Context Therapeutics — A catalyst-rich year ahead

Context Therapeutics (NASDAQ: CNTX)

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Research: Healthcare

Context Therapeutics — A catalyst-rich year ahead

Context Therapeutics’ FY21 results echoed previously highlighted progress on its novel women’s oncology franchise. With all four clinical programs expected to have initial read-outs in 2022, the next few months could be instrumental in shaping the outlook for the company. The share price, which has remained range bound in recent months, could potentially see an uplift on positive data readouts. Importantly, the cash position remains robust with the year-end cash balance of $50m sufficient to extend the runway into 2024. In the nearer term, we expect the upcoming presentations at the AACR (April 2022) to likely catalyze a momentum shift, contingent on the quality of the data. Pending upcoming read-outs, our valuation remains largely unchanged at $134.1m or $8.40/share.

Jyoti Prakash

Written by

Jyoti Prakash

Analyst, Healthcare

Healthcare

Context Therapeutics

A catalyst-rich year ahead

Earnings update

Pharma & biotech

8 April 2022

Price

$2.4

Market cap

$38.3m

Net cash ($m) at 31 December 2021

49.7

Shares in issue

15.97m

Free float

67%

Code

CNTX

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

52.3

4.7

N/A

Rel (local)

42.2

8.9

N/A

52-week high/low

US$7.5

US$1.7

Business description

Context Therapeutics is a clinical-stage women’s oncology company. Lead candidate ONA-XR is a ‘full’ progesterone receptor antagonist currently being evaluated in three Phase II clinical trials in hormone-driven breast, endometrial and ovarian cancer. Preliminary data from at least one trial are expected in mid-2022. The other asset is a bi-specific monoclonal antibody, CLDN6xCD3, currently undergoing preclinical development.

Next events

Preclinical data presentations at AACR

April 2022

ONA-XR 1st line HR+HER2-mBC and endometrial cancer Phase II preliminary data

Mid-2022

Analyst

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Context Therapeutics is a research client of Edison Investment Research Limited

Context Therapeutics’ FY21 results echoed previously highlighted progress on its novel women’s oncology franchise. With all four clinical programs expected to have initial read-outs in 2022, the next few months could be instrumental in shaping the outlook for the company. The share price, which has remained range bound in recent months, could potentially see an uplift on positive data readouts. Importantly, the cash position remains robust with the year-end cash balance of $50m sufficient to extend the runway into 2024. In the nearer term, we expect the upcoming presentations at the AACR (April 2022) to likely catalyze a momentum shift, contingent on the quality of the data. Pending upcoming read-outs, our valuation remains largely unchanged at $134.1m or $8.40/share.

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/20

0.0

(3.2)

(9.28)

0.0

N/A

N/A

12/21

0.0

(10.6)

(3.74)

0.0

N/A

N/A

12/22e

0.0

(16.1)

(1.01)

0.0

N/A

N/A

12/23e

0.0

(22.3)

(1.40)

0.0

N/A

N/A

Note: *PBT and EPS are normalized, excluding exceptional items.

The pipeline is approaching key inflection points

Enrollment remains on track across all clinical programs (three Phase II and one Phase Ib/II trials evaluating lead asset ONA-XR in multiple hormone-driven cancers). With preliminary data expected from two studies (first line HR+/HER2- mBC and recurrent endometrial cancers) by mid-2022 (and in H222 for the other two), investors have plenty to look out for in the near term. Positive data from any one study could potentially trigger an upswing in the stock price, in our view. For the second asset, CLDN6xCD3, the company anticipates the selection of a candidate in 2022.

Upcoming AACR data a potential near-term catalyst

In March 2022, Context announced plans to present five abstracts highlighting new preclinical data on the ONA-XR and CLDN6xCD3 programs at the upcoming American Association for Cancer Research Annual Meeting (AACR) in April 2022. We look forward to these data-readouts and believe that the quality and strength of this data could underpin near-term momentum for the company.

Cash balance offers headroom to 2024

Context reported $49.7m cash at year-end 2021, and we estimate these funds should extend the company’s operating runway into 2024. Nevertheless, in the absence of ensuing partnerships/out-licensing deals, we continue to estimate the need to raise a further $110m (modelled as illustrative debt) between FY24 and FY26, as discussed in our recent initiation report dated 24 February 2022.

Valuation: $134.1m or $8.40 per basic share

We have incorporated the reported FY21 results and have added another year to our estimates (FY24). After adjusting for the estimated (end Q122e) cash balance of $46.4m, our valuation remains largely unchanged at $134.1m (or $8.40 per basic share), from $134.9m (or $8.45 per basic share) previously.

Pipeline momentum building

ONA-XR is poised to report preliminary data across programs

Context’s clinical programs continue to progress towards their respective deadlines for preliminary data readouts and we expect the results to dictate investor sentiment in the near to medium term, provided there are no material delays in reporting the observations (a common concern with investigator-sponsored trials given that the company does not have full control of the study).

All clinical studies are evaluating the company’s lead asset ONA-XR across a range of hormone-driven cancers (breast, ovarian and endometrial cancer). As a quick refresher, ONA-XR is an extended-release version of the progesterone receptor (PR) antagonist onapristone, the only ‘full’ PR antagonist (no agonist activity) to be tested in humans to date, to our knowledge. The drug is being evaluated as a combination therapy in hormone-driven cancers affecting women, including hormone receptor-positive (HR+)/human epidermal growth factor receptor 2 negative (HER2-) metastatic breast cancer (mBC) (Phase II trials in second-/third-line treatment and Phase Ib/II trials as first-line escalation therapy for a subset of patients), recurrent endometrial (uterine) cancer (Phase II) and a rare form of ovarian cancer termed granulosa cell tumor (GCT) of the ovary (Phase II). The company’s pipeline is presented in Exhibit 1 below and discussed in greater detail in our recent initiation report.

Exhibit 1: Context Therapeutics pipeline

Source: Context Therapeutics

Although two of the four clinical programs are expected to report preliminary data by mid-2022 (first line HR+/HER2- mBC – Phase Ib and recurrent endometrial – Phase II cancers), we continue to expect the second-/third-line HR+/HER2- mBC opportunity to be the lynchpin for driving future value for Context. Results for this study are expected in H222. In our last note, we also highlighted potential competition from the newer-generation oral selective estrogen receptor degraders (SERDs), four of which were in advanced-stage clinical development at that time. We note that since we last wrote, Sanofi’s oral SERD amcenestrant has failed its Phase II Ameera-3 clinical trial and the fate of Roche’s Giredestrant (results expected in Q222) remains uncertain given its similarity in study design and endpoints to amcenestrant. While this may make for a clearer path for Context, it also highlights the risks inherent in the space.

Upcoming AACR presentations could be a potential catalyst

In March 2022, the company announced that it will be presenting five separate abstracts highlighting new preclinical data on its assets ONA-XR and CLDN6xCD3 at the upcoming AACR scheduled for the second week of April 2022, followed by an R&D webinar. AACR is a leading global academic conference for oncology research, and we expect that these presentations, if compelling, could swing the momentum in the company’s favor. We will be covering the results from the AACR and subsequent R&D meet in a note following the event on 13 April.

CLDN6xCD33 inching closer to the clinic

Looking beyond ONA-XR, for the second asset, the bispecific monoclonal antibody (BsAb) CLDN6xCD3, the company expects to select a clinical candidate in the second half of 2022 to support IND-enabling studies. CLDN6, a protein coding gene, part of the claudin family of tight junction proteins, is enriched in several cancer cells (rarely in healthy tissue), but accurate selectivity remains a challenge. While several pharmaceutical companies are developing CLDN6 targeting antibodies, Context claims best in-class potential with a 10x selectivity over competitors and potentially improved efficacy through CD3 facilitated T-cell recruitment. The asset is currently not included in our valuation, with potential to add upside on clinical progression.

Valuation

Since no material developments have taken place since our initiation note, our overall valuation remains largely unchanged at $134.1m or $8.40 per basic share (Exhibit 2), down marginally from $134.9m or $8.45 per basic share. The slight decrease is primarily due to updating the net cash figure to reflect our Q122 estimate of $46.4m. We will reassess our valuation following data read-outs from the four ONA-XR studies.

Exhibit 2: Context Therapeutics valuation (risk-adjusted NPV)

Program

Indication

Status

Probability of success

Launch year

Peak sales ($m)

Economics

Risked NPV ($m)

ONA-XR

Second-line HR+/HER2- mBC

Phase II

15%

2026

498

US (fully owned)
Europe (out-licensed)

40.7

First-line escalation therapy for HR+/HER2- mBC (ctDNA+)

Phase Ib

7.5%

2027

222

US (fully owned)
Europe (out-licensed)

7.0

Recurrent PR+ endometrial cancer

Phase II

10%

2027

583

US (fully owned)
Europe (out-licensed)

28.5

Advanced GCT of the ovary

Phase II

10%

2027

292

US (fully owned)
Europe (out-licensed)

11.5

Net cash (estimated at the end of Q122) $m

46.4

Total firm value

134.1

Total basic shares (m)

16.0

Value per basic share ($)

8.40

Total diluted shares (m)

1.6

Value per diluted share ($)

7.65

Source: Edison Investment Research

Financials

Context’s FY21 results were broadly in line with our expectations. While R&D expenses ($3.8m, excluding the one-time costs of $3.1m associated with the acquisition of the CLDN6 asset) were slightly lower than our estimated figure of $4.6m, the G&A expenses were higher ($3.6m vs our estimate of $2.8m), resulting in the reported operating loss figure of $10.5m matching our forecast for the year. For FY22–24, we have tweaked our R&D and G&A expectations based on the FY21 trend, resulting in revised net loss figures that are slightly lower than our previous estimates. Our cash burn projections have been marginally modified ($13.2m and $22.3m in FY22 and FY23, respectively, versus $10.9m and $24.8m), with the current cash balance ($49.7m at the end of December 2021) adequate to extend the runway into 2024. We continue to estimate another $110m capital raise before Context reaches profitability in 2027. We have modelled the required fund-raising as illustrative debt, according to Edison policy ($40m each in FY24 and FY25 and an additional $30m in FY26).

Exhibit 3: Financial summary

$000s

2020

2021

2022e

2023e

2024e

Year end 31 December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

INCOME STATEMENT

Revenue

 

 

0

0

0

0

0

Cost of Sales

0

0

0

0

0

Gross Profit

0

0

0

0

0

Research and Development Expenses

(1,642)

(6,893)

(12,336)

(16,904)

(30,786)

Sales, General and Administrative Expenses

(931)

(3,633)

(4,723)

(6,140)

(7,982)

EBITDA

 

 

(2,572)

(10,526)

(17,059)

(23,044)

(38,768)

Operating profit (before amort. and excepts.)

 

(2,572)

(10,526)

(17,059)

(23,044)

(38,768)

Amortization of acquired intangibles

0

0

0

0

0

Exceptionals

0

0

0

0

0

Share-based payments

0

0

0

0

0

Reported operating profit

(2,572)

(10,526)

(17,059)

(23,044)

(38,768)

Net Interest

(661)

(64)

994

730

283

Joint ventures & associates (post tax)

0

0

0

0

0

Exceptionals

9,878

133

0

0

0

Profit Before Tax (norm)

 

 

(3,233)

(10,590)

(16,065)

(22,314)

(38,485)

Profit Before Tax (reported)

 

 

6,644

(10,457)

(16,065)

(22,314)

(38,485)

Reported tax

0

0

0

0

0

Profit After Tax (norm)

(3,233)

(10,590)

(16,065)

(22,314)

(38,485)

Profit After Tax (reported)

6,644

(10,457)

(16,065)

(22,314)

(38,485)

Minority interests

0

0

0

0

0

Discontinued operations

0

0

0

0

0

Net income (normalized)

(3,233)

(10,590)

(16,065)

(22,314)

(38,485)

Net income (reported)

6,644

(10,457)

(16,065)

(22,314)

(38,485)

Average Number of Shares Outstanding (m)

0

3

16

16

16

EPS - basic normalized ($)

 

 

(9.28)

(3.74)

(1.01)

(1.40)

(2.41)

EPS - normalized fully diluted ($)

 

 

(9.28)

(3.74)

(1.01)

(1.40)

(2.41)

EPS - basic reported ($)

 

 

3.07

(3.69)

(1.01)

(1.40)

(2.41)

Dividend ($)

0

0

0

0

0

BALANCE SHEET

Fixed Assets

 

 

118

0

0

0

0

Intangible Assets

0

0

0

0

0

Tangible Assets

0

0

0

0

0

Investments & other

118

0

0

0

0

Current Assets

 

 

350

51,306

37,123

14,806

17,549

Stocks

0

0

0

0

0

Debtors

0

0

0

0

0

Cash & cash equivalents

341

49,686

36,475

14,157

16,901

Other

9

1,620

648

648

648

Current Liabilities

 

 

(9,548)

(3,033)

(4,916)

(4,913)

(6,141)

Creditors

(2,708)

(1,826)

(2,960)

(2,799)

(3,296)

Tax and social security

0

0

0

0

0

Short term borrowings

(5,884)

0

0

0

0

Other

(956)

(1,207)

(1,956)

(2,114)

(2,845)

Long Term Liabilities

 

 

(69)

0

0

0

(40,000)

Long term borrowings

(69)

0

0

0

(40,000)

Other long-term liabilities

0

0

0

0

0

Net Assets

 

 

(9,150)

48,272

32,207

9,893

(28,592)

Convertible preferred stock

(7,771)

0

0

0

0

Minority interests

0

0

0

0

0

Shareholders' equity

 

 

(16,921)

48,272

32,207

9,893

(28,592)

CASH FLOW

Op Cash Flow before WC and tax

(2,572)

(10,526)

(17,059)

(23,044)

(38,768)

Working capital

1,318

(2,225)

2,855

(3)

1,228

Exceptional & other

219

3,951

994

730

283

Tax

0

0

0

0

0

Operating Cash Flow

 

 

(1,035)

(8,799)

(13,210)

(22,318)

(37,256)

Capex

0

(250)

0

0

0

Equity financing

0

58,394

0

0

0

Dividends

0

0

0

0

0

Other

0

0

0

0

0

Net Cash Flow

(1,035)

49,345

(13,210)

(22,318)

(37,256)

Opening net debt/(cash)

 

 

21,742

13,384

(49,686)

(36,475)

(14,157)

FX

0

0

0

0

0

Other non-cash movements

9,393

13,725

0

0

0

Closing net debt/(cash)

 

 

13,384

(49,686)

(36,475)

(14,157)

23,099

Source: Context Therapeutics reports, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Context Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Context Therapeutics. Edison Investment Research standard fees are £60,000 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 2022 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

1,185 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 Context Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Context Therapeutics. Edison Investment Research standard fees are £60,000 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 2022 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

1,185 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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Lowland Investment Company — Patient, diversified and ripe for consideration

Lowland Investment Company’s (LWI’s) managers, James Henderson and Laura Foll, run this UK equity income portfolio with a ‘growth first’ mentality, believing that companies with strong market positions and pricing power are best placed to grow their earnings, and consequently their dividends, over time. They cast their net across the market cap spectrum, aiming to own a diversified set of attractively valued – mainly UK – stocks spread across six ‘buckets’, from small-cap income to large-cap growth. Currently, the portfolio is tilted towards financial and industrial stocks, so the recent performance has somewhat lagged a volatile market where gains have been driven in large part by commodity producers. However, the managers are confident in the longer-term prospects of the 100+ companies they own, and with a c 4.8% dividend yield, investors in LWI are arguably being ‘paid to wait’ for value to be realised.

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