Oasmia Pharmaceutical — Clarity on pathway to US approval

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Research: Healthcare

Oasmia Pharmaceutical — Clarity on pathway to US approval

Oasmia’s H1 FY21 results highlight recent developments made to realign the business. In December, global partner Elevar Therapeutics announced it had concluded discussions with the FDA on the pathway to US approval for Apealea (Cremophor-free paclitaxel) in ovarian cancer. The FDA has stated it requires two additional trials to form the basis of the NDA submission. We have delayed our forecast US launch by two years to 2025, which means our forecast timeframe to maiden profitability has now shifted to 2025. In Europe (ex-Nordics), Elevar is in final-round discussions for a distribution partner and has signed an agreement with Taiba Middle East FZ for the Middle East and North Africa (MENA) region. Our revised valuation of Oasmia is SEK2.42bn or SEK5.41/share.

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Healthcare

Oasmia Pharmaceutical

Clarity on pathway to US approval

Interim results

Pharma & biotech

17 December 2020

Price

SEK4.16

Market cap

SEK1,865m

$0.12/SEK

Net cash (SEKm) at 31 October 2020 (including short-term investments)

249.6

Shares in issue

448.4m

Free float

75%

Code

OASM

Primary exchange

Stockholm

Secondary exchange

Frankfurt

Share price performance

%

1m

3m

12m

Abs

0.7

(11.3)

(1.9)

Rel (local)

(0.1)

(15.4)

(12.9)

52-week high/low

SEK9.03

SEK3.66

Business description

Oasmia Pharmaceutical is a Swedish speciality pharma company focusing on its proprietary XR-17 technology platform to develop novel formulations of well-established cytostatic oncology treatments for human and animal health. Key assets include Apealea (partnered with Elevar) and Docetaxel micellar.

Next events

Apealea EU commercialisation partner

2020/21

Start of Apealea PK study in the US

H121

Start of Apealea pivotal Phase III superiority study in the US

H121

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Dr John Priestner

+44 (0)20 3077 5700

Oasmia Pharmaceutical is a research client of Edison Investment Research Limited

Oasmia’s H1 FY21 results highlight recent developments made to realign the business. In December, global partner Elevar Therapeutics announced it had concluded discussions with the FDA on the pathway to US approval for Apealea (Cremophor-free paclitaxel) in ovarian cancer. The FDA has stated it requires two additional trials to form the basis of the NDA submission. We have delayed our forecast US launch by two years to 2025, which means our forecast timeframe to maiden profitability has now shifted to 2025. In Europe (ex-Nordics), Elevar is in final-round discussions for a distribution partner and has signed an agreement with Taiba Middle East FZ for the Middle East and North Africa (MENA) region. Our revised valuation of Oasmia is SEK2.42bn or SEK5.41/share.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

04/19

2.0

(168.5)

(0.7)

0.00

N/A

N/A

04/20

201.8

(43.4)

0.0

0.00

N/A

N/A

04/21e

0.8

(170.1)

(0.3)

0.00

N/A

N/A

04/22e

8.9

(149.9)

(0.3)

0.00

N/A

N/A

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

Two additional studies required for the US NDA

Elevar has established a clear pathway for the US regulatory submission for Apealea. Two additional studies are required to enable the NDA filing; this includes a pharmacokinetic (PK) study that will take ~12 months to complete and a pivotal Phase III superiority study to demonstrate Apealea safety and efficacy in second-line epithelial ovarian cancer (expected to take 24–36 months to complete). Elevar will fund both and aim to start them in the first half of 2021. We now forecast launch at end 2025 (vs 2023), assuming the Phase III study completes recruitment by mid-2022. Establishing superiority is a higher risk strategy but, if confirmed, could lead to improved reimbursement and higher uptake in the US and other key territories.

Apealea first sales despite COVID-19 headwind

Oasmia reported first sales and treatment of a patient with Apealea in Finland during the period, a milestone in the Nordics. However, in Denmark, the negative outcome of the compulsory Health Technology Assessment (HTA) application due to a lack of health economic data has stalled reimbursement negotiations. Oasmia is working on alternatives to generate clinical data. Elevar has secured a partner in MENA and we expect additional regional partnerships will be announced in 2021.

Valuation: SEK2.42bn or SEK5.41/share

Our revised valuation is SEK2.42bn (SEK5.41/share) versus SEK2.82bn (SEK6.29/share) previously. The main effect is the delay of Apealea US launch and we maintain our peak sales forecasts but push them out to 2030. Our valuation includes net cash of SEK249.6m plus rNPV for Apealea (ovarian cancer), docetaxel micellar (prostate cancer) and an indicative value for the animal health business. We do not include the XR-17 platform or other cancer indications in our valuation.

Longer timeline to Apealea US approval

Oasmia’s key asset Apealea is a water-soluble, intravenous formulation of paclitaxel that is solvent free (no Cremophor EL solubilising agent used in Taxol). This is a particularly attractive value proposition as it significantly improves on the profile of a widely used chemotherapeutic agent with lower infusion time and removal of mandatory corticosteroid premedication versus conventional paclitaxel (Taxol). Apealea received approval in the EU for the treatment of second-line platinum-sensitive ovarian cancer in 2018. The deal with Elevar Therapeutics means the worldwide commercialisation of Apealea (ex-Nordics, Baltics, Kazakhstan and the Russian Federation) is now mainly in the hands of a partner, which will enable Oasmia to focus on its core drug development competencies and new strategic focuses.

Two additional trials required for Apealea NDA submission

Following discussions with the FDA, Elevar has now outlined the pathway to regulatory submission in the US for Apealea and will complete two additional studies before filing an NDA. The first is a PK study that will take ~12 months to complete. The second is a pivotal Phase III superiority study in second-line epithelial ovarian cancer to demonstrate Apealea safety and efficacy and is expected to take 24–36 months to complete. Elevar will initiate the two additional trials required during the first half of 2021 and is responsible for the full funding of both. Elevar will work closely with the GOG foundation to plan and execute the Phase III study. Elevar is still finalising the trial design but it will likely compare Apealea versus paclitaxel in combination with platinum chemotherapy (potentially with/without Avastin), which is the current standard of care in second-line platinum sensitive ovarian cancer. We note that Apealea non-inferiority in PFS and OS versus paclitaxel was successfully demonstrated in combination with carboplatin in the Phase III OAS-07OVA study that led to EU approval in 2018 (for further details see our initiation report, An appealing metamorphosis). Establishing superiority is a higher-risk strategy but, if confirmed, could lead to improved reimbursement and higher uptake. This could also have a positive read-across to Europe, potentially strengthening and expanding the label. Elevar also plans to collect health economic data that could be applicable to reimbursement negotiations in all territories.

Revised US launch affects our maiden profitability timeframe

We now forecast launch at end 2025 (vs 2023) and note that prompt execution is required to meet these timelines. We maintain our Apealea US peak sales forecasts of $128m in ovarian cancer and have pushed the timeframe to reach peak sales out by two years. The US is a key part of total sales and represents c 44% in 2030. Oasmia’s prior strategic goal is to be cash positive and achieve operational profitability from FY23. Timings of cash flows are difficult to predict as they depend on differing factors; however, our previous forecasts assumed Apealea US launch in FY23. The delay to our forecast US approval has also affected our forecast timeframe to maiden profitability, which has now shifted to FY25 (vs FY23), largely due to the delays in regulatory and launch related milestones (our previous forecasts assumed a $10m milestone on US approval in FY22 and $20m on US launch in FY23, with smaller milestones in additional countries in Europe and RoW). We now forecast a $10m milestone on US approval and $20m on US launch at end FY25. Key to our assumption is timely patient recruitment for the Phase III study. Given Oasmia’s current cash position, cash burn rate and our forecast Apealea revenues in Europe and RoW, we expect Oasmia to have sufficient capital to reach our new forecast maiden profitability in FY25.

Europe partnering deal announcement by Elevar on the horizon

Oasmia reported first sale and treatment of a patient with Apealea in Finland during the period. This is a significant milestone given the launch of Apealea in Nordic regions in February 2020 was hampered by COVID-19. Oasmia has seen positive interest from Sweden, although the effect of COVID-19 restrictions on its salesforce has led to little progress in this highly competitive market. A national registry trial is also under discussion in Sweden that, if required, could delay first sales further. In Denmark, the negative outcome of the compulsory HTA application due to a lack of health economic data has stalled reimbursement negotiations. Oasmia is working on alternatives to generate clinical data. We note that Elevar will be looking to generate health economic data in addition to the Phase III superiority study in the US, but this will unlikely be available for a number of years. As a result, management no longer expects significant prescription and sales volumes to originate from Denmark. It has stated that it does not expect the negative outcome of the Denmark HTA application to affect negotiations in other European countries and will be counting on a European partner to acquire any additional data that may be required for reimbursement in these countries.

In July Elevar announced a partnership agreement with US-based Tanner Pharma, a global provider of integrated specialty access solutions, which will facilitate access to Apealea on a named-patient basis ex-US in countries where Apealea is not commercially available. Under the named-patient programme (early or expanded access programme), physicians can prescribe investigational or approved drugs before their commercial availability to patients with no therapeutic alternatives. Elevar is in the final round of discussions for a distribution partner in Europe and we expect a partnering deal to be announced shortly to enable full launches across Europe with the accompanying country by country reimbursement negotiations. Positive results from the pivotal superiority study needed for the US NDA filing for Apealea could have a positive read across to Europe, leading to a label expansion, improved reimbursement and higher uptake, although the time frame for this is ~2025.

Further indications are key to Apealea value extraction

Apealea’s potential for use across multiple cancers represents upside (additional clinical trials required) and is critical for value maximisation. In terms of resource allocation, Elevar will need to optimise investment into two or three value-driving indications (we believe Apealea will not be developed for indications for which Abraxane (human albumin-bound paclitaxel) is approved and we note combination studies with targeted therapies and/or PD-1 inhibitors will be a critical element of its future success. We do not include other indications in our forecasts and valuation as we have no visibility on future development plans. Elevar plans to reveal additional indications in due course.

In October Elevar signed an agreement with Taiba Middle East FZ LLC for the commercialisation of Apealea in the MENA region. This is the first regional partnership and Taiba has initiated the process of obtaining the required regulatory approvals for commercialisation of Apealea. We expect the first market where Apealea is available to be Saudi Arabia, which is also the largest market in this region. Taiba is also responsible for managing named-patient programmes in this region, which will allow patients early access to Apealea before commercial launch and availability. Elevar is in active discussions with a number of other potential regional partners around the world.

Progressing on other fronts

A key pillar of OASM’s refocused strategy is to explore licensing and partnership opportunities for its existing assets. At the interim results Oasmia announced it has appointed consultancy firms that will aid in identifying potential partners for the animal health franchise and the wider XR-17 platform. Oasmia has also appointed an international investment bank to provide strategic advisory services relating to the animal health business. It is assessing strategic options for its animal health business and multiple outcomes are possible, including in-house development, partnering, licensing, spinoff or divestment. We believe divestment is the strategy that maximises shareholder value as cash proceeds could be reinvested in building the human health pipeline (potentially through in-licensing opportunities), the company’s primary business. Our indicative valuation of the animal health business is SEK443.7m (for further details see our initiation report, An appealing metamorphosis).

Oasmia has a strong cash position and is actively pursuing partnering opportunities (in-licensing and M&A) for its proprietary XR-17 platform technology. We expect Nordic-based oncology companies to be the likely targets and note that management has expressed interest in assets with clinical proof-of-concept data (Phase Ib or higher). While OASM’s focus has been on oncology and chemotherapeutics, its XR-17 technology is applicable to APIs in other therapeutic areas and we expect to see Oasmia move into non-oncology indications in the near future. Oasmia has instructed a consultancy firm to initiate a four-step project to assess the positioning of the XR-17 platform versus competitors and the perceived industry needs. Oasmia also has the opportunity to out-license its XR-17 technology and forge partnerships with companies that have promising APIs that could benefit from its proven solubility-enhancing technology. The XR-17 technology is compatible with 10–15 different cytostatic therapies.

The expansion of its pipeline is necessary to allow Oasmia to build the critical mass required to attain its ultimate goal of becoming a profitable specialty pharmaceutical company with multiple assets spanning a range of phases of development. OASM’s second asset docetaxel micellar, an ethanol and polysorbate 80 free formulation of widely used chemotherapy agent docetaxel, is poised to enter clinical development in early 2021. In June 2020, Oasmia signed a partnership agreement with the Swiss Group for Clinical Cancer Research to conduct the Phase Ib study of docetaxel micellar in patients with advanced prostate cancer in Switzerland. Top-line results expected within the next 12–24 months will determine the future development path. The dossier prepared from the Phase Ib Switzerland trial will be US compatible, allowing Oasmia to quickly launch into a global Phase II study if the results are positive. Oasmia is also progressing an in-house developed ‘new API’ candidate through preclinical development. The target indication is undisclosed but is very likely in the oncology arena.

Beyond XR-17, Oasmia is looking to further develop its platform technology by leveraging its R&D capabilities. Promising preclinical results observed with its dual encapsulation XR-19 technology are being validated and may be best suited to non-oncology indications where lower doses are required. At the interim results Oasmia introduced XR-18 for the first time. This next generation of the XR-17 solubility-enhancing platform looks to provide technical improvements (stability and storage) and long-term IP protection. R&D is underway and XR-18 is in the very early stages of development.

Valuation

Our revised valuation of Oasmia Pharmaceutical is SEK2.42bn or SEK5.41/share (Exhibit 1) versus SEK2.82bn or SEK6.29/share previously and is based on a risk-adjusted NPV model of Apealea for treatment of ovarian cancer (US, EU5 and RoW) and docetaxel micellar in prostate cancer. Our forecasts have been affected by our delay to US Apealea launch by two years (we forecast peak sales in ovarian cancer of $128m in FY30 in the US; given its commercial availability, we use a 10% discount rate but we now risk adjust the US opportunity by 75% (previously 90%) to reflect the need for an additional Phase III trial. Our EU5 and RoW sales forecasts are unchanged. We forecast docetaxel micellar peak sales of SEK239m. Adding in net cash of SEK249.6m (at 31 October 2020), rolling our model forward in time and updating for FX, we reach our risk-adjusted NPV of SEK2.42bn. Our valuation does not include Oasmia’s proprietary technology platform and unconfirmed candidates at an early stage in preclinical development; consequently, additional indications for Apealea and docetaxel micellar, plus advancing new candidates into the clinic would provide further upside.

Exhibit 1: Oasmia SOTP NPV

Product

Indication

Launch

Peak sales ($m)

Value (SEKm)

Probability

rNPV (SEKm)

NPV/share (SEK/share)

Apealea US

Ovarian cancer

2025

128

619.7

75%

464.8

1.04

Apealea EU5

Ovarian cancer

2020/21

62

536.5

100%

536.5

1.20

Apealea RoW

Ovarian cancer

2020

92

431.0

90%

387.9

0.87

Docetaxel micellar Global

Prostate cancer

2025

239

1,326.9

25%

344.0

0.77

Animal health

Multiple cancers

2024

163

883.7

50%

441.9

0.99

Net cash at 31 October 2020

 

 

249.6

100%

249.6

0.56

Valuation

 

 

4,047.4

2,424.7

5.41

Source: Edison Investment Research

Financials

Oasmia reported slightly lower consolidated net sales of SEK0.362m in H1 FY21 (SEK0.433m in H1 FY20), which comprised largely of sales of supplies of SEK0.288m as the launch of Apealea in the Nordics was affected by COVID-19. Operating loss for the period amounted to SEK102.9m (SEK83.2m in H1 FY20). The increase was in part due to higher depreciation, amortisation and impairment (SEK17.7m vs SEK6.1m) as the amortisation of Apealea capitalised development costs started in Q4 FY20. Additionally, employee benefit expenses increased (SEK40.0m vs SEK29.1m) primarily due to severance costs relating to the strategic cost-reduction programme. The number of employees at the end of H1 FY21 was 49. The operating loss was also affected by a SEK3.1m fine imposed by Nasdaq Stockholm relating to the previous board of directors’ breach of good stock market practices in 2019. Following the H1 FY21 results we have reviewed our operating expenses for the year and now forecast an increased operating loss of SEK162.8m.

Taking into consideration cash and cash equivalents plus short-term investments of SEK329.6m, Oasmia had a net cash position of SEK249.6m at 31 October 2020. Our net cash calculation includes a deduction of SEK80m for the short-term liability relating to the MGC Capital claim. However, we note that this is largely offset by a counter claim held by Oasmia that has a face value of SEK60m (book value SEK40m). This in addition to our forecast revenues is sufficient to fund Oasmia through to our revised forecast breakeven year of FY25, given our expectations of costs to stabilise at a lower run rate and the top line to start contributing meaningfully.

Exhibit 2: Financial summary

Accounts: IFRS, year-end: April 30, SEK000s

 

 

2018

2019

2020

2021e

2022e

PROFIT & LOSS

 

 

 

 

 

 

 

Operating revenues

 

 

3,169

1,980

201,843

816

8,926

Licensing revenues

 

 

2,377

417

201,442

316

8,176

Other revenues

 

 

792

1,563

401

500

750

Total operating expenses*

 

 

(102,099)

(121,211)

(211,897)

(139,073)

(121,823)

EBITDA (reported)

 

 

(98,930)

(119,231)

(10,054)

(138,257)

(112,897)

Depreciation and amortisation

 

 

(4,794)

(31,005)

(20,032)

(24,587)

(24,150)

Reported operating income

 

 

(103,724)

(150,236)

(30,086)

(162,844)

(137,047)

Operating margin %

 

 

n/a

n/a

n/a

n/a

n/a

Finance income/(expense) excl lease expense

 

 

(14,289)

(18,240)

(12,267)

(6,221)

(11,881)

Leasing expense

 

 

0

0

(1,003)

(1,003)

(1,003)

Exceptionals and adjustments

 

 

0

0

0

0

0

Reported PBT

 

 

(118,013)

(168,476)

(43,356)

(170,069)

(149,931)

Income tax expense (includes exceptionals)

 

 

0

(32,822)

32,822

0

0

Reported net income

 

 

(118,013)

(201,298)

(10,534)

(170,069)

(149,931)

Basic average number of shares, m

 

 

166.2

253.3

398.4

448.4

448.4

Year-end number of shares, m

 

 

176.4

294.6

448.4

448.4

448.4

Basic EPS (SEK)

 

 

(0.7)

(0.8)

(0.0)

(0.4)

(0.3)

Adjusted EPS (SEK)

 

 

(0.7)

(0.7)

0.0

(0.3)

(0.3)

Dividend per share (SEK)

 

 

0

0

0

0

0

BALANCE SHEET

 

 

 

 

 

 

 

Property, plant and equipment

 

 

15,527

14,701

28,014

26,014

24,451

Intangible assets

 

 

35,697

10,497

9,759

13,919

18,079

Capitalised development costs

 

 

426,079

433,130

433,357

413,110

392,863

Other non-current assets

 

 

2

2,002

2,002

2,002

2,002

Total non-current assets

 

 

477,305

460,330

473,132

455,045

437,395

Cash and equivalents

 

 

15,580

116,272

201,018

261,667

129,670

Short-term investments

 

 

0

0

234,080

34,080

34,080

Inventories

 

 

9,746

7,420

28,837

11,123

11,651

Trade and other receivables

 

 

35,949

6,545

43,907

43,875

43,889

Other current assets

 

 

17,807

14,472

24,372

24,372

24,372

Total current assets

 

 

79,082

144,709

532,214

375,118

243,662

Non-current loans and borrowings

 

 

0

0

0

0

0

Long-term leasing liabilities

 

 

0

0

8,845

8,845

8,845

Other non-current liabilities

 

 

0

32,822

0

0

0

Total non-current liabilities

 

 

0

32,822

8,845

8,845

8,845

Trade and other payables

 

 

9,256

17,666

22,524

17,408

18,233

Current loans and borrowings

 

 

187,260

139,568

80,001

80,001

80,001

Short-term leasing liabilities

 

 

0

0

5,320

5,320

5,320

Other current liabilities

 

 

26,523

31,485

69,268

69,268

69,268

Total current liabilities

 

 

223,039

188,719

177,113

171,997

172,822

Equity attributable to company

 

 

333,349

383,498

819,390

649,321

499,390

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Operating Profit/(loss)

 

 

(103,724)

(150,236)

(30,086)

(162,844)

(137,047)

Depreciation and amortisation

 

 

4,768

6,005

13,651

24,587

24,150

Share based payments

 

 

0

0

120

0

0

Other adjustments

 

 

1,652

32,086

12,738

0

0

Movements in working capital

 

 

(16,305)

(3,657)

1,065

12,629

284

Interest paid / received

 

 

(10,025)

(3,037)

(4,354)

(5,721)

(6,381)

Income taxes paid

 

 

0

0

0

0

0

Other financing charges

 

 

0

0

0

(1,503)

(6,503)

Cash from operations (CFO)

 

 

(123,634)

(118,839)

(6,866)

(132,852)

(125,497)

Capex**

 

 

(21,452)

(12,031)

(12,873)

(6,500)

(6,500)

Acquisitions & disposals net

 

 

0

0

0

0

0

Other investing activities

 

 

0

(2,000)

(275,251)

200,000

0

Cash used in investing activities (CFIA)

 

 

(21,452)

(14,031)

(288,124)

193,500

(6,500)

Net proceeds from issue of shares

 

 

147,456

151,852

401,863

0

0

Movements in debt

 

 

(15,000)

81,648

0

0

0

Other financing activities

 

 

199

0

(22,141)

0

0

Cash from financing activities (CFF)

 

 

132,655

233,500

379,722

0

0

Cash and equivalents at beginning of period

 

 

28,001

15,580

116,272

201,019

261,667

Increase/(decrease) in cash and equivalents

 

 

(12,431)

100,630

84,732

60,648

(131,997)

Effect of FX on cash and equivalents

 

 

10

62

15

0

0

Cash and equivalents at end of period

 

 

15,580

116,272

201,019

261,667

129,670

Net (debt)/cash

 

 

(171,680)

(23,296)

355,097

215,746

83,749

Source: Company accounts, Edison Investment Research. Note: *Includes non-capitalised R&D costs of SEK84.8m in FY20. **Includes capitalised development costs of SEK4.4m in FY20.


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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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Oasmia Pharmaceutical and prepared and issued by Edison, in consideration of a fee payable by Oasmia Pharmaceutical. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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