Allium Medical Solutions — Continuing to execute on an ambitious plan

Allium Medical Solutions — Continuing to execute on an ambitious plan

Following broad FDA approval for Gardia, Allium anticipates the publication of clinical study results in a leading cardiology journal. Allium believes this will further increase Gardia’s attractiveness for both physicians and potential partners. Allium has secured approval for most of its urology stents and soft tissue fixation products in its main markets. We expect additional product approvals during 2018 and sales growth from its distribution deals in new and established markets. Allium’s business model is based on distribution agreements with regional partners, with a minimum purchase commitment. New agreements are worth at least NIS192m in total over approximately five years, which supports our 2017–20e revenue CAGR of 57%. Our updated valuation is NIS1.91/share.

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Written by

Allium Medical Solutions

Continuing to execute on an ambitious plan

Business outlook

Medical devices

17 July 2018

Price*

NIS1.17

Market cap

NIS84m

*Priced at 12July 2018

Net cash (NISm) at end 2017

22.95

Shares in issue

71.4m

Free float

60%

Code

ALMD

Primary exchange

TASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(9.9)

(11.4)

4.8

Rel (local)

(9.5)

(15.1)

(1.4)

52-week high/low

NIS1.5

NIS0.8

Business description

Allium Medical Solutions is a company focused on developing and marketing minimally invasive devices in various areas: cardiovascular, metabolic, genitourinary and gastrointestinal. The company has three selling product lines: Allium Stents, IBI (EndoFast) and Gardia Medical. Allium markets its products mainly through distribution agreements.

Next events

Potential strategic agreements for Gardia

2018

Regulatory approval in additional markets for Allium and IBI

2018

Complete Allevetix first-in-human trial

Q418

Analysts

Juan Pedro Serrate

+44 (0)20 3681 2534

Jonas Peciulis

+44 (0)20 3077 5728

Following broad FDA approval for Gardia, Allium anticipates the publication of clinical study results in a leading cardiology journal. Allium believes this will further increase Gardia’s attractiveness for both physicians and potential partners. Allium has secured approval for most of its urology stents and soft tissue fixation products in its main markets. We expect additional product approvals during 2018 and sales growth from its distribution deals in new and established markets. Allium’s business model is based on distribution agreements with regional partners, with a minimum purchase commitment. New agreements are worth at least NIS192m in total over approximately five years, which supports our 2017–20e revenue CAGR of 57%. Our updated valuation is NIS1.91/share.

Year
end

Revenue (NISm)

PBT*
(NISm)

EPS*
(NIS)

DPS
(NIS)

P/E
(x)

Yield
(%)

12/16

7.4

(22.0)

(0.49)

0.0

N/A

N/A

12/17

7.7

(21.4)

(0.37)

0.0

N/A

N/A

12/18e

14.0

(13.7)

(0.19)

0.0

N/A

N/A

12/19e

21.0

(9.6)

(0.13)

0.0

N/A

N/A

Note: *Normalised, excluding amortisation of acquired intangibles and exceptionals.

Wirion is FDA approved with all atherectomy devices

Gardia Medical’s Wirion system has recently gained FDA approval for leg artery catheterisation, becoming the only embolic protection system cleared by the FDA with all atherectomy devices. The product is CE mark approved and marketed in selected US and European centres. We model Gardia as part of the revenue stream and include all approved regions in our model. Allium looks to monetise this opportunity in the form of a strategic agreement with an industry leader. Results from the WISE-LE study will be published in a leading cardiology journal.

Approvals and first orders in China, Mexico & Russia

The CFDA recently approved Allium’s complete portfolio of urological stents before a first order worth NIS200k was placed. Furthermore, the first order from its Mexican distributor valued at NIS300k was paid upfront in Q417. In addition, the urethral stents and EndoFast fixation product have been approved in Russia, and Allium expects approval of its ureteral stents and marketing this year. We expect approvals of the ureteral stents and EndoFast in Mexico this year. Our total sales forecasts are unchanged at c NIS14m in FY18 growing to NIS30m in 2020.

Making progress with Allevetix and TruLeaf

Allevetix is Allium’s indwelling gastroduodenal sleeve, currently undergoing a first-in-man (FIM) clinical trial in 10 patients with obesity and diabetes for three months. Allium expects to complete the study by year-end; a pivotal trial will commence in 2019. TruLeaf is a mitral valve replacement device currently in preclinical studies.

Valuation: DCF value of NIS1.91/share

We value Allium at NIS1.91/share (NIS1.64 before) using a DCF approach. The upgrade is due to Allevetix, which we now value based on the last funding round. Our overall valuation of Allium remains driven by sales of stents, EndoFast and Wirion in China, Russia and Mexico.

Investment summary

Company description: Minimally invasive products

Allium Medical Solutions is a medical technology company that develops, manufactures and markets minimally invasive products grouped under four medical fields: urology, obesity/diabetes, cardiovascular and urogynecology. Allium has products in different stages, from in-house development to products marketed through its group of companies. In particular, the company offers fully covered urology and biliary stents in different countries, through Allium Stents. Allium provides soft tissue fixation devices sold through IBI and embolic protection devices through its subsidiary, Gardia Medical. Additionally, the company is developing a gastroduodenal sleeve to treat obesity and Type 2 diabetes through Allevetix in a clinical study. Lastly, TruLeaf is a transcatheter mitral valve replacement (TMVR) device in preclinical development. The company is listed on the Tel Aviv Stock Exchange (TASE) and is headquartered in Caesarea, Israel.

Valuation: NIS1.91/share

We now value Allium at NIS117m, or NIS1.91/share (vs NIS1.64) on an undiluted basis using a DCF approach based on a 12.5% discount rate (10% for terminal value), explicit free cash flow forecast for Allium Stents, IBI and Gardia to 2026 and a 2% terminal growth rate. The upgrade is due to Allevetix, which we now value based on the last funding round (NIS30m for Allium’s 85% stake). Overall, our valuation of Allium is driven by the anticipated increase in stents, EndoFast and Gardia sales, which should mainly come from the distribution deals in emerging markets (China, Mexico and Russia) as well as established markets. Our base case forecasts are unchanged and imply overall revenue CAGR of 20% for 2018-26e. Delays or difficulties in executing on this ambitious growth strategy could represent significant downside risk to our valuation and vice versa.

Financials: FY17 results, 57% CAGR forecast in 2017-20e

In FY17, sales were up 5% to NIS7.7m vs NIS7.35m in FY16. We expect sales to continue to increase as the distribution agreements in China, Russia and Mexico start generating revenues. We therefore continue to forecast sales growing at a CAGR of 57% in 2017-20e, from NIS7.7m to NIS30m. We estimate operating expenses associated with these agreements to be small as distributors normally support regulatory and marketing activities in their local markets, while committing to purchasing a minimum amount of products over a certain period of time. We continue to forecast EBITDA break-even in 2020. The company raised c NIS19m net in two equity raises during 2017, which we expect to provide runway into mid-2019.

Sensitivities: Execution risk

We base our forecasts and valuation on the company’s ability to execute on its ambitious growth strategy, with revenues expanding at a double-digit rate as it continues to gain share in established and new markets. Allium has signed distribution agreements worth c NIS192m, with the bulk concentrated in three emerging countries: China, Mexico and Russia. Commercial, political or economic stability may have an impact on these deals. Regulatory uncertainty and reimbursement are equally important in obtaining the maximum value from these deals. Relying on the private sector may provide a base level of revenues, but we think reimbursement is critical to increase sales. The company's distributors are actively promoting reimbursement codes for each of Allium's products. IBI’s EndoFast products may face challenges as a result of the safety issues seen in the products of other competitors. Gardia Medical has had limited revenue expansion so far and depends on either finding a strategic partner or outlining a more ambitious commercialisation strategy. Allevetix and TruLeaf’s challenges are related to achieving successful manufacturing and clinical results, and obtaining approval from regulatory authorities.

Commercialisation remains key

The main revenue generators for the company are Allium Stents and IBI Medical’s EndoFast products, which generate the bulk of sales (92% in 2017). Allium markets these products through distribution agreements with regional players. In Allium’s model, the partner initially sells to private centres and markets to public centres once reimbursement has been achieved. Allium sells its products to distributors at an agreed transfer price, eg an average of NIS2,330 per stent in 2017. A distributor generates around a 50% margin on the final selling price; distributors are subject to penalties in the case of breaching agreement terms (eg being unable to sell pre-agreed volumes). Allium has the right to terminate the agreement, terminate exclusivity or raise prices.

Contracts valued at NIS192m support revenue growth

Over the past three years, Allium has signed distribution agreements with a purchase commitment of at least c NIS192m in total over approximately five years per contract, as shown in Exhibit 1.

Exhibit 1: Distribution deals

Country

Value (NISm)

Period (years)

Start year

Allium Stents

China

58.0

8

2018

India

5.6

6

2018

Canada

3.7

5

2015

Allium Stents and EndoFast

Russia

48.0

5

2018

Central & Eastern Europe (15 countries)*

6.3

5

2018

Kazakhstan

5.0

5

2017

Taiwan

3.0

5

2016

Turkey

9.0

5

2015

Argentina

4.5

5

2015

Spain

8.7

5

2015

Mexico

26.0

5

2017

South Korea

4.5

5

2016

EndoFast

Italy

6.5

6

2016

Total

191.8

Source: Allium Medical Solutions. Note: *This deal substitutes a 2015 agreement for the Czech Republic and Slovakia worth NIS2m over five years.

We include these deals in our revenue forecast, with a particular focus on Mexico, China and Russia, which represent the majority of the revenues from these distribution agreements (NIS132m). In May 2018, the company announced that all stent products had been approved for marketing by the China Food and Drug Administration (CFDA) and in June 2018 the first order of NIS200k from its distributor was placed. The prostatic stents and EndoFast have been approved in Russia and the company expects approval of the rest of stents and first orders in Russia this year. We also expect approvals of the rest of the stents and EndoFast in Mexico this year. We show the detail of these contracts in Allium’s key growth markets and our 2018 forecast in Exhibit 2.

Exhibit 2: Detail of main deals

Country

Product approved

Comments

2018 forecast

China

All stent portfolio

First order of NIS200k in June 2018

NIS0.82m

Russia

Prostatic and bulbar urethral stents and EndoFast

Expect approval of rest of stents by end-2018

NIS1.39m

Mexico

Ureteral stents

First order of NIS300k paid in Q417. Expect approval of rest of stents and EndoFast by end-2018

NIS0.38m

Source: Allium Medical Solutions

Additionally, we include revenues in the company’s established markets, mainly the EU5, South Africa, Australia and Israel.

Exhibit 3: Allium stents and IBI EndoFast sales forecast, NIS000s

Source: Edison Investment Research

Exhibit 3: Allium stents and IBI EndoFast sales forecast, NIS000s

Source: Edison Investment Research

Allium Stents

Ureteral stents are used in pathologies such as kidney stones, urinary incontinence and kidney transplant, to prevent or treat obstruction of the urine flow from the kidney to the bladder. Traditional ureteral stents are 24-30cm long and are called JJ stents or double J stents due to the curl at both ends. Allium’s stents are self-expandable, metal stents made of nitinol (nickel titanium), fully covered with a biomaterial that prevents encrustation, tissue ingrowth, stone formation and calcification. Allium’s stents are intended to address stenosis in the urethra, ureters, prostate and biliary duct.

Allium Stents products are intended to treat lower urinary tract symptoms (LUTS), which are voiding and storage disturbances that affect the lower urinary tract. LUTS may be caused by a number of conditions such as bladder cancer, nocturnal polyuria prostatitis and, in a significant number of cases, by benign prostatic hyperplasia (BPH). BPH happens when the prostate enlarges and is associated with age. It is estimated that about 40-50% of men between the ages of 51 and 60 and 80-90% of men older than 70 have it. Each year around 150,000 men in the US have transurethral resection of the prostate (TURP), the most common surgery for BPH. However, it is associated with up to 20% morbidity, and risks such as bleeding. Therefore, for patients unfit for TURP or other modalities, minimally invasive solutions such as stenting are needed.

Exhibit 4: Allium Stents product summary

Products

Product description

Status

Comments

Bulbar urethra stent (BUS)

Covered, expandable and retrievable metal stents, anatomically and functionally compatible with specific organs for the treatment of obstructions in the urinary tract and bile duct.

Approved in EU, Israel, Australia, South Africa and South Korea.

Approved in China. Prostatic stents approved in Russia and ureteral stents in Mexico.

Urological stents approved in Argentina and Canada.

Marketed in Europe, Australia and South Africa.

Upcoming marketing activities in Latin America and Asia.

Triangular Prostatic (TPS)

Round Posterior Stent (RPS)

Ureteral Stent (URS)

Ureteral Stent 200

Biliary Stent (BIS)

Source: Edison Investment Research, Allium Medical Solutions

Exhibit 5: Selection of stents

Ureteral Stent

Round Posterior Stent

Bulbar Urethra Stent

Source: Allium Medical Solutions

EndoFast

IBI (Israel Biomedical Innovations) develops and markets soft tissue fixation products. These products are based on the EndoFast fastening technology, which consists of a device that attaches to soft tissue (ligament, muscle and fascia) and deploys a pull-out force. It is composed of a surgical mesh placed with the Spider Fastener fixation device in the desired anatomic location. Meshes can be retrieved and repositioned, without causing pain or tissue damage.

EndoFast products are trocarless (ie do not use a sharp-pointed instrument to puncture), as opposed to most soft tissue fixation products used nowadays, which have trocars that may cause irritation and damage to internal organs as they pass blindly through the pelvis walls.

Exhibit 6: EndoFast product summary

Products

Product description

Status

Comments

EndoFast Reliant

Product comprises a mesh and a fixation device for pelvic organ prolapse and urinary incontinence.

Approved in EU and US. Approved in Russia. In regulatory process in Mexico.

Marketed in Europe and Israel. Upcoming marketing activities in Russia and Mexico

EndoFast SCP

EndoFast MN

Source: Edison Investment Research, Allium Medical Solutions

Exhibit 7: EndoFast system

EndoFast Reliant

EndoFast Reliant

Source: IBI

According to Allium, market research by Millennium Research Group and other sources, the global market is around $1.2bn, with $460m in the US, $345m in Europe and $345 in the rest of the world. This represents about 1m procedures worldwide. The same sources state that the market grew at a 9.5% CAGR from 2008 to 2013.

Wirion

In March 2018 Gardia Medical’s Wirion system received FDA approval for leg artery catheterisation. Wirion is an embolic protection device (EPD), which has the competitive advantage of allowing doctors to use any guidewire of their choice and locate the filter anywhere along the guidewire during the procedure. It is approved with all FDA atherectomy devices, as opposed to SpiderFX, which is limited to use with a specific atherectomy device.

Exhibit 8: Wirion retrieval catheter

Source: Gardia Medical

After this FDA approval, Wirion has become the only protection system cleared with all atherectomy devices in the US. It is approved in Australia and New Zealand for embolic protection during carotid artery catheterisation procedures. It is also approved in Israel and Europe for use in all interventional vascular procedures including carotid, coronary, renal and lower extremities.

Clinical data supportive of efficacy and safety

The FDA approval is based on data from the WISE-LE study. In this trial, an independent Clinical Events Committee (CEC) assessed the primary endpoint of freedom from major adverse events (MAEs) 30 days after procedure in patients undergoing LE atherectomy for the treatment of peripheral arterial disease (PAD). The WISE study compared the safety and performance of Wirion to a performance goal based on data from previous studies of SpiderFX, which was the only FDA-approved EPD for the lower extremities. The study met the primary endpoint with a rate of only 1.9% MAEs, vs 12% MAEs in the historical control group.

A sizeable commercial and strategic opportunity

The global EPD market is around $0.5bn at present depending on the source. It was estimated at $200m in 2009, according to Startup Magazine. A Market Wired report pointed to $500m in 2015. In addition to carotid and coronary indications, the large underserved market of PAD could represent a significant opportunity. Med Device Online estimates that there are around 10 million people in the US with PAD, although only 2.5 million are currently diagnosed, leading to 600,000 interventions including stenting, balloon angioplasty, plaque removal and even amputations. Finally, we note that there is strong interest in the market for atherectomy procedures, as demonstrated by the acquisition of the Spectranetics Corporation by Philips in August 2017 for a total enterprise value of €1.9bn. Spectranetics is a medical devices company focused on cardiac devices and PAD. At the time of the acquisition, Spectranetics expected to record revenues of $300m in FY17.

We model Wirion as part of Allium’s overall business and valuation, and project revenue of NIS2.4m after launch in 2018, rising to NIS8.6m in 2020. We believe that full FDA approval makes Wirion an attractive product for partnering and there is potential for the company to enter into a strategic transaction for this product as it intends to.

Allevetix: Cash influx to continue development

According to Allium, Allevetix recently raised NIS3.2m from Allium’s management, the company’s German distributor and additional undisclosed investors. The private placement values the company at NIS35m and leaves Allium owning 85% of Allevetix, vs 100% previously. Allium may consider an IPO for the Allevetix business in the future. Interestingly, one of the clauses for future investment rounds includes a 25% discount in case the valuation is less than NIS72m post-money, giving a hint of the valuation the company may potentially be seeking for the next fund-raise.

The company is developing an indwelling gastroduodenal sleeve as a minimally invasive alternative to gastric bypass surgery for obese Type 2 diabetic patients. The sleeve acts as a barrier to prevent caloric intake in the intestine. Currently it is undergoing a first-in-man clinical trial in 10 patients with obesity and diabetes; Allium expects to complete the study by the end of 2018 and to start a pivotal trial in 2019.

Nearly 13% of the world’s adults are obese (body mass index, BMI ≥30) and 39% are overweight (BMI ≥25), according to World Health Organization data from 2014. Furthermore, over 85% of people with Type 2 diabetes are overweight/obese (American Diabetes Association, ADA). The ADA now recommends weight reduction (bariatric) surgery for diabetics with a BMI >35, if glycaemic control by medication/diet is poor (2016 ADA guidelines).

According to Research and Markets, the market for bariatric surgery devices was $2bn in 2017 and is expected to reach $3.2bn in 2026. Bariatric surgery procedures are effective, but require general anaesthesia, have morbidity rates of 3-20% and are irreversible (apart from banding). Although diabetes resolves in a significant amount of cases (completely in 77% of patients), only 1% of the 18 million eligible US adults undergo bariatric surgery, as a result of perceived invasiveness, high morbidity, cost and restricted insurance coverage. Therefore, given these factors, there is room for minimally invasive therapies to expand patient uptake beyond the current 228,000 procedures in the US.

TruLeaf

Allium’s TruLeaf device is currently undergoing preclinical trials in large animals. Once preclinical studies are completed, the company will need to run clinical trials in humans for registration in Europe and the US. TruLeaf is a transcatheter mitral valve replacement (TMVR), for the treatment of mitral valve regurgitation. Regurgitation in the heart happens when blood flows backwards and the body does not get the necessary amount of blood. In mitral regurgitation, there is leakage of blood backward through the mitral valve each time the left ventricle contracts. As a result, the heart changes to adapt to pumping more blood, and these changes may lead to heart failure in the long run.

Approximately four million people in the US have significant mitral regurgitation, with an annual incidence of 250,000 newly diagnosed patients. In the EU approximately 20,000 mitral valve repair procedures are performed annually. As no TMVR devices are currently commercialised, the most similar benchmark is Abbott’s MitraClip for MV repair, which sells for $30,000. The procedure is not fully reimbursed under Medicare, where the payment is based on a standard, fast coronary angioplasty. MitraClip is limited to patients who are too ill for open-heart surgery. A 2014 report states that 10,000 procedures had used the device and that implantation now takes about 100 minutes.

As we do not usually include preclinical projects in our forecasts or valuation, we are not including TruLeaf until it enters clinical trials and there is more visibility on the development plans.

Sensitivities

Our forecasts and valuation are based on Allium’s ability to execute on its business plan. To achieve our financial forecasts, which are broadly based on company’s guidance, Allium will need to demonstrate significant growth, which relies heavily on its distribution agreements with local partners. Growth of the Stents and EndoFast business depends largely on obtaining regulatory approvals within reasonable timelines, in particular in Mexico and Russia. The company has achieved a big milestone by securing approval of the stents in China and the first order from its local partner. Allium has achieved reimbursement in some countries, but in others it relies on the private sector. Furthermore, competition is high in these markets and the ability to maintain certain price levels may prove challenging in sustaining or increasing market share.

EndoFast devices are advanced soft fixation devices, which are believed to be less invasive than those of competitors, with an enhanced safety profile. However, given previous experience with the first generation of these devices and the fact that certain companies pulled their products from the market, we believe that marketing in the US and other regions may bring challenges in gaining acceptance by doctors and regulators.

With FDA approval for all atherectomy procedures, Gardia Medical’s Wirion could attract partnering interest. The company has not provided an update on its negotiations with potential partners or its commercialisation strategy after it won approval in March 2018.

FY17 results and forecast

Allium reported sales of NIS7.7m in FY17, with stents contributing the bulk of revenues (see Exhibit 9). Importantly, the company received its first order for the ureteral stent products in Mexico for NIS300k, paid in Q417. In May 2018, Allium obtained approval of its urological stents in China and received the first order of NIS200k from its distributor in the country. We include this order in our FY18 forecast, which stands at NIS0.82m for stents in China. Our overall sales forecast for Allium is NIS14m in FY18, which implies roughly doubling revenues against the backdrop of anticipated growth in China, Mexico and Russia. We expect further growth in FY19 with forecast revenues of NIS21m.

Exhibit 9: Forecast of revenues per product

Source: Allium accounts, Edison Investment Research

Exhibit 10: Price per unit and number of units sold

Source: Edison Investment Research

Exhibit 10: Price per unit and number of units sold

Source: Edison Investment Research

We expect R&D expenses to be NIS10m in FY18, lower than FY17 as the company expects to receive public grants from the Israeli government. R&D expenses in 2018 are mainly associated with the continued clinical development of Allevetix and the preclinical study with TruLeaf. From 2019 onwards we expect a decrease in R&D expenses as the company completes clinical development of Allevetix.

The EBITDA loss in FY17 was NIS20.8m. We forecast an EBITDA loss of NIS13.2m in FY18. The net loss was NIS22.7m. Our net loss forecast is NIS15.2m in FY18, mainly due to the sales increase. We expect Allium to reach EBITDA break-even in 2020.

Exhibit 11: Revenue, EBIT and FCF forecasts

Revenues and EBIT 2018-26e, NIS000s

Free cash flow, NIS000s

Revenues and EBIT 2018-26e, NIS000s

Free cash flow, NIS000s

Source: Edison Investment Research

In 2017 Allium consumed NIS18.9m in cash (cash flow from operations plus capex) and raised total net proceeds of NIS19.1m. We estimate that net cash, cash equivalents and short-term deposits at end-2017 of c NIS23m provide runway until mid-2019, when we project a cash shortfall that for illustrative purposes we cover with long-term debt of NIS20m. Cash will be spent on the first-in-man study with Allevetix’s gastroduodenal sleeve (recently started) and the ongoing animal study with TruLeaf. We keep our capex projections unchanged.

Valuation: NIS1.91/share

Our updated DCF valuation of Allium is NIS1.91 per share (vs NIS1.64 previously), or NIS136.2m, which includes net cash of c NIS23m at end 2017 and an updated valuation of Allevetix. The latter is the main driver of the upgrade. We now value Allevetix based on its last funding round, which resulted in an overall post-money valuation of NIS35m (Allium now owns 85%). Our previous valuation of the company (NIS11m) was based on the estimated book value.

Overall, we maintain our assumptions for revenue CAGR of 20%, margins and earnings growth in the explicit forecast period (2018-26e). We assume approval of the remaining stents and EndoFast in Mexico, as well as approval of all stents in Russia in 2018. Delays to these assumptions, as well as slower than expected execution of the agreements with distributors, would have a pronounced downside impact on the valuation.

Exhibit 12: Allium summary DCF valuation

NIS000s

$000s

PV of explicit FCF forecast (2018-26e)

16,319

4,733

Terminal value (2% TGR)

172,396

49,995

PV of Terminal value

67,190

19,485

Value attributed to Allevetix

29,750

8,033

Total NPV

113,260

30,580

Add net cash (end-2017)

22,953

6,656

Implied equity value

136,213

36,777

Number of shares (m)

71,423

71,42

Per basic share

NIS1.91

$0.51

Source: Edison Investment Research. Note: US dollar values are based on the spot exchange rate.

Exhibit 13: Financial summary

NIS'000

2016

2017

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

7,353

7,703

13,972

20,993

Cost of Sales

(5,171)

(5,687)

(8,579)

(10,520)

Gross Profit

2,182

2,016

5,392

10,474

EBITDA

 

 

(20,377)

(20,826)

(13,174)

(9,014)

Operating Profit (before amort. and except.)

(20,759)

(21,219)

(13,549)

(9,347)

Intangible Amortisation

(1,579)

(1,623)

(1,551)

(1,378)

Exceptionals

(295)

0

0

0

Operating Profit

(22,632)

(22,842)

(15,100)

(10,725)

Net Interest

(1,283)

(163)

(135)

(202)

Exceptionals

0

0

0

0

Other

0

0

0

0

Profit Before Tax (norm)

 

 

(22,042)

(21,382)

(13,684)

(9,550)

Profit Before Tax (IFRS)

 

 

(23,916)

(22,679)

(15,236)

(10,928)

Tax

0

0

0

0

Profit After Tax (norm)

(22,042)

(21,382)

(13,684)

(9,550)

Profit After Tax (IFRS)

(23,916)

(22,679)

(15,236)

(10,928)

Average Number of Shares Outstanding (m)

44.97

58.19

71.42

71.42

EPS - normalised (NIS)

 

 

(0.49)

(0.37)

(0.19)

(0.13)

EPS - IFRS (NIS)

 

 

(0.53)

(0.39)

(0.21)

(0.15)

Dividend per share (NIS)

0.00

0.00

0.00

0.00

Gross Margin (%)

30%

26%

39%

50%

EBITDA Margin (%)

N/A

N/A

N/A

N/A

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

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

23,616

22,244

20,417

18,806

Intangible Assets

22,465

20,916

19,364

17,986

Tangible Assets

1,025

1,059

784

550

Restricted cash

126

269

269

269

Current Assets

 

 

28,606

29,609

15,815

26,627

Stocks

2,516

2,661

2,278

2,534

Debtors

1,253

1,491

1,531

2,013

Cash, equivalents and short term deposits

23,203

22,953

9,501

19,576

Other

1,634

2,504

2,504

2,504

Current Liabilities

 

 

(12,660)

(11,962)

(11,798)

(12,147)

Creditors

(1,890)

(1,987)

(1,823)

(2,172)

Accruals

(936)

(185)

(185)

(185)

Other short term liabilities

(4,124)

(4,373)

(4,373)

(4,373)

Long Term Liabilities

 

 

(1,368)

(1,134)

(913)

(20,692)

Long term borrowings

0

0

0

(20,000)

Other long term liabilities

(1,368)

(1,134)

(913)

(692)

Net Assets

 

 

38,194

38,757

23,521

12,593

CASH FLOW

Operating Cash Flow

 

 

(17,258)

(18,418)

(13,131)

(9,605)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(220)

(501)

(100)

(100)

Acquisitions/disposals

0

(4,005)

0

0

Financing

13,956

19,125

0

0

Dividends

0

0

0

0

Other

(328)

(456)

(221)

(221)

Net Cash Flow

(3,850)

(4,255)

(13,452)

(9,926)

Opening net debt/(cash)

 

 

(27,053)

(23,203)

(22,953)

(9,501)

HP finance leases initiated

0

0

0

0

Other

0

4,005

0

0

Closing net debt/(cash)

 

 

(23,203)

(22,953)

(9,501)

424

Source: Company accounts, Edison Investment Research

Contact details

Revenue by geography

2 Ha'Eshel St., PO Box 3081
Caesarea Industrial Park South, 3088900 Israel
+972 4 6277166
www.allium-medical.com

Contact details

2 Ha'Eshel St., PO Box 3081
Caesarea Industrial Park South, 3088900 Israel
+972 4 6277166
www.allium-medical.com

Revenue by geography

Management team

CEO: Asaf Alperovitz

CFO: Ariel Rubashkin

Mr Alperovitz is a Certified Public Accountant and holds a Bachelor's degree in Accounting and Economics and an MB from Tel Aviv University. He has held C-suite positions at several pharmaceutical and medical devices companies. Before working in the healthcare industry, he was CFO of software company Corigin and later CFO of textile company Tefron. He went on to become CFO of Omrix Biopharmaceuticals, acquired by J&J, and then CFO of Syneron. He held several management positions in the high-tech area of E&Y, both in Israel and in California for eight years. He joined Allium Medical in 2012.

Mr Rubashkin is a Certified Public Accountant and holds a Bachelor's degree in Accounting and Economics from Haifa University and an MBA from Tel Aviv University. Before joining Allium Medical in 2014, he was global VP of finance for medical devices company Syneron and controller at Plastro Gvat.

COO: Shay Arotchas

VP of R&D: Ziv Kalfon

Mr Arotchas has a BSc in Engineering and Management from Coventry University in London and more than 14 years’ experience in IT and operations in the medical device industry. He has been strategic project manager and later head of strategic material planning at Comverse Technologies. He served as the VP of operations in Disc-O-Tech Medical Technologies, which was acquired by Kyphon/Medtronic Corp, before becoming COO of Allium Medical in 2012.

Mr Kalfon has over 15 years’ experience in developing medical products. He manages the R&D and engineering departments at Allium. Before joining Allium he served five years at GE Healthcare (previously Versamed) in various R&D positions and three years at Mediguide. Ziv holds an MSc in Biomedical Engineering and a BSc in Mechanical Engineering from the Technion Israel Institute of Technology.

Management team

CEO: Asaf Alperovitz

Mr Alperovitz is a Certified Public Accountant and holds a Bachelor's degree in Accounting and Economics and an MB from Tel Aviv University. He has held C-suite positions at several pharmaceutical and medical devices companies. Before working in the healthcare industry, he was CFO of software company Corigin and later CFO of textile company Tefron. He went on to become CFO of Omrix Biopharmaceuticals, acquired by J&J, and then CFO of Syneron. He held several management positions in the high-tech area of E&Y, both in Israel and in California for eight years. He joined Allium Medical in 2012.

CFO: Ariel Rubashkin

Mr Rubashkin is a Certified Public Accountant and holds a Bachelor's degree in Accounting and Economics from Haifa University and an MBA from Tel Aviv University. Before joining Allium Medical in 2014, he was global VP of finance for medical devices company Syneron and controller at Plastro Gvat.

COO: Shay Arotchas

Mr Arotchas has a BSc in Engineering and Management from Coventry University in London and more than 14 years’ experience in IT and operations in the medical device industry. He has been strategic project manager and later head of strategic material planning at Comverse Technologies. He served as the VP of operations in Disc-O-Tech Medical Technologies, which was acquired by Kyphon/Medtronic Corp, before becoming COO of Allium Medical in 2012.

VP of R&D: Ziv Kalfon

Mr Kalfon has over 15 years’ experience in developing medical products. He manages the R&D and engineering departments at Allium. Before joining Allium he served five years at GE Healthcare (previously Versamed) in various R&D positions and three years at Mediguide. Ziv holds an MSc in Biomedical Engineering and a BSc in Mechanical Engineering from the Technion Israel Institute of Technology.

Principal shareholders

(%)

Filvest

20.85

The David Milch Family 2010 Trust

9.79

Meitav Dash Investments

9.46

Michael Ilan Management and Investments

8.96

Companies named in this report

Spectranetics, Philips

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

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DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Allium Medical Solutions and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors
his research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “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.

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Allium Medical Solutions and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors
his research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “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.

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

Research: Healthcare

Transgene — Near-term data to define long-term strategy

Transgene develops virus-based product candidates for use in oncology and infectious diseases, its five clinical products are currently in 11 clinical trials across a variety of indications, its most advanced is Phase III trial with Pexa-Vec in first-line Hepatocellular Carcinoma with data anticipated in 2019. Its strategy remains to develop its candidates in combination with approved treatments, notably immune checkpoint inhibitors (ICIs). It anticipates eight clinical readouts across its five clinical candidates by year end, notably TG4010 in combination with Opdivo and chemo in first-line NSCLC. We value Transgene at €4.65/share vs €3.80/share previously.

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