Celyad — Update 10 June 2016

Celyad — Update 10 June 2016

Celyad

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Celyad

CAR reaches the highest dose

Clinical progress and FY15

Pharma & biotech

10 June 2016

ADR research

Price

$57

Market cap

$519m

ADR/Ord conversion ratio 1:1

Net cash ($m) as at 31 Dec 2015

122

ADRs in issue

9.31m

ADR Code

CYAD

ADR exchange

NASDAQ

Underlying exchange

Euronext Brussels

Depository

CITI

ADR share price performance

52-week high/low

$61

$34

Business description

Celyad is developing C-Cure, an autologous Phase III stem-cell therapy for chronic ischaemic heart disease with Phase II data due in June. An innovative cell cancer CAR T-cell NKR-T immuno-oncology program is in Phase I. Celyad listed an ADR on NASDAQ in 2015.

Next events

CHART-1 data

Late June

NKR-2 Phase I data

Late June

Analyst

Dr John Savin MBA

+44 (0)20 3077 5735

Celyad is a research client of Edison Investment Research Limited

Celyad can now move to the highest planned dose of 3x107 cells in the important NKR-2 Phase II CAR trial. If the next 30m cell dose is also safe (and the MTD) it will lead to two separate six patient open label studies in Acute Myeloid Leukemia and Multiple Myeloma. Further data is possible in late June. Efficacy indications in either of these could enable a series of solid tumor exploratory studies. The advantage of the NKR-T immuno-oncology approach is that it is easily transferred to multiple cancer types. FY15 accounts were as expected with year-end cash of $122m.

Year end

Revenue ($m)

PTP*
($m)

EPADR
($)

DPADR
($)

P/E
(x)

Gross Yield
(%)

12/14

0.2

(20.9)

(2.7)

0.0

N/A

N/A

12/15

0.0

(32.0)

(3.3)

0.0

N/A

N/A

12/16e

0.0

(36.8)

(3.5)

0.0

N/A

N/A

12/17e

0.0

(42.6)

(4.1)

0.0

N/A

N/A

Note: Converted at €0.87/US$1 Dividend yield excludes withholding tax. Investors should consult their tax advisor regarding the application of any domestic and foreign tax laws.

CAR progress: high dose cohort can start

Celyad’s emphasis is now on the NKR-T CAR platform with its broad potential in multiple cancer types. The US NKR-2 immuno-oncology Phase I has completed the third dose level and with no safety issues can move to the 30m dose level. It is not certain if this will be the maximum tolerated dose (MTD) expected to be used in later solid tumor studies. Once an MTD is found, the trial will move into an expansion phase where six acute myeloid leukemia (AML) and six multiple myeloma (MM) patients are recruited in total. Management expects further data by late June. Solid tumor indication studies are being planned at the highest dose level. An allogeneic technology is in preclinical development.

Pivotal cardiac data due in late June

The Phase III C-Cure CHART-1 cardiac regeneration result is expected at the end of June. The primary endpoint is a composite (Bartunek et al, 2015). The CHART-1 outcome will be fascinating and success would trigger the start of the part-US 240 patient Phase III CHART-2. Celyad aims to do a partnering deal, possibly to be signed in 2017. The will enable resources to be focused onto NKR-T development.

Valuation: Unchanged at $947m

The core value remains C-Cure at 45% probability of success for CHART-1, and 40% for CHART-2. The probability for CAR in AML and MM remains at 17.5%, but could rise once the last safety hurdle is cleared. The indicative valuation assumes that C-Cure is partnered after Phase III in Europe with some upfront fees; C-Cure was always assumed to be partnered for US marketing. The value estimate remains at $947m ($98 per ADR). The FY15 financial results were as expected with cash of $122m. We have updated our 2016 forecast based on the 2015 results. The 2017 forecast (Exhibit 1) does not assume any C-Cure royalties or deals and is preliminary pending the CHART-1 outcome.

Exhibit 1: Financial summary

US$'000s

2013

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

0

165

3

0

0

Cost of Sales

0

(130)

(1)

0

0

Gross Profit

0

35

2

0

0

EBITDA

 

 

(12,222)

(20,619)

(32,362)

(37,029)

(42,621)

Operating Profit (before amort and except)

 

 

(12,459)

(20,837)

(32,671)

(37,338)

(42,929)

Intangible Amortization

(757)

(765)

(859)

(859)

(859)

Other income and charges

0

4,269

0

0

0

Share-based payments

(1,422)

(1,241)

(898)

(898)

(898)

Operating Profit

(14,638)

(18,574)

(34,428)

(39,095)

(44,686)

Net Interest

(1,735)

(18)

631

565

283

Pre-tax profit (norm)

 

 

(14,194)

(20,855)

(32,040)

(36,773)

(42,647)

Pre-tax profit (FRS 3)

 

 

(16,373)

(18,592)

(33,797)

(38,530)

(44,404)

Tax

0

0

0

0

0

Profit After Tax (norm)

(14,194)

(20,855)

(32,040)

(36,773)

(42,647)

Profit After Tax (FRS 3)

(16,373)

(18,592)

(33,797)

(38,530)

(44,404)

Average number of ADRs outstanding (m)

4.1

6.8

8.7

9.3

9.3

EPADR - normalized ($)

 

 

(3.06)

(2.73)

(3.26)

(3.50)

(4.05)

EPADR - (IFRS) ($)

 

 

(3.53)

(2.44)

(3.44)

(3.66)

(4.22)

Dividend per ADR ($)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

N/A

N/A

N/A

N/A

EBITDA Margin (%)

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

BALANCE SHEET

Fixed Assets

 

 

11,055

12,476

56,619

55,621

54,623

Intangible Assets

10,622

11,601

55,132

54,273

53,414

Tangible Assets

275

676

1,284

1,145

1,006

Investments

158

200

203

203

203

Current Assets

 

 

25,540

34,199

123,645

80,775

36,431

Stocks

0

0

0

0

615

Debtors

476

938

620

620

0

Cash

24,926

31,225

121,490

78,738

34,399

Other

139

2,036

1,535

1,417

1,417

Current Liabilities

 

 

(3,830)

(6,840)

(12,984)

(13,099)

(13,052)

Creditors

(3,346)

(5,962)

(11,969)

(11,969)

(11,969)

Deferred revenue

0

0

0

0

0

Regional government loans

(484)

(878)

(1,015)

(1,130)

(1,083)

Long Term Liabilities

 

 

(13,672)

(12,700)

(41,314)

(34,303)

(34,303)

Regional government loans (non-current)

(13,641)

(12,179)

(11,847)

(10,486)

(10,486)

Other long term liabilities

(31)

(521)

(29,467)

(23,817)

(23,817)

Net Assets

 

 

19,093

27,136

125,966

88,994

43,699

CASH FLOW

Operating Cash Flow

 

 

(12,021)

(19,660)

(31,484)

(42,011)

(42,315)

Net Interest

(1,735)

(18)

631

729

139

Tax

0

0

0

0

0

Capex

(601)

(723)

(947)

(170)

(170)

Acquisitions/disposals

0

(1,752)

(5,860)

0

0

Financing

34,887

29,851

123,345

0

0

Dividends

0

0

0

0

0

Other

2,537

1,851

(3,714)

(1,300)

0

Net Cash Flow

23,067

9,550

81,970

(42,752)

(42,345)

Opening net debt/(cash)

 

 

12,267

(10,800)

(18,169)

(108,628)

(67,121)

HP finance leases initiated

0

0

0

0

0

Other

0

(2,181)

8,489

1,245

7,461

Closing net debt/(cash)

 

 

(10,800)

(18,169)

(108,628)

(67,121)

(32,238)

Source: Edison Investment Research, Celyad accounts. Note: Solely for the convenience of US readers the financial summary table has been converted at a rate of US$1 to €0.87. Celyad reports statutory accounts in euros. These translations should not be considered representations that any such amounts have been or could be converted into US dollars at the assumed conversion rate.

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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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Viralytics — Update 10 June 2016

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