Oasmia Pharmaceutical — Delivering on promises

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Research: Healthcare

Oasmia Pharmaceutical — Delivering on promises

FY21 results highlight delivery on key elements of Oasmia’s ongoing transformation. Notably, ‘rightsizing’ the business and prudent cost control has brought the underlying cash burn rate down to c SEK10m per month in 2021. With the fully secured rights issue expected to raise gross proceeds of c SEK150m, management has guided it can fund operations for 18–24 months. We anticipate material progression can be made across the pipeline during this time, with clinical progress expected from Cantrixil and Docetaxel micellar and the start of commercial royalties from Apealea sales in Europe. Separate financing requirements will be considered for any potential bolt-on acquisitions to the pipeline. We maintain our valuation at SEK2.89bn but place our financial forecasts under review, pending publication of the prospectus and closing of the rights issue.

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Written by

Healthcare

Oasmia Pharmaceutical

FY21 results

Pharma & biotech

25 February 2022

Price

SEK1.56

Market cap

SEK699m

Net cash (SEKm) at 31 December 2021 (including short-term investments) and excluding SEK10.4m in lease liabilities

97.3

Shares in issue

448.4m

Free float

61%

Code

OASM

Primary exchange

Stockholm

Secondary exchange

Frankfurt

Share price performance

Business description

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

Analysts

Dr Sean Conroy

+44 (0)20 3077 5700

Dr Jonas Peciulis

+44 (0)20 3077 5728

Oasmia Pharmaceutical is a research client of Edison Investment Research Limited

FY21 results highlight delivery on key elements of Oasmia’s ongoing transformation. Notably, ‘rightsizing’ the business and prudent cost control has brought the underlying cash burn rate down to c SEK10m per month in 2021. With the fully secured rights issue expected to raise gross proceeds of c SEK150m, management has guided it can fund operations for 18–24 months. We anticipate material progression can be made across the pipeline during this time, with clinical progress expected from Cantrixil and Docetaxel micellar and the start of commercial royalties from Apealea sales in Europe. Separate financing requirements will be considered for any potential bolt-on acquisitions to the pipeline. We maintain our valuation at SEK2.89bn but place our financial forecasts under review, pending publication of the prospectus and closing of the rights issue.

Delivering on promises

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/20

201.8

(57.5)

(0.13)

0.00

N/A

N/A

12/21

26.2

(132.7)

(0.30)

0.00

N/A

N/A

Note: *PBT and EPS are as reported. Note financial results have been restated to reflect revised fiscal year-end to December.

Apealea (cremophor-free paclitaxel) remains the primary near-term value driver, in our view. Marketing authorisations have now been transferred to commercial partner Inceptua and European launch is expected in H122 (Germany and the UK), enabling the first flow of royalties in H222. Ultimately, the United States remains the key market for Apealea and Oasmia’s partner Elevar is reviewing the previously planned clinical and regulatory path. We expect an update in the coming months, but understand Elevar’s overarching goals are to maximise Apealea's commercial potential and shorten timelines.

The funding secured with the rights issue should enable Oasmia to make material progress across the rest of the pipeline. Preparations for a Phase II study for Cantrixil in advanced ovarian cancer are underway and substantial progress can be expected throughout 2022. Primarily, a new manufacturing partner needs to be secured before starting this study to ensure supply can support future clinical development. In February, the first patient completed dosing in the ongoing, investigator-initiated Phase Ib study for Docetaxel micellar in advanced prostate cancer, with completion of the study expected by end-2022.

General disclaimer and copyright

This report has been commissioned by Oasmia Pharmaceutical and prepared and issued by Edison, in consideration of a fee payable by Oasmia Pharmaceutical. Edison Investment Research standard fees are £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.

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

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Frankfurt +49 (0)69 78 8076 960

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London +44 (0)20 3077 5700

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Oasmia Pharmaceutical and prepared and issued by Edison, in consideration of a fee payable by Oasmia Pharmaceutical. Edison Investment Research standard fees are £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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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