Medigene — Update 19 May 2016

Medigene — Update 19 May 2016

Medigene

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Medigene

Continuing to progress its clinical pipeline

Q1 results

Pharma & biotech

19 May 2016

Price

€8.34

Market cap

€164m

Net cash (£m) at 31 March 2016

46.3

Shares in issue

19.7m

Free float

62.6%

Code

MDG1

Primary exchange

XETRA

Secondary exchange

Frankfurt

Share price performance

%

1m

3m

12m

Abs

5.4

9.0

(8.9)

Rel (local)

7.3

3.8

6.2

52-week high/low

€12.15

€5.20

Business description

Medigene is a German biotech company with a core technology platform in cancer immunotherapy. Dendritic cell (DC) vaccines are in Phase I/II clinical studies, while a T-cell receptor (TCR) candidate should enter the clinic in 2016/2017.

Next events

Interim results (6M-report)

5th August 2016

TCR (IIT) clinical trial initiation

Q416/Q117

First TCR (CIT) clinical trial initiation

H217

Analysts

Dr Linda Pomeroy

+44 (0)20 3077 5738

Lala Gregorek

+44 (0)20 3681 2527

Medigene is a research client of Edison Investment Research Limited

Medigene’s Q1 results continue to underpin its transformation to a cancer immunotherapy-focused company. Progress across its clinical pipeline continues to create further focus on clinical development and future commercialisation. Alongside management changes, this indicates that the company is executing its strategy. It is well funded, with a net cash position of €46.3m (Q116).

Year end

Revenue (€m)

PBT* (€m)

EPS* (€)

DPS (€)

P/E (x)

Yield (%)

12/14

13.8

(5.3)

(0.42)

0.0

N/A

N/A

12/15

6.8

(12.8)

(0.74)

0.0

N/A

N/A

12/16e

7.1

(13.1)

(0.66)

0.0

N/A

N/A

12/17e

7.3

(13.5)

(0.67)

0.0

N/A

N/A

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

Promising early IIT DC vaccine data presented

Promising early data have been presented from its investigator-initiated trials (IITs) in both prostate cancer and acute myeloid leukaemia (AML) at the American Association for Cancer Research (AACR) and the Association for Cancer Immunotherapy (CIMT) conferences respectively. The use of Medigene’s dendritic cell (DC) vaccine in prostate cancer is being trialled in patients that are high-risk prostate cancer patients. 50% of this patient population develop an early biochemical relapse (raised levels of prostate-specific antigen), for which there is no curative therapy currently available. The preliminary data indicated that three out of 15 patients who had received a DC vaccine (matured via the investigator’s original approach) experienced a biochemical relapse and none of a further five patients who had received the DC vaccine (matured via Medigene’s new generation approach) had yet suffered a relapse. While these are early data and follow-up continues, they are promising as the new maturation approach is also being utilised in the company-initiated DC vaccine trial. The AML IIT data continue to demonstrate an excellent safety profile and the capacity to induce T-cell responses in elderly patients unable to undergo stem cell transplantation.

Pipeline progresses

The Phase II DC vaccine company-initiated trial (CIT) in AML continues as expected, with seven patients (out of 20) now recruited. Once patient recruitment is complete, the Phase II trial will take two years to complete (one year of treatment and one year of follow-up), with expected data readout in 2019. Also due to start (at end 2016/early 2017) is the IIT of TCR therapy in cancer, currently being prepared for its clinical trial application and pending grant funding to progress. Two CITs in TCR therapy are being prepared, due to start in 2017 and 2018.

Valuation: No change to fundamentals

We now use Q116 reported cash, which reduces our rNPV-based valuation to €214m (vs €216m) or €10.8 per share (vs €10.96). The rest of our valuation assumptions are unchanged. Medigene is well funded and focused on executing its clinical development strategy over the next few years.

Exhibit 1: Financial summary

€'000s

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

13,784

6,808

7,056

7,330

of which: Veregen revenues (royalties/milestones/supply)

5,195

3,101

3,462

3,737

R&D partnering (SynCore/Falk Pharma/grants)

6,096

1,214

1,100

1,100

Non-cash income (Eligard)

2,493

2,493

2,493

2,493

Cost of sales

(2,086)

(1,103)

(1,305)

(1,415)

Gross profit

11,698

5,705

5,751

5,915

Selling, general & administrative spending

(7,081)

(7,615)

(7,833)

(8,057)

R&D expenditure

(7,498)

(8,529)

(9,808)

(10,789)

Other operating spending

0

0.

0

0

Operating profit

(2,881)

(10,439)

(11,890)

(12,931)

Goodwill & intangible amortisation

(527)

(526)

(525)

(524)

Exceptionals

0

0

0

0

Share-based payment

(66)

(111)

(50)

(50)

EBITDA

 

 

(2,005)

(9,384)

(11,090)

(12,132)

Operating profit (before GW and except.)

 

 

(2,288)

(9,802)

(11,315)

(12,357)

Net interest

(1,774)

(2,914)

(2,529)

(2,361)

Other (forex gains/losses; associate profit/loss)

(1,257)

(46)

719

1,204

Profit before tax (norm)

 

 

(5,319)

(12,762)

(13,126)

(13,514)

Profit before tax (FRS 3)

 

 

(5,912)

(13,399)

(13,701)

(14,088)

Tax

155

400

0

0

Profit/(loss) from discontinued operations

0

0

0

0

Profit after tax (norm)

(5,164)

(12,362)

(13,126)

(13,514)

Profit after tax (FRS 3)

(5,757)

(12,999)

(13,701)

(14,088)

Average number of shares outstanding (m)

12.2

16.8

19.9

20.2

EPS - normalised (€)

 

 

(0.42)

(0.74)

(0.66)

(0.67)

EPS - FRS 3 (€)

 

 

(0.47)

(0.77)

(0.69)

(0.70)

Dividend per share (€)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed assets

 

 

46,617

53,631

45,730

46,309

Intangible assets & goodwill

38,377

37,792

35,188

34,664

Tangible assets

951

2,502

3,605

4,708

Other non-current assets

7,289

13,337

6,937

6,937

Current assets

 

 

24,666

59,900

54,364

37,836

Stocks

4,406

6,654

6,654

6,654

Debtors

1,733

763

763

763

Cash

14,976

46,759

45,679

29,151

Other

3,551

5,724

1,268

1,268

Current liabilities

 

 

(7,755)

(9,664)

(8,376)

(8,376)

Trade accounts payable

(1,785)

(1,354)

(1,354)

(1,354)

Short-term borrowings

0

0

0

0

Deferred income

(57)

(226)

(226)

(226)

Other

(5,913)

(8,084)

(6,796)

(6,796)

Long-term liabilities

 

 

(14,457)

(13,879)

(13,879)

(13,879)

Pension provisions

(413)

(359)

(359)

(359)

Long-term borrowings

0

0

0

0

Other liabilities (Deferred taxes; Trianta milestones)

(3,221)

(2,915)

(2,915)

(2,915)

Deferred revenues (Eligard non-cash income)

(10,823)

(10,605)

(10,605)

(10,605)

Net assets

 

 

49,071

89,988

77,839

61,890

CASH FLOW

Operating cash flow

 

 

(8,765)

(10,585)

(9,495)

(14,339)

Net interest

9

(20)

(1,029)

(861)

Tax

0

0

0

0

Capex

(873)

(1,328)

(1,328)

(1,328)

Expenditure on intangibles

0

0

0

0

Acquisitions/disposals

0

0

9,953

0

Equity financing

14,502

43,695

819

0

Other

(62)

21

0

0

Net cash flow

4,811

31,783

(1,080)

(16,528)

Opening net debt/(cash)

 

 

(10,166)

(14,976)

(46,759)

(45,679)

HP finance leases initiated

0

0

0

0

Other (foreign exchanges differences)

(1)

0

(0)

0

Closing net debt/(cash)

 

 

(14,976)

(46,759)

(45,679)

(29,151)

Source: Company accounts, Edison Investment Research

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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

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4SC — Update 19 May 2016

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