Tissue Regenix
Written by
Tissue Regenix |
Interim results underpin expectations |
Interim results |
Healthcare equipment & services |
19 October 2016 |
Share price performance
Business description
Next events
Analyst
Tissue Regenix is a research client of Edison Investment Research Limited |
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Tissue Regenix’s interim results are in line with our expectations and demonstrate the progress the company is making to achieve various milestones in each of its divisions. In particular, its Wound Care division made important progress in its commercialisation and achieved 510k market clearance for its SurgiPure XD product and increased its Medicare coverage for DermaPure (to 93%). We have increased our valuation to £364m (previously £338m) due to an updated exchange rate (£/$1.22), rebasing the model and using an updated H116 cash position of £13.5m.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
0.1 |
(8.2) |
(1.2) |
0.0 |
N/A |
N/A |
12/16 |
0.8 |
(10.0) |
(1.4) |
0.0 |
N/A |
N/A |
12/16e |
2.6 |
(11.8) |
(1.5) |
0.0 |
N/A |
N/A |
12/17e |
6.9 |
(12.2) |
(1.5) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Commercialisation progress
DermaPure has continued to perform well, with H1 revenue of £631k. This is an increase on the previous year (£252k), following an increase in Medicare coverage (currently 10 out of 11 reimbursement agencies), an expanded portfolio and increased distributorship. The company indicates that H2 should follow a similar revenue profile as previous years, with acceleration in sales towards the year end. Progress in H1 included the SurgiPure XD 510k market clearance in the US. This was important as it not only enables the launch of SurgiPure XD to the US market (expected in H217), but also validated the dCELL safety and efficacy data, important for future development of the technology in the US market.
Tissue also established a joint venture (JV) in H1 with a German tissue bank to commercialise its human dCELL heart valves and DermaPure in the EU. The JV will receive non-exclusive licences and pursue regulatory submissions, potentially leading to a first product launch in 2017.
Focus on orthopaedic trial output in H2
The OrthoPure XT (xenogeneic tendon) clinical trial in Europe is due to report in H2. Approval is expected by end 2016 and subsequent launch by end 2017. A second trial in Europe for OrthoPure XM, a dCELL porcine meniscus tissue scaffold, is also underway and should enable CE mark submission and launch in 2018.
Valuation: Increased to £364m from £338m
Our key valuation assumptions are unchanged, although we have rolled the model forward, updated the £:$ exchange rate (to $1.22) and now use H1 cash of £13.5m. As a result, our sum-of-the-parts DCF valuation increases to £364m (vs £338m) or 47.9p per share (vs 44.4p). Interim results were in line with our expectations and we therefore maintain our forecasts (while updating the exchange rate), resulting in a slight increase. Potential near-term catalysts include the CE mark submission and grant for OrthoPure XT (end 2016) and subsequent launch (end 2017).
Exhibit 1: Financial summary
|
£'000s |
2014 |
2015 |
2016* |
2016e** |
2017e |
2018e |
|
Years ending 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|
|
||||||
Revenue |
|
|
6 |
100 |
816 |
2,605 |
6,866 |
18,412 |
Cost of Sales |
0 |
0 |
(154) |
(469) |
(1,285) |
(3,640) |
||
Gross Profit |
6 |
100 |
662 |
2,136 |
5,582 |
14,773 |
||
Operating expenses |
(6,459) |
(8,318) |
(10,904) |
(14,008) |
(17,705) |
(24,965) |
||
EBITDA |
|
|
(6,453) |
(8,218) |
(9,997) |
(11,667) |
(11,974) |
(10,189) |
Operating Profit (normalised) |
|
|
(6,577) |
(8,369) |
(10,242) |
(11,937) |
(12,227) |
(10,413) |
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
4 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(6,577) |
(8,365) |
(10,242) |
(11,937) |
(12,227) |
(10,413) |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Interest |
274 |
168 |
213 |
149 |
63 |
(6) |
||
Profit Before Tax (norm) |
|
|
(6,303) |
(8,201) |
(10,029) |
(11,788) |
(12,164) |
(10,419) |
Profit Before Tax (as reported) |
|
|
(6,303) |
(8,197) |
(10,029) |
(11,788) |
(12,164) |
(10,419) |
Tax |
710 |
620 |
527 |
589 |
608 |
521 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(5,593) |
(7,581) |
(9,502) |
(11,198) |
(11,556) |
(9,898) |
||
Profit After Tax (as reported) |
(5,590) |
(7,581) |
(9,502) |
(11,198) |
(11,556) |
(9,898) |
||
Average Number of Shares Outstanding (m) |
636 |
636 |
698 |
760 |
760 |
760 |
||
EPS - normalised (p) |
|
|
(0.88) |
(1.19) |
(1.36) |
(1.47) |
(1.52) |
(1.30) |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
100.0 |
100.0 |
81.1 |
82.0 |
81.3 |
80.2 |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
472 |
435 |
901 |
1,152 |
1,242 |
1,386 |
Intangible Assets |
0 |
0 |
0 |
0 |
0 |
0 |
||
Tangible Assets |
472 |
435 |
901 |
1,152 |
1,242 |
1,386 |
||
Investments |
0 |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
19,610 |
12,238 |
22,296 |
11,523 |
2,692 |
10,567 |
Stocks |
0 |
34 |
64 |
257 |
704 |
1,496 |
||
Debtors |
1,127 |
1,947 |
2,325 |
2,854 |
2,822 |
6,306 |
||
Cash & equivalents |
18,483 |
10,257 |
19,907 |
8,412 |
(834) |
2,765 |
||
Income taxes |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other current assets |
0 |
0 |
0 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(1,104) |
(1,095) |
(1,958) |
(2,569) |
(5,280) |
(7,977) |
Creditors |
(1,104) |
(1,095) |
(1,958) |
(2,569) |
(5,280) |
(7,977) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Contingent consideration |
0 |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
(15,000) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
(15,000) |
||
Contingent consideration |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
18,978 |
11,578 |
21,239 |
10,106 |
(1,347) |
(11,024) |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
(6,121) |
(8,285) |
(9,625) |
(11,713) |
(9,574) |
(11,547) |
Net Interest |
274 |
168 |
213 |
149 |
63 |
(6) |
||
Tax |
474 |
0 |
745 |
589 |
608 |
521 |
||
Capex |
(358) |
(114) |
(711) |
(521) |
(343) |
(368) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Financing |
8 |
5 |
19,019 |
0 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
||
Capitalised R&D |
0 |
0 |
9 |
0 |
0 |
0 |
||
Net Cash Flow |
(5,723) |
(8,226) |
9,650 |
(11,495) |
(9,246) |
(11,400) |
||
Opening net debt/(cash) |
|
|
(24,206) |
(18,483) |
(10,257) |
(19,907) |
(8,412) |
834 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(18,483) |
(10,257) |
(19,907) |
(8,412) |
834 |
12,235 |
Source: Edison Investment Research, company accounts. Note: *Reported year end 31 January. **First year with year-end 31 December.
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