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Research: Healthcare
Pixium provided a minor business update on 2 June, indicating that it is seeking to capitalise on increased interest from US investors in recent months and that it has hired a US investment bank to advise on possible options, including a mechanism to list on the Nasdaq. The core operational focus remains on advancing the Prima Bionic Vision system (BVS) through the ongoing PRIMAvera pivotal EU study, with top-line data now guided for early 2023 (from late 2022 previously), with a potential European launch in late 2023. We have slightly pushed back our commercialisation forecasts and moderated our pricing assumptions, resulting in a new rNPV of €122.5m.
Pixium Vision |
Signalling an intent to access US investors |
Business update |
Healthcare equipment |
8 June 2021 |
Share price performance
Business description
Next events
Analysts
Pixium Vision is a research client of Edison Investment Research Limited |
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Pixium provided a minor business update on 2 June, indicating that it is seeking to capitalise on increased interest from US investors in recent months and that it has hired a US investment bank to advise on possible options, including a mechanism to list on the Nasdaq. The core operational focus remains on advancing the Prima Bionic Vision system (BVS) through the ongoing PRIMAvera pivotal EU study, with top-line data now guided for early 2023 (from late 2022 previously), with a potential European launch in late 2023. We have slightly pushed back our commercialisation forecasts and moderated our pricing assumptions, resulting in a new rNPV of €122.5m.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
1.8 |
(9.8) |
(0.44) |
0.0 |
N/A |
N/A |
12/20 |
2.1 |
(8.7) |
(0.26) |
0.0 |
N/A |
N/A |
12/21e |
2.4 |
(10.7) |
(0.23) |
0.0 |
N/A |
N/A |
12/22e |
1.6 |
(15.5) |
(0.32) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Still aiming for European launch before YE23
Pixium began the PRIMAvera European pivotal trial for Prima in late 2020 and it announced the first successful implantation in April 2021. The company now expects to release top-line data in early 2023, aiming for a CE mark submission in Europe in H123, leading to a potential European approval and launch in late 2023. This new timing for top-line PRIMAvera data is slightly pushed back from the prior guidance of late 2022.
More conservative stance on Prima pricing
We have revised our net Prima device pricing assumptions lower given the company’s recent presentations where management signalled that device pricing at launch could potentially be $75,000. We continue to expect a higher price point than this, but have revised our at-launch pricing projections from €95,000 and $157,000 in Europe and the US, respectively, to €80,000 and $112,000, respectively. Given the changes and minor revisions to ramp estimates and forex, we now estimate 2028 net global sales of €694m, versus €929m, previously.
Valuation
We now obtain an rNPV of €122.5m (from €142.8m, previously), with the largest driver being adjustments to our Prima pricing and timing estimates. We believe that Pixium’s current funds on hand (€9.7m at Q121) should last into Q122, and assume it will need to raise €31.8m (from €33.7m, previously) in additional funds before year-end 2023, modelled as illustrative long-term debt, to bring Prima to commercial launch. We believe the company’s recent hiring of a US investment bank is well-timed given the upcoming near-term funding need, and we believe the company is looking at multiple possibilities to extend its runway and fund the PRIMAvera trial and potentially enable a US market listing. We believe a US listing likely would expand Pixium’s access to capital as it may provide a wider pool of potential investors for future financing initiatives.
Pixium eyes US investors
Pixium announced a minor business update on 2 June, signalling its aim to capitalise on increased interest from US investors and potentially list on Nasdaq through its recent engagement of a US investment bank. We believe a US listing likely would expand Pixium’s access to capital as it may provide a wider pool of potential investors for future financing initiatives than Pixium’s current Euronext listing.
Prima on track for potential European launch before YE23
Pixium began the PRIMAvera European pivotal trial for Prima in late 2020 and it announced the first successful implantation in April 2021. The open-label, baseline-controlled, prospective, single-arm confirmatory trial is designed to enrol 38 patients, and the primary efficacy endpoint is the proportion of subjects with an improvement of visual acuity of logMAR 0.2 or more from baseline to 12 months and the primary safety endpoint is the number and severity of device and procedure related serious adverse events at 12 months follow-up. The company now expects to release top-line data in early 2023, aiming for a CE mark submission in Europe in H123, leading to a potential European approval and launch in late 2023. This new timing for top-line PRIMAvera data is slightly pushed back from the prior guidance of late 2022, but the potential European launch guidance is little changed from prior guidance of H223.
Pixium continues discussions with the FDA on a US pathway
Pixium remains in discussions with US regulators to explore the possibility of including or adding US sites to the PRIMAvera study such that the trial could potentially serve as a registration-enabling study for the US market. While discussions have been slower than expected due to the COVID-19 pandemic, the company is hopeful on obtaining better visibility on this consideration by YE21. Our baseline forecast continues to assume that the FDA will require a separate pivotal study to support US Premarket Approval (PMA) registration for the Prima BVS, but at minimum, we expect that PRIMAvera study data could be used to supplement or support the eventual US PMA application. Meanwhile, the US feasibility study remains underway, with top-line data guided for H222.
Our baseline estimate continues to assume a potential US launch of H225, but there continues to be a possibility that this could be brought forward if the FDA agrees to an approach that would allow the PRIMAvera trial to serve as a registration-enabling study in this market. Nonetheless, we continue to model that a separate US pivotal study will start implantations in H122, and that a US PMA and launch will occur in H225.
Revisions to Prima sales forecasts
Given the new guidance on the completion of the PRIMAvera study, we have slightly pushed back our Prima European launch forecasts by a quarter; we now expect launch in Europe in Q423 (from H223 previously). We have also revised our net Prima device pricing assumptions lower given the company’s recent presentations where management signalled that device pricing at launch could potentially be $75,000. We continue to expect a higher price point than this, but have revised our at-launch pricing projections from €95,000 and $157,000 in Europe and the US, respectively, to €80,000 and $112,000, respectively. Our lowered pricing estimate is partly offset by a reduced post-2030 annual sales decline rate in our model (20% vs 40%, previously), as we believe that our prior post-peak sales decline assumptions were likely too severe given that certain Prima patents will remain unexpired at this point and that there is no Dry-AMD therapeutic product in the development pipeline that, in our view, would materially dampen the incidence of late-stage geographic atrophy due to Dry-AMD by 2030–35 (in the US and Europe). We have also made minor changes in our ramp rate modelling assumptions between launch and revenue peak.
Exhibit 1: Financial forecasts for Prima in Dry-AMD
2023e |
2024e |
2025e |
2026e |
2027e |
2028e |
2029e |
|
Europe |
|||||||
EU patients with Dry AMD with GA (000) |
1,471 |
1,486 |
1,501 |
1,516 |
1,531 |
1,546 |
1,562 |
Percentage with 20/400 or worse visual acuity |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
Percentage meeting all Prima eligibility criteria |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
GA-AMD patients meeting all Prima eligibility criteria (000) |
66.2 |
66.9 |
67.5 |
68.2 |
68.9 |
69.6 |
70.3 |
Prima unit sales in EU |
94 |
644 |
1,505 |
2,810 |
4,016 |
4,816 |
4,894 |
Average revenue per treatment (€) |
80,000 |
81,103 |
82,719 |
84,330 |
85,994 |
87,677 |
89,430 |
Total EU revenue (€000) for PRIMA-AMD |
7,544 |
52,211 |
124,526 |
236,954 |
345,347 |
422,255 |
437,690 |
United States |
|||||||
US patients with Dry AMD with GA (000) |
1,156 |
1,168 |
1,179 |
1,191 |
1,203 |
1,215 |
1,227 |
Percentage with 20/400 or worse visual acuity |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
15.0% |
Percentage meeting all Prima eligibility criteria |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
30.0% |
GA-AMD patients meeting all Prima eligibility criteria (000) |
52.0 |
52.5 |
53.1 |
53.6 |
54.1 |
54.7 |
55.2 |
Prima unit sales in US |
- |
- |
186 |
762 |
1,705 |
2,809 |
3,724 |
Average revenue per treatment ($) |
N/A |
N/A |
112,000 |
113,557 |
115,783 |
118,047 |
120,359 |
Total US revenue ($000) for PRIMA-AMD |
- |
- |
20,792 |
86,505 |
197,454 |
331,626 |
448,195 |
Assumed $/€ rate |
1.22 |
1.22 |
1.22 |
1.22 |
1.22 |
1.22 |
1.22 |
Worldwide total revenue (€000) |
7,544 |
52,211 |
141,569 |
307,859 |
507,195 |
694,079 |
805,063 |
Source: Edison Investment Research
Financials
Pixium had a Q420 net cash position of €3.3m (€10.6m in gross cash and €7.2m gross debt), excluding €1.3m in lease liabilities. Since YE20, the company raised another €1.25m tranche from its ESGO financing facility, followed by two €1m tranches (announced in April), and converted about €1.28m of its outstanding ESGO debt into equity. Pixium reported Q121 gross cash of €9.7m and a Q121 operating cash burn rate of €3.6m, up from €2.5m in Q120 due to the start of the PRIMAvera trial and costs borne in relation of the proposed (and now terminated) business combination with Second Sight. On 8 April, Pixium received a $1m payment from Second Sight, but Pixium considers this payment insufficient to compensate the loss it has sustained due to Second Sight’s unilateral termination and plans to seek additional compensation through the Paris Commercial Court system.
We estimate Q121 net cash of c €0.5m (€9.7m gross cash offset by €9.2m estimated current gross debt), or €1.3m pro forma after including the April Second Sight payment. We believe that Pixium’s funds on hand should last into Q122. Our model assumes Pixium will need to raise €31.8m (from €33.7m, previously, given that €2m in new debt from the ESGO facility has been announced since our 7 April note) in additional funds before year-end 2023, modelled as illustrative long-term debt, to complete the PRIMAvera pivotal study, all EU-related regulatory and preparatory commercial activities and bring Prima to commercial launch. We expect part of this requirement will be fulfilled using the remaining (or unused) €3.0m in tranches from the ESGO funding facility. All in, we model a €9.3m funding raise in H221, €12.5m in 2022 and €10m in 2023. We believe the company’s recent hiring of a US investment bank is well-timed given the upcoming near-term funding need, and we believe the company is looking at multiple possibilities to extend its runway and potentially enable a US market listing.
Valuation
We now obtain an rNPV to €122.5m (from €142.8m, previously), with the largest driver of the change being adjustments to our Prima pricing estimates and launch timing forecasts, as cited above. We have made no significant local currency changes to our operating expense forecasts, but have adjusted our forex assumptions to $1.22/€ (from $1.18/€ previously). We have also adjusted the net cash component of our valuation, to reflect our Q121 pro forma net cash estimate of €1.3m (versus €2.1m, previously). After including net cash, we obtain an equity valuation of €123.9m, or €2.55 per share (vs €3.07 previously). The per-share valuation is also affected by increased shares outstanding compared to our prior note.
Exhibit 2: Pixium Vision rNPV assumptions
Product contribution |
Indication |
Status |
NPV |
Probability of success |
rNPV (€m) |
rNPV/ share (€) |
Launch year |
Peak sales (€m) in 2029 |
|
Prima (net of R&D and SG&A costs) in EU market |
Age-related macular degeneration with geographic atrophy |
Pivotal study |
596.3 |
25.00% |
142.3 |
2.93 |
Q423 |
438 |
|
Prima (net of R&D and SG&A costs) in US market |
Age-related macular degeneration with geographic atrophy |
Human feasibility trials |
339.0 |
20.00% |
67.5 |
1.39 |
H225 |
367 |
|
Net capex, NWC & taxes (Global) |
(349.4) |
(87.3) |
(1.80) |
||||||
Total |
586.0 |
122.5 |
2.52 |
||||||
Net cash (Q121e) pro forma including $1m Second Sight payment |
1.3 |
1.3 |
0.03 |
||||||
Total equity value |
587.3 |
123.9 |
2.55 |
||||||
FD shares outstanding (000) (31 May 2021) |
48,558 |
||||||||
Source: Edison Investment Research
Below we provide a sensitivity analysis demonstrating how our per-share valuation would be affected using different Prima pricing and probability of success assumptions (for Europe).
Exhibit 3: Pixium Vision per-share equity value (€) analysis based on European net Prima pricing (€) versus probability of success in Europe
70,000 |
75,000 |
80,000 |
85,000 |
90,000 |
|
15.0% |
1.20 |
1.31 |
1.43 |
1.54 |
1.60 |
20.0% |
1.68 |
1.84 |
1.99 |
2.14 |
2.21 |
25.0% |
2.17 |
2.36 |
2.55 |
2.74 |
2.83 |
30.0% |
2.66 |
2.89 |
3.12 |
3.34 |
3.46 |
35.0% |
3.15 |
3.42 |
3.68 |
3.95 |
4.08 |
Source: Edison Investment Research. Note: Left hand column represents European probability of success and top row represents European net Prima pricing at launch (€).
Exhibit 4: Financial summary
€(000) |
2017 |
2018 |
2019 |
2020e |
2021e |
2022e |
|||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
2,535 |
1,598 |
1,782 |
2,092 |
2,440 |
1,600 |
|
Cost of Sales |
(1,124) |
(41) |
0 |
0 |
0 |
0 |
|||
General & Administrative |
(5,324) |
(2,019) |
(3,572) |
(4,017) |
(3,800) |
(4,345) |
|||
Research & Development |
(7,817) |
(5,297) |
(6,563) |
(5,711) |
(8,400) |
(10,400) |
|||
EBITDA |
|
|
(11,731) |
(5,758) |
(8,352) |
(7,636) |
(9,760) |
(13,145) |
|
Depreciation |
(936) |
(677) |
(448) |
(366) |
(409) |
(497) |
|||
Operating Profit (before exceptionals) |
|
(12,666) |
(6,435) |
(8,801) |
(8,003) |
(10,169) |
(13,642) |
||
Exceptionals |
0 |
(5,859) |
(69) |
(448) |
0 |
0 |
|||
Operating Profit |
(12,666) |
(12,294) |
(8,870) |
(8,450) |
(10,169) |
(13,642) |
|||
Net Interest |
(876) |
(1,277) |
(1,006) |
(700) |
(554) |
(1,888) |
|||
Profit Before Tax (norm) |
|
|
(13,542) |
(7,712) |
(9,806) |
(8,703) |
(10,723) |
(15,530) |
|
Profit Before Tax (FRS 3) |
|
|
(13,542) |
(13,571) |
(9,876) |
(9,150) |
(10,723) |
(15,530) |
|
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Profit After Tax and minority interests (norm) |
(13,542) |
(7,712) |
(9,806) |
(8,703) |
(10,723) |
(15,530) |
|||
Profit After Tax and minority interests (FRS 3) |
(13,542) |
(13,571) |
(9,876) |
(9,150) |
(10,723) |
(15,530) |
|||
Average Number of Shares Outstanding (m) |
13.3 |
18.5 |
22.3 |
34.0 |
47.5 |
49.2 |
|||
EPS - normalised (€) |
|
|
(1.02) |
(0.42) |
(0.44) |
(0.26) |
(0.23) |
(0.32) |
|
EPS - normalised and fully diluted (€) |
|
(1.02) |
(0.42) |
(0.44) |
(0.26) |
(0.23) |
(0.32) |
||
EPS - (IFRS) (€) |
|
|
(1.02) |
(0.73) |
(0.44) |
(0.27) |
(0.23) |
(0.32) |
|
Dividend per share (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
9,649 |
3,666 |
4,507 |
3,411 |
3,226 |
2,772 |
|
Intangible Assets |
7,680 |
2,623 |
2,361 |
1,727 |
1,727 |
1,727 |
|||
Tangible Assets |
1,970 |
1,042 |
2,145 |
1,684 |
1,499 |
1,046 |
|||
Current Assets |
|
|
14,241 |
17,756 |
9,107 |
12,721 |
13,890 |
11,766 |
|
Cash |
10,532 |
15,629 |
6,792 |
10,566 |
11,650 |
9,527 |
|||
Other |
3,710 |
2,126 |
2,316 |
2,155 |
2,240 |
2,240 |
|||
Current Liabilities |
|
|
(2,752) |
(2,044) |
(2,880) |
(3,795) |
(2,559) |
(2,559) |
|
Creditors |
(2,752) |
(2,044) |
(2,880) |
(3,260) |
(2,023) |
(2,023) |
|||
Short term borrowings |
0 |
0 |
0 |
(536) |
(536) |
(536) |
|||
Long Term Liabilities |
|
|
(9,302) |
(8,023) |
(7,033) |
(7,851) |
(19,071) |
(31,571) |
|
Long term borrowings |
(9,130) |
(7,870) |
(5,787) |
(6,695) |
(17,915) |
(30,415) |
|||
Other long term liabilities |
(172) |
(153) |
(1,246) |
(1,157) |
(1,157) |
(1,157) |
|||
Net Assets |
|
|
11,836 |
11,355 |
3,700 |
4,485 |
(4,514) |
(19,592) |
|
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
(10,605) |
(6,174) |
(7,282) |
(6,206) |
(10,637) |
(12,692) |
|
Net Interest |
(876) |
(1,277) |
(1,006) |
(700) |
(554) |
(1,888) |
|||
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Net Operating Cash Flow |
(11,481) |
(7,450) |
(8,288) |
(6,906) |
(11,192) |
(14,580) |
|||
Capex |
(191) |
(31) |
(34) |
(82) |
(224) |
(44) |
|||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Financing |
519 |
14,068 |
2,034 |
9,055 |
1,280 |
0 |
|||
Net Cash Flow |
(11,153) |
6,587 |
(6,288) |
2,068 |
(10,136) |
(14,624) |
|||
Opening net debt/(cash) |
|
|
(12,911) |
(1,401) |
(7,760) |
(1,004) |
(3,336) |
6,800 |
|
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Other |
(357) |
(228) |
(468) |
264 |
0 |
0 |
|||
Closing net debt/(cash) |
|
|
(1,401) |
(7,760) |
(1,004) |
(3,336) |
6,800 |
21,424 |
|
Lease debt |
N/A |
N/A |
1,346 |
1,258 |
1,258 |
1,258 |
|||
Closing net debt/(cash) inclusive of IFRS16 lease debt |
(1,401) |
(7,760) |
342 |
(2,078) |
8,058 |
22,682 |
|||
Source: Company accounts, Edison Investment Research
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Research: Investment Companies
Finsbury Growth & Income Trust (FGT) is managed by Nick Train, one of the founding partners of boutique investment firm Lindsell Train. He is optimistic on the current outlook for UK equities, all the more so given several years of relative underperformance; in particular, the manager believes that global investors are underestimating the level of technological innovation within the UK corporate sector. While FGT’s relative performance has lagged that of its peers and the UK market in recent months, a period that followed positive COVID-19 vaccine news last November, Train has a very commendable long-term record. This has been achieved by following a buy-and-hold strategy, focusing on specific sectors and a select number of companies that he believes have superior long-term earnings and dividend growth potential as a result of their unique brands and franchises.