Acacia Pharma — ByFavo deal to bolster pipeline

Acacia Pharma (EU: ACPH)

Last close As at 20/12/2024

1.28

0.04 (3.23%)

Market capitalisation

129m

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Research: Healthcare

Acacia Pharma — ByFavo deal to bolster pipeline

Acacia Pharma has announced a deal with Cosmo Pharmaceuticals to acquire the US rights to registrational phase asset ByFavo (remimazolam). The deal strengthens Acacia’s product offering beyond key asset BARHEMSYS for post-operative nausea and vomiting (PONV), as it looks to build its US sales and marketing infrastructure in 2020. Both assets are under FDA review, with imminent PDUFA dates (BARHEMSYS 26 February, ByFavo 5 April) and potential US launch of both in H220. The terms of the deal are complex and we place our forecasts and valuation under review. However, the €10m equity investment and access of up to $35m in loan facilities from Cosmos is important in extending Acacia’s cash reach into 2020, enabling it to expand its much-needed US commercial infrastructure ahead of product launches.

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Healthcare

Acacia Pharma

ByFavo deal to bolster pipeline

Licensing deal

Pharma and biotech

13 January 2020

Price

€2.52

Market cap

€136m

Net cash ($m) at 30 June 2019

12.8

Shares in issue

53.9m

Free float

28%

Code

ACPH

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

Business description

Acacia Pharma is a hospital pharmaceutical company focused on the development and commercialisation of new nausea and vomiting treatments for surgical and cancer patients. Its main product, BARHEMSYS, is used for the treatment of PONV and could be approved by the FDA in 2020.

Analyst

Dr Susie Jana

+44 (0)20 3077 5700

Acacia Pharma is a research client of Edison Investment Research Limited

Acacia Pharma has announced a deal with Cosmo Pharmaceuticals to acquire the US rights to registrational phase asset ByFavo (remimazolam). The deal strengthens Acacia’s product offering beyond key asset BARHEMSYS for post-operative nausea and vomiting (PONV), as it looks to build its US sales and marketing infrastructure in 2020. Both assets are under FDA review, with imminent PDUFA dates (BARHEMSYS 26 February, ByFavo 5 April) and potential US launch of both in H220. The terms of the deal are complex and we place our forecasts and valuation under review. However, the €10m equity investment and access of up to $35m in loan facilities from Cosmos is important in extending Acacia’s cash reach into 2020, enabling it to expand its much-needed US commercial infrastructure ahead of product launches.

Year end

Revenue
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/17

0.0

(6.5)

(2.32)

0.00

N/A

N/A

12/18

0.0

(16.2)

(0.35)

0.00

N/A

N/A

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

ByFavo (remimazolam) is an ultra-short-acting and reversible IV benzodiazepine sedative/anaesthetic designed for use during endoscopic procedures. Cosmo in-licensed the product from Paion in 2016. Under the terms of the deal, Cosmo will receive a €10m upfront payment from Acacia Pharma (through equity issuance) and make a strategic equity investment of €10m in Acacia. In total, Cosmo will hold 14.08% of Acacia’s enlarged share capital. Cosmo will make up to $35m available in a loan facility that is contingent on approval milestones (€10m on US approval of BARHEMSYS and €20m on US approval of ByFavo). Under the terms of the licence deal, Cosmo will receive a €10m upfront payment (through ACPH equity issuance), €30m payment on US ByFavo approval, up to €105m in sales-related milestones and tiered double-digit royalties on US sales. In a separate statement, Acacia has announced CFO Christine Soden will be retiring in February 2020 and the board has appointed Gary Gemignani as successor. Our forecasts and valuation are under review.

General disclaimer and copyright

This report has been commissioned by Acacia Pharma and prepared and issued by Edison, in consideration of a fee payable by Acacia Pharma. 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.

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This report has been commissioned by Acacia Pharma and prepared and issued by Edison, in consideration of a fee payable by Acacia Pharma. 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). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2020. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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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.

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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.

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Schumannstrasse 34b

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Germany

London +44 (0)20 3077 5700

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NSW 2000, Australia

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