NV556. Our updated valuation is slightly higher at SEK1.55bn or SEK8.3/share.

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Healthcare

NeuroVive Pharmaceutical

Several R&D events within cash reach

R&D update

Pharma & biotech

12 June 2019

Price

SEK1.21

Market cap

SEK225m

SEK9.40/US$

Net cash (SEKm) at end-Q119

113.3

Shares in issue

186.0m

Free float

95%

Code

NVP

Primary exchange

Nasdaq Stockholm

Secondary exchange

OTCQX

Share price performance

%

1m

3m

12m

Abs

2.7

(13.3)

(58.1)

Rel (local)

1.8

(16.2)

(59.7)

52-week high/low

SEK5.06

SEK1.16

Business description

NeuroVive Pharmaceutical is a Swedish biopharmaceutical company with deep expertise in mitochondrial medicine. It has a diversified portfolio in terms of indications and employs a dual strategy: it develops a core portfolio of assets for orphan diseases and seeks to out-license proprietary products for non-orphan indications. NeuroSTAT (neurotrauma, Phase IIb ready) and KL1333 (genetic mitochondrial diseases) are the most advanced assets.

Next events

Initial results from Phase Ia/b with KL1333

H219

Initiation of NeuroSTAT Phase II

2019

NV354 in vivo data

2019

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Alice Nettleton

+44 (0)20 3077 5700

NeuroVive Pharmaceutical is a research client of Edison Investment Research Limited

The combined net proceeds of SEK108m from a rights issue and direct placement completed in Q119 ensure NeuroVive Pharmaceutical’s operations will be funded well into 2020. Potential near-term share price catalysts include initial results from the KL1333 Phase Ia/b, a non-dilutive financing solution to enable the start of the NeuroSTAT Phase II clinical trial, the publication of in vivo data for NV354 and the an out-licensing of NV556. Our updated valuation is slightly higher at SEK1.55bn or SEK8.3/share.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/17

0.6

(70.1)

(1.49)

0.0

N/A

N/A

12/18

2.5

(68.8)

(0.94)

0.0

N/A

N/A

12/19e

1.5

(92.0)

(0.64)

0.0

N/A

N/A

12/20e

1.5

(115.0)

(0.65)

0.0

N/A

N/A

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

KL1333 trial to drive R&D costs; funded into 2020

The company reported a Q119 operating loss of SEK13.8m versus SEK13.0m a year ago and in line with our expectations. Q119 R&D costs were SEK6.1m, but we expect this to increase now that the KL1333 Phase Ia/b trial is underway. Q119 personnel costs of SEK3.5m were in line with Q118. Following the rights issue (SEK82.0m net) completed in February 2019 and the direct issue (SEK26.0m net) in March 2019, NeuroVive’s cash position was SEK113.3m at the end of Q119, which should fund the company’s operations well into 2020.

Expected near-term newsflow

The initial results from the Phase Ia/b study testing KL1333, in development for mitochondrial diseases, should be the key catalyst achievable with the new funds. The trial has already enrolled the first healthy volunteer and initial data are expected in H219. In addition, following the FDA’s approval of an investigation new drug application (IND) for NeuroSTAT, NeuroVive plans to initiate a proof-of-concept Phase II trial in traumatic brain injury (TBI), where there is no specific, approved therapeutic treatment. The company will require additional funding to initiate the trial and this could come from non-dilutive funding or a partnership. NV354 (selected compound from the NVP015 programme) is one of the preclinical projects also gaining pace and could enter the clinic in 2020.

Valuation: SEK1.55bn or SEK8.3/share

Our updated, risk-adjusted NPV valuation of NeuroVive is marginally higher at SEK1.55bn or SEK8.3/share. This is due to rolling our model forward and a positive forex effect. We leave our financial forecasts and R&D assumptions virtually unchanged, as described in our initiation report and last outlook note.

Highlights of the most advanced products in R&D

KL1333 – Phase Ia/b has started

The funds raised in Q119 allowed NeuroVive to initiate the next steps in the clinical development of its lead clinical assets, KL1333 and NeuroSTAT, and the preclinical asset NV354. In March 2019, the first healthy volunteer was enrolled in the Phase Ia/b study testing KL1333 for mitochondrial diseases, such as MELAS, PEO, KSS and Pearson’s syndrome. KL1333, a small molecule NAD+ modulator, is intended for oral use in a variety of mitochondrial diseases. The drug was tested in healthy volunteers in a Phase I trial (single ascending dose) by NeuroVive’s partner (licensor) Yungjin Pharm in South Korea and positive safety and tolerability results were reported in May 2018. We believe this diminishes the likelihood of negative surprises from NeuroVive’s own Phase Ia/b trial with KL1333, although additional interesting early efficacy insights could be obtained from patient data. NeuroVive’s own trial will include multiple ascending doses in healthy volunteers and patients. Initial data from healthy volunteers are expected by end-2019 and hence are achievable with current funding.

KL1333 is a novel NAD+ modulator, which interacts with NQO1 (NAD(P)H:quinone oxidoreductase 1) as a substrate and regulates the levels of nicotinamide adenine dinucleotide (NAD+) (Kang-Sik Seo et al, 2018). NAD+ is a coenzyme necessary for many cellular metabolism processes including mitochondrial biogenesis and function, as well as the production of ATP in the electron transport chain. The ability to increase the level of NAD+ in patients could therefore improve mitochondrial function in various mitochondrial diseases.

NeuroSTAT – IND approved

NeuroSTAT is another of NeuroVive’s leading clinical-stage drug candidates. NeuroSTAT is an innovative, patent-protected formulation of ciclosporin without the use of Cremophor or ethanol. There is still no neuroprotective treatment available for TBI. The most advanced dataset with this drug was generated in the Phase IIa Copenhagen Head Injury Ciclosporin (CHIC) study (n=20). In October 2018, NeuroVive, in collaboration with researchers at the University of Florida released a biomarker analysis from this study, which included four novel biomarkers from cerebrospinal fluid samples: GFAP (Glial fibrillary acidic protein), UCH-L1 (Ubiquitin carboxy-terminal hydrolase L1), NF-L (Neurofilament Light) and Tau. The administration of NeuroSTAT had a positive longitudinal effect on the levels of these biomarkers potentially alleviating secondary brain injury. The CHIC study was complemented by an experimental large animal (piglets) study, which showed a 35% reduction of brain injury volume in TBI. The study was conducted in collaboration with the University of Pennsylvania, US (published Karlsson et al, 2018).

The CHIC study was open-label and non-controlled, therefore the next step is a proof-of-concept Phase II clinical trial. To this end, in May 2019 NeuroVive announced that the FDA had approved an investigational new drug application, which enables the initiation of clinical studies with NeuroSTAT in the US. Study design details have not been announced yet. Additional funding will be required to initiate the Phase II efficacy trial, which management indicated could be carried out via non-dilutive funding or a partnership.

NV354 – external validation from BridgeBio

NV354 is the selected preclinical lead compound in the NVP015 program, which is focusing on the development of succinate prodrugs targeting complex I deficiency. Mitochondrial complex I deficiency is the most prevalent defect in the respiratory chain in paediatric mitochondrial diseases (around 50%) and clinically presents as a group of syndromes, which can be caused by changes in either the nuclear or mitochondrial genome. The next steps with NV354, expected in 2019, are further in vivo dose-response data and the initiation of toxicology studies.

As part of the NPV015 discovery programme, NeuroVive evaluated many other succinate prodrugs and, on June 2018, the company announced that it had out-licensed a subset of these prodrugs to private biotech BridgeBio, based in California, US. BridgeBio plans to develop these compounds for the localised treatment of Leber’s hereditary optic neuropathy (LHON) in its new subsidiary Fortify Therapeutics. The total deal value could reach $60m (a ‘limited’ amount will be provided upfront for research funding). We believe this deal provides external validation of the science behind the NVP015 programme.

We reviewed the remainder of NeuroVive’s R&D pipeline in our last outlook report.

Exhibit 1: NeuroVive’s R&D pipeline

Source: NeuroVive

Valuation

Our updated, risk-adjusted NPV valuation of NeuroVive is marginally higher at SEK1.55bn or SEK8.3/share vs SEK1.51bn or SEK8.1/share previously. This is due to rolling the model forward and the positive forex effect. We maintain our financial forecasts and R&D assumptions as described in our initiation report and last outlook note. As previously, in our valuation we include clinical-stage NeuroSTAT (TBI) and KL1333 (genetic mitochondrial disorders), as well as advanced preclinical products. We continue to exclude NVP025 (mitochondrial myopathy) and NVP022 (NASH) as both remain at an early stage.

Exhibit 2: NeuroVive sum-of-the parts valuation

Product

Launch

Peak sales*
($m)

NPV
($m)

NPV/share
($)

Probability

rNPV
($m)

rNPV/share
($)

NeuroSTAT

2025

454

297.0

1.6

15%

35.9

0.2

KL1333

2024

574

608.3

3.3

10%

57.1

0.3

NVP015

2027

875

466.5

2.5

5%

20.8

0.1

NV556

2027

1,743

143.5

0.8

8%

31.2

0.2

NVP024

2029

730

32.0

0.2

3%

7.7

0.0

Net cash, last reported

12.1

0.1

100%

12.1

0.1

Valuation

 

 

1,559.4

8.4

164.8

0.9

SEKm

SEK

SEKm

SEK

NeuroSTAT

2,792.0

15.0

15%

337.8

1.8

KL1333

5,718.4

30.8

10%

536.9

2.9

NVP015

4,385.1

23.6

5%

195.4

1.1

NV556

1,348.9

7.3

8%

293.7

1.6

NVP024

300.8

1.6

3%

72.2

0.4

Net cash, last reported

113.3

0.6

100%

113.3

0.6

Valuation

14,658.4

78.8

1,549.2

8.3

Source: Edison Investment Research. Note: *Peak sales reached six years after launch. WACC = 12.5% for product valuations.

Exhibit 3: Financial summary

SEK000s

 

2017

2018

2019e

2020e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

585

2,466

1,500

1,500

Cost of Sales

0

0

0

0

Gross Profit

585

2,466

1,500

1,500

Research and development

(27,926)

(37,922)

(59,533)

(80,840)

EBITDA

 

 

(67,897)

(66,675)

(91,847)

(114,867)

Operating Profit (before amort. and except.)

 

 

(69,492)

(68,589)

(91,995)

(114,999)

Intangible Amortisation

0

0

0

0

Exceptionals

(1,595)

(4,771)

0

0

Other

56

66

0

0

Operating Profit

(71,031)

(73,294)

(91,995)

(114,999)

Net Interest

(571)

(200)

0

0

Profit Before Tax (norm)

 

 

(70,063)

(68,789)

(91,995)

(114,999)

Profit Before Tax (reported)

 

 

(71,602)

(73,494)

(91,995)

(114,999)

Tax

0

0

0

0

Profit After Tax (norm)

(70,007)

(68,723)

(91,995)

(114,999)

Profit After Tax (reported)

(66,727)

(68,373)

(86,874)

(109,878)

Average Number of Shares Outstanding (m)

50.2

78.5

152.8

186.0

EPS - normalised (SEK)

 

 

(1.49)

(0.94)

(0.64)

(0.65)

EPS - normalised fully diluted (SEK)

 

 

(1.49)

(0.94)

(0.64)

(0.65)

EPS - reported (SEK)

 

 

(1.33)

(0.87)

(0.57)

(0.59)

Dividend per share (SEK)

0.0

0.0

0.0

0.0

Gross Margin (%)

100.0

100.0

100.0

100.0

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

 

 

87,579

86,681

86,681

86,681

Intangible Assets

74,315

73,440

73,440

73,440

Tangible Assets

162

140

140

140

Investments

13,102

13,101

13,101

13,101

Current Assets

 

 

30,560

27,383

43,539

1,432

Stocks

0

0

0

0

Debtors

0

0

0

0

Cash

28,992

25,951

42,107

0

Other

1,568

1,432

1,432

1,432

Current Liabilities

 

 

(14,259)

(18,296)

(18,296)

(18,296)

Creditors

(14,259)

(18,296)

(18,296)

(18,296)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

 

0

0

0

(72,830)

Long term borrowings

0

0

0

(72,830)

Other long term liabilities

0

0

0

0

Net Assets

 

 

103,880

95,768

111,924

(3,013)

CASH FLOW

Operating Cash Flow

 

 

(58,039)

(63,630)

(91,847)

(114,867)

Net Interest

(84)

(199)

0

0

Tax

0

0

0

0

Capex

(40)

(82)

(87)

(70)

Acquisitions/disposals*

(11,035)

0

0

0

Financing

9,031

64,656

108,090

0

Other

(4,092)

(3,786)

0

0

Dividends

0

0

0

0

Net Cash Flow

(64,259)

(3,041)

16,156

(114,937)

Opening net debt/(cash)

 

 

(93,251)

(28,992)

(25,951)

(42,107)

HP finance leases initiated

0

0

0

0

Other

0

(0)

0

(0)

Closing net debt/(cash)

 

 

(28,992)

(25,951)

(42,107)

72,830

Source: NeuroVive accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by NeuroVive Pharmaceutical and prepared and issued by Edison, in consideration of a fee payable by NeuroVive Pharmaceutical. Edison Investment Research standard fees are £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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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

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.

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1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

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Level 4, Office 1205

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General disclaimer and copyright

This report has been commissioned by NeuroVive Pharmaceutical and prepared and issued by Edison, in consideration of a fee payable by NeuroVive Pharmaceutical. Edison Investment Research standard fees are £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

1,185 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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StatPro Group — Bolt-on of an ESG research and index business

StatPro has acquired ECPI, a small private Italian environmental, social and governance (ESG) research and index business, from its management for a total consideration of c €2.9m (c £2.6m). While the deal is small, we believe there is significant potential to add value by cross-selling the products to StatPro’s large global client base. In our view, the shares continue to look undervalued, given the group’s c £56m recurring revenue book and the attractive rating (c 14x FY20e), especially in light of the active M&A backdrop in the financial software sector.

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