Currency in EUR
Last close As at 02/06/2023
EUR0.17
— 0.00 (0.60%)
Market capitalisation
EUR6m
Research: Healthcare
Quantum Genomics’ H122 results showed the company is on steady footing as it approaches a key inflection point. Top-line data from the Phase III FRESH study, investigating the use of firibastat in treatment-resistant hypertension (TRH), is expected to be presented at the American Heart Association (AHA) annual meeting on 7 November and, if positive, we expect data could form the basis of a global licensing deal. In H122, the company reported total revenues of €4.1m (including a €1.2m R&D tax credit), in line with our expectations. Lower total operating costs of €12.5m have led us to trim our FY22 loss before tax to €17.1m from €20.2m. With a net cash position at end-June 2022 of €16.5m, we see the company as funded to Q223, past key results from the FRESH trial and with time to negotiate a licensing deal. We value Quantum Genomics at €728.8m or €21.1 per share (previously €701.3m or €20.3 per share).
Quantum Genomics |
Steady sailing as FRESH readout approaches |
H122 update |
Pharma and biotech |
5 October 2022 |
Share price performance 54.
Business description
Next events
Analysts
Quantum Genomics is a research client of Edison Investment Research Limited |
Quantum Genomics’ H122 results showed the company is on steady footing as it approaches a key inflection point. Top-line data from the Phase III FRESH study, investigating the use of firibastat in treatment-resistant hypertension (TRH), is expected to be presented at the American Heart Association (AHA) annual meeting on 7 November and, if positive, we expect data could form the basis of a global licensing deal. In H122, the company reported total revenues of €4.1m (including a €1.2m R&D tax credit), in line with our expectations. Lower total operating costs of €12.5m have led us to trim our FY22 loss before tax to €17.1m from €20.2m. With a net cash position at end-June 2022 of €16.5m, we see the company as funded to Q223, past key results from the FRESH trial and with time to negotiate a licensing deal. We value Quantum Genomics at €728.8m or €21.1 per share (previously €701.3m or €20.3 per share).
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
3.98 |
(14.66) |
(0.72) |
0.0 |
N/A |
N/A |
12/21 |
6.16 |
(15.37) |
(0.58) |
0.0 |
N/A |
N/A |
12/22e |
8.25 |
(17.13) |
(0.53) |
0.0 |
N/A |
N/A |
12/23e |
54.91 |
33.84 |
0.97 |
0.0 |
3.0 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Major catalyst: FRESH top-line data
As a reminder, firibastat is in two Phase III trials for TRH (FRESH and REFRESH). Final data from the FRESH trial, expected to be presented at the AHA annual meeting on 7 November, will demonstrate whether firibastat can reduce blood pressure in TRH patients after 12 weeks of treatment. We expect a greater than 5mmHg reduction in blood pressure and a clean safety profile as a meaningful result in FRESH. Long-term data from the REFRESH trial (expected mid-2023) will be important in solidifying firibastat’s potential clinical utility.
Funded past FRESH readout
Given the clear unmet medical need in TRH, the data from FRESH, in our view, could provide the basis of a global licensing deal for firibastat. With net cash of €16.5m at end-H122, we see the company as funded well past the FRESH data readout, giving management considerable time in which to negotiate a licensing deal for firibastat. Considering H122 results, we have reduced our forecast loss before tax to €17.1m from €20.2m, largely due to a reduction in personnel expenses.
Valuation: €728.8m or €21.1 per share
We value Quantum Genomics at €728.8m or €21.1 per share (previously €701.3m or €20.3 per share). We have rolled our model forward and updated it for FX changes. We note the potential for considerable value uplift should FRESH data prove positive and will revisit our assumptions when these are reported. Our valuation reflects a net cash position of €16.5m at end-June 2022.
Exhibit 1: Financial summary
Accounts: IFRS, Yr end: December 31, €:000s |
|
|
2019 |
2020 |
2021 |
2022e |
2023e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
1,547 |
3,977 |
6,157 |
8,250 |
54,912 |
Cost of sales |
|
|
0 |
0 |
0 |
0 |
0 |
Gross profit |
|
|
1,547 |
3,977 |
6,157 |
8,250 |
54,912 |
Total operating expenses |
|
|
(11,420) |
(18,661) |
(23,251) |
(26,933) |
(22,613) |
Research and development expenses |
|
|
(4,861) |
(10,003) |
(13,548) |
(21,000) |
(17,000) |
SG&A |
|
|
0 |
0 |
0 |
0 |
0 |
EBITDA (normalized) |
|
|
(8,861) |
(13,067) |
(14,883) |
(16,820) |
34,125 |
Operating income (reported) |
|
|
(9,873) |
(14,684) |
(17,094) |
(18,683) |
32,300 |
Finance income/(expense) |
|
|
(13) |
(1,457) |
(95) |
(19) |
(33) |
Exceptionals and adjustments |
|
|
859 |
1,480 |
1,821 |
1,568 |
1,568 |
Profit before tax (reported) |
|
|
(9,886) |
(16,141) |
(17,189) |
(18,702) |
32,267 |
Profit before tax (normalised) |
|
|
(9,027) |
(14,661) |
(15,368) |
(17,134) |
33,835 |
Income tax expense (includes exceptionals) |
|
|
0 |
(83) |
(170) |
(170) |
(170) |
Net income (reported) |
|
|
(9,886) |
(16,224) |
(17,359) |
(18,872) |
32,097 |
Net income (normalised) |
|
|
(9,027) |
(14,744) |
(15,538) |
(17,304) |
33,665 |
Basic average number of shares, m |
|
|
16.8 |
20.4 |
27.0 |
32.7 |
34.6 |
Basic EPS (€) |
|
|
(0.59) |
(0.79) |
(0.64) |
(0.58) |
0.93 |
Adjusted EPS (€) |
|
|
(0.54) |
(0.72) |
(0.58) |
(0.53) |
0.97 |
Dividend per share (€) |
|
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
Tangible assets |
|
|
27.0 |
27.0 |
30.0 |
32.0 |
35.4 |
Intangible assets |
|
|
360.0 |
760.0 |
537.0 |
411.0 |
411.0 |
Right-of-use assets |
|
|
275.0 |
154.0 |
412.0 |
324.9 |
250.2 |
Other non-current assets |
|
|
38.0 |
32.0 |
32.0 |
32.3 |
32.3 |
Total non-current assets |
|
|
700 |
973 |
1,011 |
800 |
729 |
Cash and equivalents |
|
|
11,164 |
27,153 |
13,552 |
8,501 |
42,309 |
Contract assets |
|
|
0 |
0 |
684 |
1,135 |
1,135 |
Trade and other receivables |
|
|
0 |
740 |
12 |
3,344 |
3,344 |
Current non-financial assets |
|
|
2,711 |
3,650 |
5,727 |
5,044 |
5,044 |
Other current assets |
|
|
204 |
285 |
257 |
0 |
0 |
Total current assets |
|
|
14,079 |
31,828 |
20,232 |
18,024 |
51,832 |
Non-current loans and borrowings |
|
|
490 |
470 |
2,882 |
2,582 |
2,282 |
Long-term rental debt |
|
|
159 |
29 |
290 |
290 |
290 |
Provisions for pensions and similar |
|
|
367 |
376 |
441 |
441 |
441 |
Other non-current liabilities |
|
|
33.00 |
0.00 |
96.00 |
0.00 |
0.00 |
Total non-current liabilities |
|
|
1,049 |
875 |
3,709 |
3,313 |
3,013 |
Accounts payable |
|
|
3,353 |
5,921 |
6,746 |
5,894 |
5,894 |
Current loans and borrowing |
|
|
204 |
252 |
163 |
0 |
0 |
Short-term rental debt |
|
|
133 |
133 |
125 |
0 |
0 |
Contract liabilities |
|
|
0 |
200 |
125 |
0 |
0 |
Other current liabilities |
|
|
634 |
766 |
708 |
516 |
516 |
Total current liabilities |
|
|
4,324 |
7,272 |
7,867 |
6,410 |
6,410 |
Equity attributable to company |
|
|
9,406 |
24,654 |
9,667 |
9,101 |
43,138 |
|
|
|
|
|
|
|
|
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Operating income |
|
|
(9,873) |
(14,684) |
(17,094) |
(18,683) |
32,300 |
Depreciation and amortisation |
|
|
153 |
137 |
390 |
295 |
257 |
Share based payments |
|
|
859 |
1,480 |
1,568 |
1,568 |
1,568 |
Other adjustments |
|
|
44 |
(19) |
(314) |
0 |
0 |
Movements in working capital |
|
|
(1,611) |
1,093 |
(1,567) |
(4,635) |
0 |
Cash from operations (CFO) |
|
|
(10,428) |
(11,993) |
(17,017) |
(21,455) |
34,125 |
Capex |
|
|
(45) |
(411) |
(15) |
(16) |
(17) |
Acquisitions & disposals net |
|
|
0 |
0 |
(30) |
0 |
0 |
Other investing activities |
|
|
0 |
6 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(45) |
(405) |
(45) |
(16) |
(17) |
Capital changes |
|
|
7,381 |
28,501 |
846 |
16,720 |
0 |
Debt Changes |
|
|
(462) |
(108) |
2,620 |
(300) |
(300) |
Interest paid |
|
|
(7) |
(6) |
(5) |
0 |
0 |
Other financing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
6,912 |
28,387 |
3,461 |
16,420 |
(300) |
Cash and equivalents at beginning of period |
|
|
14,725 |
11,164 |
27,153 |
13,552 |
8,501 |
Increase/(decrease) in cash and equivalents |
|
|
(3,561) |
15,989 |
(13,601) |
(5,051) |
33,808 |
Effect of FX on cash and equivalents |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents at end of period |
|
|
11,164 |
27,153 |
13,552 |
8,501 |
42,309 |
Net (debt)/cash |
|
|
10,178 |
26,269 |
10,092 |
5,629 |
39,737 |
Source: Quantum Genomic company accounts, Edison Investment Research
|
|
Research: Healthcare
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