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Research: Healthcare
Following its successful IPO in May, Apontis’s maiden results highlight that the expansion of its single pill franchise continues at pace and should continue to provide high double-digit sales growth. These pills are combinations of commonly co-prescribed generic drugs that have been reformulated into one branded pill. We believe an increasing mix of these higher-margin single pills will improve profitability. Apontis’s shares have appreciated since they were initially priced at €19.0/share (up c 16%) and the company has a market cap of €187m with an EV of c €157m.
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Apontis Pharma |
Solid results following a successful IPO
Pharma & biotech |
Scale research report - Flash
24 August 2021 |
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Following its successful IPO in May, Apontis’s maiden results highlight that the expansion of its single pill franchise continues at pace and should continue to provide high double-digit sales growth. These pills are combinations of commonly co-prescribed generic drugs that have been reformulated into one branded pill. We believe an increasing mix of these higher-margin single pills will improve profitability. Apontis’s shares have appreciated since they were initially priced at €19.0/share (up c 16%) and the company has a market cap of €187m with an EV of c €157m.
Single pill franchise continues to grow at pace
During H121, revenues grew by 36% to €24.0m, primarily driven by single pill sales which grew 83% to €14.0m. Apontis continues to benefit from prescriber and payor adoption of its single pills, with AXA Health Insurance recommending its antihypertensives to policy holders during the period. Single pills represented 58% of the revenue mix and margins are improving as a result, with the adjusted EBITDA margin up at 11.8% (H120: -8.1%). Substantial investment in its single pill portfolio can be expected over the mid-term to sustain growth momentum, and c €20m of the IPO proceeds are ear-marked for this purpose. Following the IPO, the company is now debt-free with cash of €30.5m at 30 June.
Promising mid-term outlook
Management has guided that based on its existing and developmental portfolio, single pill sales could grow by c €100m from a base of €19.0m in 2020. Assuming these are fully realised by end-2030 would imply a c 20% sales CAGR. An increasing mix of these higher-margin products (>70% gross) should enable it to hit its mid-term group EBITDA target of 30%. Despite being lower margin, co-marketing agreements with AstraZeneca and Novartis for several respiratory and diabetes drugs clearly offer synergies to its single pills and ultimately provide an entry point for its c 130 sales reps, who market to c 23k physicians in Germany.
Valuation: High growth and an enticing margin story
Based on revenue expectations for FY21 (consensus: €49.3m; management: €48.5m) Apontis currently trades at c 3.2x EV/sales, a slight discount to the peer average of c 3.6x. Based on FY21 adjusted EBITDA it trades at c 39x (consensus: €4.0m) or c 28x EV/EBITDA (management: €5.5m), a premium to the peer average of c 14x. Recognition of its double-digit sales growth potential, coupled with the potential for a strong margin story, should continue to underpin share momentum.
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Consensus estimates
Source: Refinitiv |
Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.
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Research: Healthcare
BerGenBio (BGBIO) has announced the appointment of a new chief executive officer (CEO), Martin Olin, with effect from 8 September 2021. Martin Olin has more than two decades of executive experience in the pharmaceutical and biotechnology industry and previously served as CEO of Symphogen, a clinical-stage biotech developing monoclonal antibody based treatments for a variety of cancers, prior to its acquisition by Servier in 2020. While the timing of this announcement does come as a surprise, we do not expect any disruptions to the current business strategy which the board has always been supportive of. Our valuation of BGBIO is unchanged at NOK4.91bn or NOK 55.8/share.