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Research: Healthcare
MagForce, a pioneer in nanotechnology-based cancer treatments, is making steady progress with its strategy to drive the uptake of its thermal ablation treatment, NanoTherm. In Europe, NanoTherm is approved for glioblastoma (brain tumours) and while sales started slowly MagForce is seeing considerable growth in sales in 2020. Newly established treatment centres in Germany and Poland (with expansion to Italy and Spain expected in 2021), is driving an increasing number of glioblastoma patients treated with NanoTherm. In the US, NanoTherm is now in the final phase of the registrational study for prostate cancer; approval and launch are now expected in H221. These indications could be the catalyst for meaningful growth in the top line and the path to sustainable profitability, which we forecast for 2022. We value MagForce at â¬269.1m.
Written by
Susie Jana
MagForce |
Striding towards major inflection points
Healthcare equipment & services |
Deutsches Eigenkapitalforum 2020
14 October 2020 |
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MagForce is a research client of Edison Investment Research Limited |
MagForce, a pioneer in nanotechnology-based cancer treatments, is making steady progress with its strategy to drive the uptake of its thermal ablation treatment, NanoTherm. In Europe, NanoTherm is approved for glioblastoma (brain tumours) and while sales started slowly MagForce is seeing considerable growth in sales in 2020. Newly established treatment centres in Germany and Poland (with expansion to Italy and Spain expected in 2021), is driving an increasing number of glioblastoma patients treated with NanoTherm. In the US, NanoTherm is now in the final phase of the registrational study for prostate cancer; approval and launch are now expected in H221. These indications could be the catalyst for meaningful growth in the top line and the path to sustainable profitability, which we forecast for 2022. We value MagForce at €269.1m.
US NanoTherm approval expected mid-2021
MagForce received FDA approval to proceed with its streamlined trial protocol for the next stage of its pivotal US NanoTherm clinical study in prostate cancer. This means patients can receive treatment in an outpatient facility within one day (NanoTherm particle installation in the prostate and activation) rather than weeks previously. Although the COVID-19 pandemic has slowed the pace of treatment, MagForce believes that it will have sufficient data to achieve 80% confidence that clinical objectives have been met by end-Q420. This should enable commercial preparations for a H221 launch to start while the trial concludes.
European roll-outs imperative
MagForce’s expansion strategy is to install NanoActivators at new treatment centres in Europe; this is vital for accelerated growth in the top line. Management expects a significant increase in the number of commercial treatments of glioblastoma patients to 35-45 patients in FY20, despite additional challenges caused by the COVID-19 pandemic. MagForce is making good progress to establish a path to an efficient reimbursement procedure in Germany this year.
Valuation: €269.1m (€9.7/share)
Our valuation of MagForce is based on a risk-adjusted NPV analysis of treatment sales in Europe (for glioblastoma) and the US (for prostate cancer). We note that delays in the US trial would materially affect our valuation and prudent execution is needed to launch the asset on time (the US is ~70% of our valuation).
Edison estimates
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. |
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Research: TMT
Life sciences is one of Mercia’s areas of focus and investment expertise. Seven of Mercia’s top 20 holdings at 31 March 2020 were in life sciences, valued at £29m in aggregate or 33% of total portfolio value (all of which had originated through Mercia’s third-party managed funds), with another c 40 earlier-stage life sciences investments across its third-party managed funds. COVID-19 has accelerated the opportunity for a new generation of novel and recombinant vaccines. This explosion of potential new treatments will require new diagnostics and bio-manufacturing support to scale supply once they are approved. These are areas where Mercia is already invested.
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