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Probiodrug — Emerging details of PQ912 late-stage development

Probiodrug — Emerging details of PQ912 late-stage development

The highlight of Probiodrug’s FY17 results presentation was the rather detailed introduction of the Phase IIb development programme for the lead asset PQ912, a small molecule inhibitor of glutaminyl cyclase (QC) for Alzheimer’s disease (AD) patients. Two Phase IIb trials (in Europe and the US) are designed to gather the amount of data that, if sufficiently positive, could allow for accelerated or conditional regulatory approval. The first Phase IIb study in Europe is expected to start by end 2018 and Probiodrug is exploring all options for funding sources. After several modest changes to our model, our updated valuation is slightly higher at €513m, €62.4/sh.

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Written by

Probiodrug

Emerging details of PQ912 late-stage development

FY17 company update

Pharma & biotech

13 April 2018

Price

€10.75

Market cap

€88m

Net cash (€m) at end December 2017

10.3

Shares in issue

8.2m

Free float

50%

Code

PBD

Primary exchange

Euronext Amsterdam

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(10.0)

(32.8)

(40.0)

Rel (local)

(11.6)

(31.2)

(43.3)

52-week high/low

€17.9

€10.1

Business description

Probiodrug is a German biopharmaceutical company developing its clinical pipeline for the treatment of Alzheimer’s disease. Lead product candidate PQ912 has completed a Phase IIa study with encouraging results. PQ912 is a small molecule inhibitor of glutaminyl cyclase, which is essential for the formation of pGlu-Abeta. Two further products are in preclinical stages.

Next events

Q118 results

15 May 2018

Phase IIb trial start

H218

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Alice Nettleton

+44 (0)20 3077 5700

Probiodrug is a research client of Edison Investment Research Limited

The highlight of Probiodrug’s FY17 results presentation was the rather detailed introduction of the Phase IIb development programme for the lead asset PQ912, a small molecule inhibitor of glutaminyl cyclase (QC) for Alzheimer’s disease (AD) patients. Two Phase IIb trials (in Europe and the US) are designed to gather the amount of data that, if sufficiently positive, could allow for accelerated or conditional regulatory approval. The first Phase IIb study in Europe is expected to start by end 2018 and Probiodrug is exploring all options for funding sources. After several modest changes to our model, our updated valuation is slightly higher at €513m, €62.4/sh.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/16

0.0

(13.8)

(1.81)

0.0

N/A

N/A

12/17

0.0

(9.0)

(0.97)

0.0

N/A

N/A

12/18e

0.0

(7.8)

(0.95)

0.0

N/A

N/A

12/19e

0.0

(7.9)

(0.97)

0.0

N/A

N/A

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

European/US Phase IIb studies could lead to market

The preliminary design for the European Phase IIb trial SAPHIR 2 have been presented. The design of the Phase IIb US study should be substantially similar in regard to patent population and titration, but will likely include additional readouts and treatment period will be 18 months including an interim analysis. The primary endpoint is PQ912’s effect on cognitive function measured by the neuropsychological test battery (NTB). NTB was one of the exploratory endpoints in the Phase IIa trial with PQ912 and showed initial signs of positive changes in cognitive function of AD patients after a short, three-month treatment period. AD patients will be treated for about a year on average in the upcoming European trial. If the data are sufficiently positive from both the US and European trials, Probiodrug expects to initiate a discussion with the regulatory authorities for accelerated or conditional approval (we assume in 2023).

Financials: 2018 spend expected lower than in 2017

Probiodrug reported R&D and G&A costs of €7.5m and €2.5m in 2017, close to our respective estimates of €7.7m and €3.1m. FY17 R&D spend was lower than in 2016 (€11.0m), when the Phase IIa SAPHIR trial was in full swing. Management indicated that it expects a net loss in 2018 to decrease further y-o-y mainly due to lower R&D spend as the company is preparing for the late-stage trials with PQ912. Cash at end of 2017 was €10.3m (no debt), which is sufficient for this year. Probiodrug indicated that it is focusing on strengthening its financial position.

Valuation: Marginally higher at €513m or €62.4/share

We value Probiodrug at €513m or €62.4/share, up from €496m or €60.6/share due to rolling our model forward, which offset the lower cash position of €10.3m and modest changes in our R&D assumptions (mainly timing of the licensing deal and the launch date). The initiation of the Phase IIb trial expected later this year, clarification on funding sources and any partnering deal are potential catalysts in the short term.

Phase IIb trial design leverages Phase IIa data

The preliminary design for the European trial (SAPHIR 2) is shown in Exhibit 1. The US study details are not yet released, but it should be similar in design to the European trial with a somewhat longer treatment period. Notably, the US study could potentially benefit from the initial titration phase in the European study. Therefore, timewise, both studies should significantly overlap. Trial design for late-stage development was inspired by the rich dataset obtained from the Phase IIa SAPHIR trial announced in June 2017. As a reminder:

■

The Phase IIa SAPHIR study was a safety/tolerability trial, but secondary endpoints included exploratory efficacy tests, such as the NTB (Cogstate) as cognitive composite, quantitative EEG, resting state functional MRI as well as a set of molecular biomarkers in the spinal fluid.

■

The highest dose of 800mg bid tested and well tolerated in the Phase I study was selected and administered for three months. Probiodrug indicated that this high dose (although not established as maximum tolerated dose over the 7-11 days of treatment in the elderly in Phase I) was strategically selected to:

•

firstly, understand the picture of safety/tolerability in AD patients treated for three months and comply with the EMA guidelines requesting that in Phase I or Phase IIa a maximum tolerated dose should be established; and

•

secondly, to get early signs of efficacy over such a short treatment period.

■

The number of patients experiencing adverse events did not significantly differ between the placebo and PQ912 arms (PQ912 n=49, placebo n=45), but the total number of non-adherent to treatment patients for any reason was higher in the active arm (PQ912 n=26; placebo n=2; p<0.01). Skin and gastrointestinal (GI) side effects were more common in the PQ912 arm.

■

Despite the short treatment period, several exploratory efficacy endpoints provided statistically significant results or trends pointing to a positive overall picture of the dataset in our view (discussed in our previous report).

Overall, no major safety concerns associated with PQ912 were established in the Phase IIa trial. The observed skin and GI side effects were manageable, appeared early in the trial and resolved upon the discontinuation of PQ912. In upcoming Phase IIb studies to address any safety issues Probiodrug will explore lower doses and a gradual titration to maximum individually tolerable levels. Dose reduction is feasible, as in the Phase I trial, target occupancy has been shown to be 90% at a dose of 800mg bid, while a dose range of 300 to 600mg bid would still achieve target occupancy in the range of 70–80+%. Probiodrug will enrol patients into an initial 12-week treatment regimen titrating the dose of PQ912 in the range 150-300mg (Exhibit 2) over that period. Subsequently, patients will receive the maximum individually tolerable dose of 300mg or 600mg. In total, each patient is expected to be treated for between 36 and 84 weeks (on average around a year, 52 weeks).

NTB will be used to assess PQ912’s efficacy on the cognitive function of AD patients (primary endpoint). NTB was one of the exploratory endpoints in the Phase IIa trial with PQ912 and two out of seven cognitive assessments (that constitute the NTB) showed significant or trending positive changes in cognitive function of AD patients after the short, three-month treatment period. Secondary endpoints (changes in daily activities measured by the Amsterdam Instrumental Activity of Daily Living Questionnaire, effect on EEG and synaptic brain connectivity) and exploratory endpoints (CSF biomarkers, MRI imaging of brain) also build on the insights from the Phase IIa trial, where several of the tests showed statistically significant or trending changes.

Exhibit 1: Preliminary Phase IIb SAPHIR 2 trial (Europe) details

Aim

Clinical proof of concept in cognition.

Summary design

Prospective, multi-centre, randomised controlled trial.

Design details

250 early-stage AD patients.

12 weeks of treatment with 150–300mg (bid) for initial safety readout.

Patients then receive individually highest tolerated doses (300 or 600mg bid).

Each patient will be treated for 36 to 84 weeks.

Patients

Male or female; MMSE 21-30, CSF amyloid & tau positive; on standard of care or treatment naïve.

Endpoints

Primary: efficacy of PQ912 on cognitive function in early AD (NTB).

Secondary: efficacy on activities of daily living, effect on qEEG on synaptic function and brain connectivity.

Exploratory readouts: CSF-based biomarker and MRI imaging of brain and hippocampal volume.

Timelines

Start Q418; interim safety/futility analysis Q419; key results Q321.

Source: Probiodrug, Note: MMSE = mini mental state examination.

Exhibit 2: SAPHIR 2 trial time schedule

Source: Probiodrug

The preliminary timelines indicate that the European Phase IIb trial could start in Q418. Interim safety analysis is planned by end 2019 and final data are expected in Q321. Details for the US study are yet to be finalised, but potentially both trials should run at least partially in parallel. If sufficiently positive data are obtained, Probiodrug expects to discuss accelerated or conditional approval with the regulatory authorities. Alternatively, a pivotal Phase III programme will be initiated. With regards to funding sources, the company indicated that it is working on strengthening its financial position.

Valuation

We value Probiodrug at €513m or €62.4/share, up from €496m or €60.6/share previously due to rolling our model forward, which offsets the lower cash position of €10.3m at the end of 2017. We have made some modest changes to our model. Our key assumption was that Probiodrug will out-license the project to a partner for a pivotal study in 2017 and, if successful, the drug will be launched in 2022. From the timeline perspective we view the conditional approval scenario as consistent with our model since the timelines for the European Phase IIb trial are in line with our assumptions. Given that the timelines for the US study are not fully defined, we leave some room by postponing the launch date in our model from 2022 to 2023. Another change in our NPV model was the timing of the licensing deal.

The key near-term sensitivity is obtaining the required funds for the Phase IIb trials. Probiodrug’s current cash reach is until early 2019, according to our model. For comparison, the Phase IIa study ran from Q115 to Q317 and Probiodrug’s total R&D spend for 2015–2017 was €28.6m. Part of that was spent on preclinical development, but the bulk of it likely accounted for the costs related to the Phase IIa trial. As the next studies will be larger, the R&D costs will be substantially higher. As before, Probiodrug indicated that all financing options for the late-stage development are on the table, that is, share issue, non-dilutive funding options or a partnership deal. For the time being we maintain our out-licensing approach (the partner will take over the development) in our model with same terms as before, but move the deal to 2018. We include €35m in income from the partner in 2018 in our risk-adjusted NPV, but do not show it in our financial summary table as the deal is not certain. The breakdown of our rNPV valuation, which uses a discount rate of 12.5%, is shown in Exhibit 3. Full details are discussed in our last outlook report.

Exhibit 3: Probiodrug rNPV valuation

Product

Indication

Launch

Peak sales (€m)

Value (€m)

Probability

rNPV (€m)

NPV/share (€/share)

PQ912

Alzheimer’s disease

2023

6,200

1,380.2

35%

502.2

61.2

Net cash

10.3

100%

10.3

1.3

Valuation

 

 

 

1,390.5

512.5

62.4

Source: Edison Investment Research. Note: Peak sales are rounded to the nearest €100m.

Exhibit 4: Financial summary

€000s

2015

2016

2017

2018e

2019e

December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

0

0

0

0

0

Cost of Sales

0

0

0

0

0

Gross Profit

0

0

0

0

0

Research and development

(10,158)

(10,951)

(7,454)

(5,169)

(5,169)

EBITDA

 

 

(13,337)

(13,680)

(9,855)

(7,763)

(7,905)

Operating Profit (before amort. and except.)

(13,363)

(13,700)

(9,876)

(7,790)

(7,932)

Intangible Amortisation

(30)

(77)

(85)

(11)

(1)

Exceptionals

0

0

0

0

0

Other

0

0

0

0

0

Operating Profit

(13,393)

(13,777)

(9,961)

(7,801)

(7,933)

Net Interest

(112)

(114)

850

0

0

Profit Before Tax (norm)

 

 

(13,475)

(13,814)

(9,026)

(7,790)

(7,932)

Profit Before Tax (FRS 3)

 

 

(13,505)

(13,891)

(9,111)

(7,801)

(7,933)

Tax

0

0

1,102

0

0

Profit After Tax (norm)

(13,475)

(13,814)

(7,924)

(7,790)

(7,932)

Profit After Tax (FRS 3)

(13,505)

(13,891)

(8,009)

(7,801)

(7,933)

Average Number of Shares Outstanding (m)

6.9

7.6

8.2

8.2

8.2

EPS - normalised (€)

 

 

(1.96)

(1.81)

(0.97)

(0.95)

(0.97)

EPS - normalised and fully diluted (€)

 

(1.96)

(1.81)

(0.97)

(0.95)

(0.97)

EPS - (IFRS) (€)

 

 

(1.97)

(1.82)

(0.98)

(0.95)

(0.97)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

n/a

n/a

n/a

n/a

n/a

EBITDA Margin (%)

n/a

n/a

n/a

n/a

n/a

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

n/a

n/a

n/a

n/a

n/a

BALANCE SHEET

Fixed Assets

 

 

140

167

69

41

23

Intangible Assets

56

96

11

1

0

Tangible Assets

81

68

55

37

20

Investments

3

3

3

3

3

Current Assets

 

 

21,726

22,199

10,693

3,206

402

Stocks

0

0

0

0

0

Debtors

0

0

0

0

0

Cash

21,361

21,897

10,291

2,804

0

Other

365

302

402

402

402

Current Liabilities

 

 

(4,911)

(5,140)

(668)

(668)

(668)

Creditors

(4,911)

(5,140)

(668)

(668)

(668)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(822)

(850)

(1,171)

(1,171)

(5,996)

Long term borrowings

0

0

0

0

(4,825)

Other long term liabilities

(822)

(850)

(1,171)

(1,171)

(1,171)

Net Assets

 

 

16,133

16,376

8,923

1,408

(6,239)

CASH FLOW

Operating Cash Flow

 

 

(12,149)

(13,255)

(12,117)

(7,477)

(7,619)

Net Interest

0

0

0

0

0

Tax

2

0

0

0

0

Capex

(6)

(7)

(7)

(10)

(10)

Acquisitions/disposals

0

0

0

0

0

Financing

12,594

13,798

518

0

0

Dividends

0

0

0

0

0

Net Cash Flow

441

536

(11,606)

(7,487)

(7,629)

Opening net debt/(cash)

 

 

(20,920)

(21,361)

(21,897)

(10,291)

(2,804)

HP finance leases initiated

0

0

0

0

0

Other

(0)

0

0

0

0

Closing net debt/(cash)

 

 

(21,361)

(21,897)

(10,291)

(2,804)

4,825

Source: Probiodrug accounts, Edison Investment Research

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

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Probiodrug 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. This research is issued in Australia by Edison Investment Research Pty Limited (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.

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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

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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

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Probiodrug 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. This research is issued in Australia by Edison Investment Research Pty Limited (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

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

Research: TMT

XP Power — Strong Q1 drives forecast upgrades

XP Power’s Q1 trading update confirmed continuing positive momentum in order intake. Orders received were 9% higher on a year-on-year and quarter-on-quarter basis. With Q1 revenue growth of 18% y-o-y, book-to-bill remained strong at 1.1x. We have revised our revenue forecasts to take account of the higher than expected performance in Q1, resulting in an upgrade to forecast normalised EPS of 7.7% in FY18 and 7.6% in FY19.

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