Medigene’s Q3 results are in line with our forecasts. The company has submitted its Phase I/II clinical trial application for its lead TCR cellular immunotherapy product candidate MDG1011 and anticipates initiation of the trial by year end. In addition to the upcoming trial initiation, Medigene has made numerous scientific and technological achievements in 2017, including presentations on its automated TCR identification platform and preclinical data on MDG1011. Partners have presented compassionate use data on DC vaccines in AML. We value Medigene at €316m (€14.3/share).
Written by
Medigene |
TCR clinical trial initiation imminent |
Q317 results |
Pharma & biotech |
9 November 2017 |
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Medigene is a research client of Edison Investment Research Limited |
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Medigene’s Q3 results are in line with our forecasts. The company has submitted its Phase I/II clinical trial application for its lead TCR cellular immunotherapy product candidate MDG1011 and anticipates initiation of the trial by year end. In addition to the upcoming trial initiation, Medigene has made numerous scientific and technological achievements in 2017, including presentations on its automated TCR identification platform and preclinical data on MDG1011. Partners have presented compassionate use data on DC vaccines in AML. We value Medigene at €316m (€14.3/share).
Year |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
6.8 |
(12.8) |
(0.74) |
0.0 |
N/A |
N/A |
12/16 |
9.7 |
(11.3) |
(0.56) |
0.0 |
N/A |
N/A |
12/17e |
9.0 |
(18.6) |
(0.89) |
0.0 |
N/A |
N/A |
12/18e |
9.3 |
(20.2) |
(0.91) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
First TCR trial expected to begin by year end
Medigene has submitted a CTA application to begin the first clinical trial (Phase I/II) with its lead proprietary T-cell receptor (TCR) modified T-cell (MDG1011); the company anticipates that the trial will receive approval by the end of CY17. We anticipate the Phase I portion of the trial to complete by the end of 2018. For an overview of Medigene’s TCR technology, please see our recent outlook note.
Continued technical progress highlights capabilities
Medigene continues to expand its technical capabilities in order to position itself as a leading immunotherapy company. In the period, Medigene presented technical data for its high throughput screening platform that enables the rapid identification of patient specific TCRs. The R&D collaboration with Bluebird bio is progressing as anticipated and Medigene expects to give a detailed update in the coming months.
Q317 results: In line with full year forecasts
In the first nine months of 2017 Medigene reported a slight increase in total revenue to €7.2m (9M16: €7.1m), supported by the growth of immunotherapy revenue from the Bluebird bio agreement of €3.4m (9M16: €0m) which largely offset the one-off gain in 2016 from the non-recurring sale of EndoTAG (€2.4m). R&D rose as expected to €11.0m (9M16: €8.0m) as the company prepares for the launch of the TCR trial. EBITDA for the period is in line with our forecasts and we retain our full year EBITDA forecast loss of €17.6m. Cash was €55.4m as of 30 September 2017.
Valuation: €316m or €14.3/per share
We value Medigene at €316m vs €315m previously. This is based on a risk-adjusted NPV of its TCR, DC and legacy assets. We have rolled forward the model and updated it for Q3 net cash. We expect a number of important milestones in the next 12 months including the start of its first company-initiated TCR clinical trial and completion of patient enrolment for its Phase I/II study for its DC vaccines in AML.
Exhibit 1: Financial summary
€'000s |
2015 |
2016 |
2017e |
2018e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
6,808 |
9,749 |
8,959 |
9,263 |
of which: Veregen revenues (royalties/milestones/supply) |
3,101 |
3,048 |
3,128 |
3,433 |
||
R&D partnering (SynCore/Falk Pharma/grants) |
1,214 |
3,155 |
0 |
0 |
||
Non-cash income (Eligard) |
2,493 |
2,493 |
2,493 |
2,493 |
||
Bluebird bio partnership |
1,053 |
3,338 |
3,338 |
|||
Cost of sales |
(1,103) |
(1,402) |
(1,231) |
(1,353) |
||
Gross profit |
5,705 |
8,347 |
7,728 |
7,910 |
||
Selling, general & administrative spending |
(7,615) |
(7,942) |
(8,286) |
(8,524) |
||
R&D expenditure |
(8,529) |
(11,538) |
(17,884) |
(19,672) |
||
Other operating spending |
. |
0 |
0 |
0 |
||
Operating profit |
(10,439) |
(6,891) |
(18,443) |
(20,286) |
||
Goodwill & intangible amortisation |
(526) |
(525) |
(524) |
(523) |
||
Exceptionals |
0 |
4,242 |
0 |
0 |
||
Share-based payment |
(111) |
(50) |
(50) |
(50) |
||
EBITDA |
|
|
(9,384) |
(10,238) |
(17,644) |
(19,488) |
Operating profit (before amort. and except.) |
|
|
(9,802) |
(10,558) |
(17,869) |
(19,713) |
Net interest |
(2,914) |
(1,009) |
(1,495) |
(1,928) |
||
Other (forex gains/losses; associate profit/loss) |
(46) |
263 |
720 |
1,489 |
||
Profit before tax (norm) |
|
|
(12,762) |
(11,304) |
(18,644) |
(20,152) |
Profit before tax (FRS 3) |
|
|
(13,399) |
(7,637) |
(19,218) |
(20,725) |
Tax |
400 |
228 |
0 |
0 |
||
Profit/(loss) from discontinued operations |
0 |
0 |
0 |
0 |
||
Profit after tax (norm) |
(12,362) |
(11,076) |
(18,644) |
(20,152) |
||
Profit after tax (FRS 3) |
(12,999) |
(7,409) |
(19,218) |
(20,725) |
||
Average number of shares outstanding (m) |
16.8 |
20.0 |
21.0 |
22.1 |
||
EPS - normalised (c) |
|
|
(73.55) |
(55.51) |
(88.63) |
(91.11) |
EPS - FRS 3 (€) |
|
|
(0.77) |
(0.37) |
(0.91) |
(0.94) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
51,552 |
47,742 |
50,012 |
52,282 |
Intangible assets & goodwill |
35,713 |
35,767 |
35,243 |
34,720 |
||
Tangible assets |
2,502 |
3,323 |
6,117 |
8,910 |
||
Other non-current assets |
13,337 |
8,652 |
8,652 |
8,652 |
||
Current assets |
|
|
59,900 |
63,973 |
61,190 |
36,767 |
Stocks |
6,654 |
7,866 |
7,866 |
7,866 |
||
Debtors |
763 |
1,175 |
1,175 |
1,175 |
||
Cash |
46,759 |
52,630 |
49,847 |
25,424 |
||
Other |
5,724 |
2,302 |
2,302 |
2,302 |
||
Current liabilities |
|
|
(9,664) |
(11,966) |
(11,966) |
(11,966) |
Trade accounts payable |
(1,354) |
(973) |
(973) |
(973) |
||
Short-term borrowings |
0 |
0 |
0 |
0 |
||
Deferred income |
(226) |
(3,575) |
(3,575) |
(3,575) |
||
Other |
(8,084) |
(7,418) |
(7,418) |
(7,418) |
||
Long-term liabilities |
|
|
(13,879) |
(21,157) |
(17,820) |
(14,482) |
Pension provisions |
(359) |
(408) |
(408) |
(408) |
||
Long-term borrowings |
0 |
0 |
0 |
0 |
||
Other liabilities (Deferred taxes; Trianta milestones) |
(2,915) |
(2,395) |
(2,395) |
(2,395) |
||
Deferred revenues (Eligard non-cash income & bluebird bio) |
(10,605) |
(18,354) |
(15,017) |
(11,679) |
||
Net assets |
|
|
87,909 |
78,592 |
81,416 |
62,601 |
CASH FLOW |
||||||
Operating cash flow |
|
|
(10,585) |
(3,611) |
(19,469) |
(20,977) |
Net interest |
(20) |
(45) |
5 |
(428) |
||
Tax |
0 |
(102) |
0 |
0 |
||
Capex |
(1,328) |
(1,677) |
(3,019) |
(3,019) |
||
Expenditure on intangibles |
0 |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
10,537 |
0 |
0 |
||
Equity financing |
43,695 |
(77) |
19,700 |
0 |
||
Other |
21 |
846 |
0 |
0 |
||
Net cash flow |
31,783 |
5,871 |
(2,783) |
(24,424) |
||
Opening net debt/(cash) |
|
|
(14,976) |
(46,759) |
(52,630) |
(49,847) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other (foreign exchanges differences) |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(46,759) |
(52,630) |
(49,847) |
(25,424) |
Source: Medigene accounts, Edison Investment Research
|
|
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