Wilex — Update 4 November 2015

Wilex — Update 4 November 2015

Wilex

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Wilex

Seeking partners for novel ADC technology

Q315 results

Pharma & biotech

5 November 2015

Price

€1.88

Market cap

€17m

Net cash (€m) at 31 August 2015

3.1

Shares in issue

9.3m

Free float

13%

Code

WL6

Primary exchange

FRA

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.7)

(43.1)

(7.5)

Rel (local)

(11.8)

(40.2)

(23.0)

52-week high/low

€5.55

€1.78

Business description

Wilex is focusing on the novel antibody drug conjugate (ADC) technology and contract research at its Heidelberg Pharma subsidiary. The company out-licensed Mesupron to Link Health (China, Hong Kong, Taiwan, Macao) and to RedHill Biopharma (RoW). It requires partners to progress its clear cell renal cancer programmes: Redectane, a diagnostic, and Rencarex, an adjuvant therapy.

Next events

FY15 results

March 2016

News on clinical partners

tbc

New ATAC partnerships

tbc

Analysts

Emma Ulker

+44 (0)20 3077 5738

Christian Glennie

+44 (0)20 3077 5727

Wilex is a research client of Edison Investment Research Limited

Wilex’s subsidiary, Heidelberg Pharma, is developing antibody-targeted amanitin conjugates (ATACs), which are differentiated from first-in-class, and developing antibody drug conjugates by potential efficacy against dormant and proliferating tumours. The investment case rests on the new partnerships for the ATAC pipeline and on clinical partnering progress for renal cancer programmes. Our DCF valuation is €41m.

Year end

Revenue (m)

PBT*
(
m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

11/13

19.1

(5.0)

(64.3)

0.0

N/A

N/A

11/14

5.0

(5.6)

(72.9)

0.0

N/A

N/A

11/15e

4.1

(4.5)

(54.0)

0.0

N/A

N/A

11/16e

4.2

(4.2)

(44.7)

0.0

N/A

N/A

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

The power of ATACs

Wilex’s ATACs use the toxin α-Amanitin from the green death cap mushroom. The principle of anti-cancer antibody drug conjugates (ADCs) is to use the very high specificity of antibodies and link them to toxic small molecules. ATACs could prevent tumour relapse and resistance in slower-growing tumours, while many ADC technologies block only proliferating tumour cells. Wilex has a proprietary preclinical pipeline of undisclosed ATACs. Separately, it is developing ATACs against prostate-specific membrane antigen (PSMA) in prostate tumours.

Seeking out new ventures

In August, Roche communicated its strategic decision to discontinue its ATAC collaboration with Heidelberg Pharma. The decision was chiefly based on Roche’s immunotherapy focus, despite very good progress made in the ATAC collaboration. Wilex continues to seek new alliances for its proprietary pipeline based on its pioneering approach in ADC cancer therapy. Preclinical results published in Nature this year are likely to assist Wilex in its discussions with future licence partners. The clinical pipeline includes uPA inhibitor Mesupron out-licensed in oncology. Wilex seeks separate partners to progress its Phase III clear cell renal cancer products.

Q3 financials indicate Q116 cash reach

Q315 revenue was €2.9m including revenues and milestones. We have lowered our FY16 sales forecast in line with management’s Q3 guidance from €5.1m to €4.1m, based on cessation of the Roche alliance. End-Q315 cash of €3.1m gives an estimated runway to the end of Q116 following the April €4.2m rights issue.

Valuation: DCF of €41m

Our DCF valuation is €41m, down from €57m, removing €52m of risked Roche milestones, revising our forecasts and adding end-Q315 cash. We value CRO revenue streams at Heidelberg Pharma at €2.1m. If Wilex secures partners for Redectane and Rencarex, our valuation would increase to €115m.

Exhibit 1: Financial summary

€'000s

2013

2014

2015e

2016e

Year end 30 November

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

19,106

5,010

4,075

4,204

Cost of Sales

(3,678)

(1,355)

(1,169)

(1,029)

Gross Profit

15,428

3,655

2,906

3,175

EBITDA

 

 

(3,248)

(5,093)

(4,213)

(3,974)

Operating Profit (before GW and except.)

(4,964)

(5,576)

(4,466)

(4,183)

Intangible Amortisation

0

0

0

(161)

Other

0

0

0

0

Exceptionals

0

0

0

0

Operating Profit

(4,964)

(5,576)

(4,466)

(4,344)

Net Interest

(77)

(31)

15

24

Other

0

0

0

0

Profit Before Tax (norm)

 

 

(5,040)

(5,607)

(4,451)

(4,159)

Profit Before Tax (FRS 3)

 

 

(5,040)

(5,607)

(4,451)

(4,321)

Tax

(0.12)

(93.2)

(0.09)

(0.21)

Deferred tax

0

0

0

0

Profit After Tax (norm)

(5,040)

(5,701)

(4,451)

(4,160)

Profit After Tax (FRS 3)

(5,040)

(5,701)

(4,451)

(4,321)

Average Number of Shares Outstanding (m)

7.8

7.8

8.2

9.3

EPS - normalised (c)

 

 

(64.3)

(72.9)

(54.0)

(44.7)

EPS - FRS 3 (c)

 

 

(64.3)

(72.9)

(54.0)

(46.4)

Dividend per share (c)

0.0

0.0

0.0

0.0

Gross Margin (%)

80.7

73.0

71.3

75.5

EBITDA Margin (%)

-17.0

-101.7

-103.4

-94.5

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

-26.0

-111.3

-109.6

-99.5

BALANCE SHEET

Fixed Assets

 

 

12,805

12,120

11,948

11,665

Intangible Assets

9,182

9,059

8,941

8,780

Tangible Assets

1,324

1,053

870

748

Other

2,298

2,007

2,136

2,136

Current Assets

 

 

9,507

2,910

2,762

2,873

Stocks

78

190

201

201

Debtors

402

449

718

718

Cash

8,920

2,197

1,821

1,932

Other

106

74

22

22

Current Liabilities

 

 

(7,285)

(3,151)

(2,991)

(6,991)

Creditors

(4,647)

(3,151)

(2,991)

(2,991)

Short term borrowings

(2,638)

0

0

(4,000)

Long Term Liabilities

 

 

(77)

(3)

0

0

Long term borrowings

0

0

0

0

Other long term liabilities

(77)

(3)

0

0

Net Assets

 

 

14,950

11,876

11,719

7,546

CASH FLOW

Operating Cash Flow

 

 

(14,359)

(6,559)

(5,010)

(3,826)

Net Interest

(94)

(155)

630

24

Tax

0

93

0

(0)

Capex

(172)

(196)

(79)

(87)

Acquisitions/disposals

0

0

0

0

Financing

0

0

3,961

0

Dividends

0

0

0

0

Other

(224)

(38)

(17)

0

Net Cash Flow

(14,849)

(6,855)

(515)

(3,889)

Opening net debt/(cash)

 

 

(20,726)

(6,283)

(2,197)

(1,821)

HP finance leases initiated

0

0

0

0

Exchange rate movements

(406)

(131)

26

0

Other

811

2900

113

0

Closing net debt/(cash)

 

 

(6,283)

(2,197)

(1,821)

2,068

Source: Company accounts, Edison Investment Research

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United Kingdom

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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

Haydale Graphene Industries — Update 4 November 2015

Haydale Graphene Industries

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