BONESUPPORT — Turnaround story on the way

BONESUPPORT — Turnaround story on the way

Bonesupport’s independent distributor network is now promoting CERAMENT bone void filler (BVF) in the US since Zimmer Biomet’s exclusivity period ended on 21 October. According to the latest update, 25 distributors in total had signed up ahead of the previously communicated deadline (end-2018). Other recent news includes Bonesupport’s capital markets days in Stockholm and London, where management presented on CERAMENT products, market opportunities, clinical and economic studies, and new details on the commercial platform. Our valuation is higher at SEK1.49bn or SEK29.0/share (vs SEK22.8/share), upgraded mainly to reflect the substantial expansion of their commercial presence in Europe.

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BONESUPPORT

Turnaround story on the way

Company update

Pharma & biotech

16 November 2018

Price

SEK19.50

Market cap

SEK991m

Net cash (SEKm) at end-Q318

313.2

Shares in issue

50.8m

Free float

50%

Code

BONEX

Primary exchange

Nasdaq Stockholm

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(0.2)

35.8

(13.7)

Rel (local)

2.8

45.6

(9.1)

52-week high/low

SEK26.4

SEK9.3

Business description

BONESUPPORT is an orthobiologics company that has commercialised three synthetic bone graft substitutes and has several other projects in R&D. The marketed products, CERAMENT BVF, CERAMENT G (gentamicin) and CERAMENT V (vancomycin), are intended to help orthopaedic surgeons manage bone voids and defects after injuries or diseases affecting bones.

Next events

CERTiFy study results (data)

Q418

CERTiFy study results (published)

Q119

First US commercial platform sales reported during Q418 results

Q119

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Alice Nettleton

+44 (0)20 3077 5700

BONESUPPORT is a research client of Edison Investment Research Limited

Bonesupport’s independent distributor network is now promoting CERAMENT bone void filler (BVF) in the US since Zimmer Biomet’s exclusivity period ended on 21 October. According to the latest update, 25 distributors in total had signed up ahead of the previously communicated deadline (end-2018). Other recent news includes Bonesupport’s capital markets days in Stockholm and London, where management presented on CERAMENT products, market opportunities, clinical and economic studies, and new details on the commercial platform. Our valuation is higher at SEK1.49bn or SEK29.0/share (vs SEK22.8/share), upgraded mainly to reflect the substantial expansion of their commercial presence in Europe.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/16

104.6

(108.4)

(4.22)

0.0

N/A

N/A

12/17

129.3

(126.7)

(3.21)

0.0

N/A

N/A

12/18e

103.8

(174.3)

(3.44)

0.0

N/A

N/A

12/19e

213.8

(141.0)

(2.72)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

Executing on commercial platform improvements

During the Q318 results presentation Bonesupport’s management reviewed progress on the execution of its strategy, revised earlier this year. The main recent developments include the establishment of the independent distributor network in the US and revision of the commercial organisation in Europe. In the US, 25 distributors with a total of 500+ sales representatives have now been secured (ahead of the end-2018 deadline); they started the promotion of CERAMENT BVF after Zimmer Biomet’s exclusivity period ended on 21 October 2018. In Europe, one key strategic change has been the increase in salesforce in strategic locations that have been relatively underrepresented historically.

Q318 results: Transition phase in the US

US sales reached SEK78.1m in 2017, while 9M18 sales were down to SEK30.0m. As expected, no sales from Zimmer Biomet were reported during Q318. We may see signs of an initial rebound in Q418 now that the new distributors have started the promotion. Q318 sales in Europe and RoW were SEK14.2m, up 29% y-o-y. Management indicated that, while growth was strong in this region, a substantial improvement could still be achieved in a number of geographical areas. To address that, Bonesupport plans to double the European salesforce by the end of 2018, which should have incremental addition to sales growth.

Valuation: SEK1.49bn or SEK29.0/share

We value Bonesupport at SEK1.49bn or SEK29.0/share versus SEK1.16bn or SEK22.8/share previously, as we have rolled our model forward and a net positive effect from the increase in our estimates in Europe, where management is substantially investing in commercial activities (in our model, higher near-term costs were offset by operating margin improvement in the longer run). We keep US estimates unchanged as we already reflected the change to the independent distributor network in our previous report. Key near-term catalysts include the CERTiFy study results in Q418 and the Q418 financial results, which will detail the first quarter of US sales through Bonesupport’s own commercial platform.

Turnaround story: A more hands-on approach to sales

Bonesupport’s three main marketed products are CERAMENT BVF, CERAMENT G and CERAMENT V. The products are very profitable, with gross margin of c 85% on a company level, and total sales have grown rapidly over the past few years (Q114–Q218 CAGR of 38%). In Europe, the company either sells directly or uses distributors. In the US, exclusive distributor Zimmer Biomet experienced internal supply problems in the second half of 2017, which also affected CERAMENT sales (H118 sales in US declined by 32% y-o-y; Exhibit 1). Bonesupport decided to reshape its business model in this key market and has now switched to a potentially more economically beneficial independent distributor network, after Zimmer Biomet’s exclusivity ended on 21 October 2018.

Exhibit 1: Bonesupport sales development

Source: Bonesupport capital markets day 2018

Progress in the US: Promotion commenced 21 October 2018

In total, 25 distributors in the US have been secured, which is ahead of the previously communicated deadline (18 by end-2018). US-based employee count is expected to grow from 12 in 2017 to 21 by end-2018. According to Bonesupport, Zimmer Biomet sold CERAMENT with its hardware and covered around one-third of the total accessible synthetic BVF market in the US (c 210k procedures a year; US + top EU5 is c 650k procedures a year), while competitors (Stryker, DePuy, etc) and independent distributors covered the rest. Using independent distributors, Bonesupport expects to access a wider market opportunity. According to the company’s estimates, the distributors that are currently engaged will cover c 85% of the target market (more will be added in the future).

No specific revenue guidance has been provided for the US market, but we believe that there could be a certain level of retention of existing customers, as surgeons who work with CERAMENT tend to be loyal to the product, according to Bonesupport. Zimmer Biomet is currently destocking CERAMENT BVF; therefore, we do not expect any material sales in the US in Q318. Given that the distributor network appears to be set, initial indications of the US sales rebound may be seen as early as Q418. Going forward, Bonesupport expects annual growth rate resuming to c 40% after 2019 on a whole company level (growth in 2019 vs 2018 could be even higher than that). In addition, distribution deal economics should be more favourable now than those with Zimmer Biomet; therefore, the company expects higher profit margins. Changes in accounting mean that Bonesupport will book 100% of revenues (previously 50%) and higher promotion expenses.

Progress in Europe: Optimising the salesforce

Bonesupport has also been revising its commercial operations in Europe, where the company’s products are sold in eight countries via local distributors, and five countries (UK, Germany, Switzerland, Sweden and Denmark) via direct presence. In addition to optimising its own sales processes, key changes include significant expansion of salesforce and a clear indication priority list. The number of representatives should increase from 14 to c 27 by end-2018, with the aim of having a direct presence in all geographical areas where large trauma/orthopaedic centres exit.

In Europe, where Bonesupport is marketing all three CERAMENT products, the antibiotic-eluting CERAMENT G/V are most lucrative because of higher pricing, unique value proposition and a less crowded antibiotic-eluting BVF market. Looking to boost sales growth, Bonesupport identified complex trauma as a key priority indication going forward, mainly due to the much larger market opportunity (c 10 times) than that of chronic osteomyelitis, which so far was the primary indication for CERAMENT G/V. Many other strategic initiatives are aimed at taking market share from synthetic BVFs, and ultimately from autografts and allografts (more details below).

CMD highlights

Below we detail some of the key takeaways from the recent capital markets day, mainly focusing on the long term strategic vision from the company’s management. Our overview of the products and background information on the application areas and markets has been already provided in detail in our recent initiation report.

Navigating a niche market

The addressable market in the US and top EU5 for Bonesupport is c 650k procedures annually in indications such as trauma, osteomyelitis, revision arthroplasty, foot and ankle, and oncology. In terms of volume, synthetic BVFs constitute roughly one-third of the addressable bone graft market in the US and top five EU countries (Exhibit 2). The remainder is still dominated by autografts and allografts in Europe, while the demineralised bone matrix (DBM) is more favoured in the US at the expense of autografts and allografts. Autografting usually means taking a patient’s own bone from the iliac crest, which basically entails a second surgical intervention and can supply only a limited amount of bone tissue. Allografting from other individuals bears foreign tissue risks, and can have disease transmission risk and higher failure rates. DBM is human bone that has had its calcium removed. It potentially has osteoinductive property and scaffolding function, but weak to no support.

Exhibit 2: Bone void market in the US and Europe by type of bone graft material (number of procedures)

Source: Bonesupport capital markets day, September 2018

One of the main reasons autograft is still considered the gold standard, besides the fact that it is using the patient’s own tissue, is that it also has osteoconductive (scaffold function), osteoinductive (turning undifferentiated cells into osteoblasts) and osteogenic (new bone tissue production by osteoblasts) properties. The prevailing opinion about synthetic BVFs (or ceramics) is that they mainly provide support and act as scaffold. Bonesupport mentioned that during its preclinical studies with animal models, some findings would suggest that CERAMENT products may have properties transcending just support or scaffold function.

Historically, calcium sulphate was one of the first materials used for synthetic BVF, with the first versions mentioned in the 1890s, which were found to resorb too fast. Later on, calcium phosphate was found to resorb too slowly and block the growth of new bone. Many other synthetic BVFs have been developed (bioglass, degradable and non-degradable polymers and other biomaterials) with little to no supporting prospective, randomised clinical data and the field has become commoditised, ie many products with no well-conducted, randomised trial to prove the competitive edge. For example, EvaluatePharma lists a total of 522 BVF brands on the market in the US and 311 in Europe, which are marketed by a total of 67 companies in the US and 50 companies in Europe (although that involves materials and indications where Bonesupport does not compete at the moment, such as spinal surgery).

In later years, combinations of calcium sulphate and calcium phosphate have appeared, which seem to offer the ‘best of both worlds’. CERAMENT is 60% calcium sulphate and 40% hydroxyapatite (a form of calcium phosphate). Bonesupport has shown a clinically balanced resorption rate (see CERAMENT BVF section below) that matches the formation of new bone tissue, allowing time for bone remodelling. While several products with similar properties exist, CERAMENT appears to be one of the best documented synthetic BVFs. Currently, there are more than 130 publications in peer-reviewed journals related to CERAMENT products. But the hallmark data will come from the two randomised clinical trials that Bonesupport is conducting: CERTiFy and FORTIFY.

Unlocking the growth potential of CERAMENT products

Against this background, Bonesupport’s management summarised its intention to grow CERAMENT’s market share in four strategic steps:

Optimal commercial platform is in focus at the moment and progress is described above.

Create a new prophylaxis market with CERAMENT G. Bonesupport updated its indication priority list, which now puts complex trauma at the top, as it is a market opportunity c 10 times larger than chronic osteomyelitis, an indication where CERAMENT G/V achieved high growth over the past several years in Europe. Prevention of infection in complex trauma should be supported by the upcoming data from the company’s FORTIFY trial, which will be one of the most advanced datasets with antibiotic-eluting BVF, and, if successful, will unlock the US market.

Gain share from other synthetic BVFs. According to management, a key area of near-term growth will come from CERAMENT products taking market share from other BVFs in the US and Europe, underpinned by Bonesupport’s dedication to accumulating clinical data (supporting investigator-initiated studies, conducting its own randomised large clinical trials (CERTiFy and FORTIFY).

Gain share from autograft/allograft. Given that autografts have been used for decades, a clinical practice shift towards synthetic BVFs will likely be slow. However, we do see a long-term, secular trend of such a shift, as synthetic BVFs are consistent and scalable products that avoid the risks associated with auto-/allografting and longer operation times (an estimated 26 minutes). In addition, improving technology should lead to increased acceptance by surgeons. The next step will be novel synthetic BVFs that are combined with various substances that add osteoinductive osteogenic properties. To this end, Bonesupport has an in-house preclinical R&D programme (described below).

CERAMENT G in complex trauma/osteomyelitis

CERAMENT G and V are both high-growth products in Europe, but not available in the US. Bonesupport has established an R&D programme and could bring CERAMENT G to the US market in 2021, substantially expanding its potential. This means that Bonesupport’s initial focus in Europe will be efforts to increase the share in the complex trauma market following success in osteomyelitis.

In 2017, CERAMENT G/V made up 30% of total Bonesupport sales, but 75% of sales in Europe, where the pricing is higher than CERAMENT BVF. This pricing differential should also be present in the US. Given the successful marketing in Europe, we see expect that the high-growth story in Europe can be reproduced in the US, if CERAMENT G is approved.

Antibiotic-impregnated PMMA beads are the gold standard in the treatment of infection in trauma and osteomyelitis, and represent the more traditional method of treating infection where the surgeon adds the beads then removes them at a later date during a second procedure once the infection is eradicated. Chips and cement products are also used, but also must be removed later. This need for a second surgery is a significant limitation. Antibiotic BVFs/bone grafts such as CERAMENT G offer a significant advantage over traditional alternatives for treating infections, according to several recent scientific reviews,1, 2, 3 mainly because they are biocompatible and able to degrade/resorb over time, thus eliminating the requirement for a second surgery. A one-stage procedure is more beneficial for both the patient and hospital with limited resources.

  Ferguson et al. Ceramic Biocomposites as Biodegradable Antibiotic Carriers in the Treatment of Bone Infections. J. Bone Joint Infect. 2017, Vol. 2.

  G. E. Cook. Infection in Orthopaedics. Journal of Orthopaedic Trauma: Dec 2015, Vol 29-Issue-pS19-S23.

  Geurts et al. Bone graft substitutes in active or suspected infection. Contra-indicated or not? International Journal of the Care of the Injured, Sep 2011,Vol 42, Supp 2, pS82-S86.

Compared to the market for BVFs, the selection of antibiotic-eluting BVFs is much more limited, to our knowledge. While CERAMENT products have been clinically documented by multiple investigators, there is still a lack of meta-analysis studies that would compare antibiotic-eluting synthetic BVFs. One relatively recent paper published by Ferguson et al (2010) compared clinical trials with several antibiotic-eluting BVFs and CERAMENT G/V appear to compare well with the rest when looking at infection recurrence rates, bone healing (fracture) and wound leakage (Exhibit 3).

Exhibit 3: Meta-analysis of biodegradable antibiotic carriers in the treatment of bone infections

Material (contents)

Number of patients

Mean age

Male: female

Mean follow -up (years)

Infection recurrence

Fracture

Bone filling

Wound leakage

Paper

CERAMENT G

(Calcium sulphate

Hydroxyapatite

Gentamicin)

100

51.6

(23–88)

65/35

1.6

(1–2.8)

4/100

(4%)

3/100

(3%)

Unknown

6/100

(6%)

McNally et al.

2016

Osteoset T

(Calcium sulphate

Tobramycin)

25

44.1

15/10

2.3

(1.7–3.2)

2/25

(8%)

3/25

(12%)

9 required bone graft

8/25

(32%)

McKee et al. 2002

6

50.0

(26–85)

3/3

2.3

(1.5–3.3)

0/6

(0%)

0/6

(0%)

91% bone ingrowth at

final follow-up

No

significant

drainage

Gitelis et al. 2002

25

39.8

(18–69)

Unknown

Unknown

5/25

(20%)

Unknown

40% bone ingrowth at

1 year

Unknown

Chang et al. 2007

14

44.1

11/4

3.2

(2.2–5)

2/14

(14%)

2/14

(14%)

Not clear

(Mean void

consolidation time 6

months)

3/14

(21%)

McKee et al. 2010

193

46.1

(16–82)

150/43

3.7

(1.3–7.1)

18/193

(9%)

9/193

(4.7%)

36.6% no filling

59.0% partial filling

4.4% complete filling

30/193

(15.5%)

Ferguson et al.

2014

21

49

(26–88)

18/3

1.3

(0.5–2.1)

1/20

(5%)

Unknown

Unknown

7/21

(33.3%)

Humm et al. 2014

Herafill G

(Calcium sulphate

Calcium carbonate

Gentamicin)

20

51.1

(24–79)

16/4

Not stated (Only

1/20 patients had

long term follow

up)

4/20

(20%)

Unknown

Unknown

Unknown

(used drains)

Fleiter et al. 2014

PerOssal

(Calcium sulphate

Hydroxyapatite

Antibiotic targeted to

organism)

27

47

(24–74)

16/11

1.8

(1–3)

3/27

(11.1%)

0/27

(0%)

Partial incorporation

8/27

(29.6%)

Romanò et al.

2014

Calcium deficient

hydroxyapatite

(Bovine collagen

Teicoplanin)

22

45

(23–77)

14/8

1.8

(1–3)

3/22

(13.6%)

0/22

(0%)

Partial incorporation

6/22

(27.3%)

Romanò et al.

2014

Source: Ferguson et al.

Bonesupport indicated that, as with autografts, there is some conservatism or resistance to switch to new solutions from PMMA, because this method has become entrenched in surgical practice for a long time. However, the upcoming readout (expected in 2020) from Bonesupport’s FORTIFY trial, with patients with open tibial fractures (primary end point: reduction of infections) will provide the most advanced, prospective, randomised data so far in a one-step, infection-preventive setting in complex trauma.

Complex trauma or open fractures are associated with skin perforation and contamination. These cases carry a higher risk of infection to the patient. There are c 196,000 complex trauma procedures carried out annually in the US and EU5 together, and the opportunity is around 10 times larger than for osteomyelitis. The infection rate in these patients ranges within 5–27%.4 Infection prophylaxis in complex trauma is mainly managed by giving prophylactic antibiotics. To our knowledge, PMMA beads are not routinely used for prophylaxis, probably due to the unnecessary risk of a second surgery in patients that might not become infected. Bonesupport aims to position the product to allow prophylactic local antibiotic administration in addition to systematic, without the need for second surgery to remove the antibiotic carrier.

  Morgenstern et al. The effect of local antibiotic prophylaxis when treating open limb fractures: A systematic review and meta-analysis. Bone Joint Res. 2018 Jul; 7(7): 447–456.

Product portfolio expansion: Licensing and innovating

Bonesupport has two strategies to expand its product portfolio: through strategic collaborations and developing innovative solutions via in-house R&D. Bonesupport is seeking to gain access to third-party products that are complementary to CERAMENT with osteoinductive/osteoconductive properties. These bundled offerings would improve the company’s competitive position as a ‘one-stop-shop’ for buyers.

The plan over the next two years is to add products that have osteoinductive and osteogenic properties complementing CERAMENT products. Recent examples include strategic partnerships with Collagen Matrix (synthetic graft that delivers autologous stem cells) and MTF Biologics (DBM). Within the next 2–4 years, Bonesupport aims to launch tailor-made procedural kits with CERAMENT products and potentially launch novel products from their internal R&D programme. The latter includes CERAMENT in combination with bisphosphonates or bone morphogenic protein, or a triple combination of these. Another potential innovation is CERAMENT with biological agents, such as stem cells or bone marrow aspirate. We have reviewed the unmet need in each of these applications in our initiation report.

Financials and valuation

We have already reflected in detail in our initiation report the shift to independent distributor marketing in the US and make no changes to our estimates (FY18 sales of SEK39.1m), as Bonesupport has been delivering on its strategy so far. As mentioned above, the next operational milestone in the US will be sales recovery, initial signs of which we believe may be seen as early as in Q418 (following the first almost-full quarter of its own promotion), but Q1–Q219 will be more relevant to gauge the success of the strategy.

When it comes to Europe, following the Q318 results we slightly lowered our FY18 sales estimate in this region from SEK74.7m to SEK64.7m. While reported Q318 sales of SEK14.2m in Europe and RoW represent a substantial 29% growth y-o-y, Bonesupport indicated that this was achieved with several major areas still underrepresented. The expansion of the commercial organisation in Europe should have an additional growth effect; we therefore increased our mid- to long-term sales forecast in European markets, which in turn was balanced somewhat with increased S&M costs. This resulted in a modest negative net effect on our short-term estimates (Exhibit 4), but a moderate positive effect on our longer-term EBIT margin, increasing from 30% to 37% in 2027 on the company level. Our model implies break-even on free cash flow reachable by 2021, with existing cash of SEK313.2m (end-Q318), in line with management’s indications.

Given that Bonesupport’s investment case is in a turnaround phase, our estimates are subject to revision once more performance data points are in. Also, the new products are not yet included in our estimates, as financial and commercial details of those deals are still lacking at this early stage, but we will reconsider once more visibility on the potential of the products is present.

Exhibit 4: Key changes to our financial forecasts

SEK000s

FY17

FY18e

FY19e

Actual

Old

New

Change (%)

Old

New

Change (%)

Revenue

129.301

113.813

103.813

-9%

210.917

213.760

+1%

Gross profit

112.430

96.741

88.241

-9%

179.280

181.696

+1%

R&D

(60.636)

(69.731)

(69.731)

+0%

(69.731)

(69.731)

+0%

SG&A

(150.336)

(195.037)

(195.037)

+0%

(241.506)

(255.162)

+6%

EBITDA

(97.898)

(165.866)

(174.366)

+5%

(129.663)

(140.902)

+9%

Operating profit

(99.285)

(167.495)

(175.995)

+5%

(131.482)

(142.721)

+9%

Profit before tax (norm)

(126.723)

(164.010)

(174.260)

+6%

(128.570)

(141.019)

+10%

Profit after tax

(128.869)

(166.346)

(176.596)

+6%

(131.083)

(143.532)

+9%

EPS (SEK) (norm)

(3.21)

(3.26)

(3.44)

+5%

(2.54)

(2.72)

+7%

Source: Bonesupport accounts, Edison Investment Research.

A moderate positive impact on our long-term EBIT margin forecast was the main reason for our DCF-based valuation upgrade to SEK1.49bn or SEK29.0/share, versus SEK1.16bn or SEK22.8 per share previously. Our recent initiation report provides detailed assumptions for our valuation. Key near-term catalysts include:

the CERTiFy study top-line results in Q418;

the Q418 financial results, which will detail the first quarter of US sales through Bonesupport’s own commercial platform, as well as sales performance in Europe;

reports from investigator-initiated studies; and

the launch of the new products (Collagen Matrix and MTF Biologics).

Exhibit 5: Assumptions, projected cash flow and DCF valuation

(SEKm)

2018e

2019e

2020e

2021e

2022e

2023e

2024e

2025e

2026e

2027e

EBIT* (risk-adjusted)

(176.0)

(142.7)

(59.7)

80.8

164.1

222.9

257.8

267.1

272.6

275.6

Tax**

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

D&A

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

Change in WC

4.6

(40.4)

(46.9)

(59.5)

(37.8)

(27.8)

(19.5)

(5.3)

(3.6)

(2.4)

Capex

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

Operating FCF

(170.1)

(181.7)

(104.9)

23.2

128.4

197.4

240.8

264.4

271.9

276.2

NPV (SEKm)

Free cash flows FY18–27e

313.5

Terminal value (2.0% growth rate assumed)

866.6

Total NPV

1,180.1

Net cash (end-Q318)

313.2

Valuation

1,493

Valuation/share (SEK)

29.0

Discount rate

10.0%

Tax rate (long-term)

22%

Source: Edison Investment Research. *EBIT here includes 70% risk-adjusted cash flows (sales and promotion) associated with CERAMENT G launch in the US in 2021. **Tax loss carry forwards (SEK604m at end-2017) offset taxes during our forecast period.

Exhibit 6: Financial summary

SEK000s 

2016

2017

2018e

2019e

December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

104,599

129,301

103,813

213,760

Cost of Sales

(16,312)

(16,871)

(15,572)

(32,064)

Gross Profit

88,287

112,430

88,241

181,696

Research and development

(38,233)

(60,636)

(69,731)

(69,731)

EBITDA

 

 

(87,399)

(97,898)

(174,366)

(140,902)

Operating Profit (before amort. and except.)

(87,601)

(98,146)

(87,601)

(98,146)

Intangible Amortisation

(1,144)

(1,139)

(1,328)

(1,506)

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

(88,745)

(99,285)

(175,995)

(142,721)

Net Interest

(20,821)

(28,600)

407

196

Profit Before Tax (norm)

 

 

(108,422)

(126,746)

(174,260)

(141,019)

Profit Before Tax (reported)

 

 

(109,566)

(127,885)

(175,589)

(142,525)

Tax

(625)

(1,007)

(1,007)

(1,007)

Profit After Tax (norm)

(109,047)

(127,753)

(175,267)

(142,026)

Profit After Tax (reported)

(110,191)

(128,892)

(176,596)

(143,532)

Average Number of Shares Outstanding (m)

25.8

25.8

39.8

50.9

EPS - normalised (SEK)

 

 

(4.22)

(3.21)

(3.44)

(2.72)

EPS - normalised and fully diluted (SEK)

 

(4.22)

(4.22)

(3.21)

(3.44)

EPS - (reported) (SEK)

 

 

(4.26)

(3.24)

(3.47)

(2.75)

Dividend per share (SEK)

0.0

0.0

0.0

0.0

Gross Margin (%)

84.4

87.0

85.0

85.0

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

5,091

8,591

8,986

9,581

Intangible Assets

4,469

5,244

6,171

6,750

Tangible Assets

442

3,099

2,567

2,583

Investments

180

248

248

248

Current Assets

 

 

183,718

588,093

325,076

193,543

Stocks

14,489

22,079

13,832

28,481

Debtors

20,242

20,678

24,356

50,152

Cash

141,501

533,367

274,919

102,942

Other

7,486

11,969

11,969

11,969

Current Liabilities

 

 

(69,742)

(145,725)

(47,105)

(47,105)

Creditors

(44,639)

(47,105)

(47,105)

(47,105)

Short term borrowings

(25,103)

(98,620)

0

0

Long Term Liabilities

 

 

(84,763)

(173)

(173)

(173)

Long term borrowings

(84,599)

0

0

0

Other long term liabilities

(164)

(173)

(173)

(173)

Net Assets

 

 

34,304

450,786

286,784

155,846

CASH FLOW

Operating Cash Flow

 

 

(70,184)

(95,060)

(157,203)

(168,752)

Net Interest

(11,640)

(11,737)

407

196

Tax

(109)

(737)

(1,007)

(1,007)

Capex

(67)

(2,344)

(329)

(329)

Acquisitions/disposals

0

0

0

0

Financing

103,714

504,833

0

0

Other

4,091

7,993

(1,694)

(2,085)

Dividends

0

0

0

0

Net Cash Flow

25,805

402,948

(159,828)

(171,978)

Opening net debt/(cash)

 

 

(5,994)

(31,799)

(434,747)

(274,919)

HP finance leases initiated

0

0

0

0

Other

0

0

(0)

0

Closing net debt/(cash)

 

 

(31,799)

(434,747)

(274,919)

(102,942)

Source: Bonesupport accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by BONESUPPORT and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

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Germany

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US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by BONESUPPORT and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Research: Investment Companies

Brunner Investment Trust (The) — Focused global equity exposure

The Brunner Investment Trust (BUT) is now a much more focused global equity proposition compared with mid-2016: there is a single manager, running a single portfolio (rather than one UK and one overseas), performance has improved and the board has paid off the trust’s longstanding, high-cost debt. Manager Lucy Macdonald believes that the investment cycle is mature, characterised by peaks levels of liquidity, earnings growth and equity valuations, suggesting investors should gravitate towards quality companies that can generate above-average returns on investment. BUT has a distinguished dividend track record; its annual distribution has increased for the last 46 consecutive years.

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