Hybrigenics — Update 17 February 2017

Hybrigenics — Update 17 February 2017

Hybrigenics

Analyst avatar placeholder

Written by

Hybrigenics

Encouraging initial CML clinical data

Clinical update

Pharma & biotech

17 February 2017

Price

€0.91

Market cap

€33m

Net cash (€m) at June 2016

8.0

Shares in issue

35.8m

Free float

100%

Code

ALHYG

Primary exchange

Alternext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.0

21.3

13.8

Rel (local)

(0.9)

11.0

(4.8)

52-week high/low

€1.10

€0.71

Business description

Hybrigenics is a French biotech company. It provides protein-protein, genetic and small molecule analysis services and is conducting Phase II studies on lead drug inecalcitol in orphan adult leukaemias: chronic myeloid leukaemia and acute myeloid leukaemia.

Next events

Orphan designation in CML in the EU & US

2017

CML Phase II completion

H218

AML Phase II data

Year end 2018/H119

Analysts

Juan Pedro Serrate

+44 (0)20 3681 2534

Dr Philippa Gardner

+44 (0)20 3077 5727

Hybrigenics is a research client of Edison Investment Research Limited

Hybrigenics has presented the first ever clinical data from an interim analysis of a Phase II study of inecalcitol in combination with imatinib in patients with chronic myeloid leukaemia (CML). At interim, 43% of patients who had been on treatment for three months showed improvements to baseline MMR (major molecular response). Furthermore, 33% of patients who had completed one year in the study achieved a deep molecular response (DMR). Achieving and sustaining a DMR may allow patients to discontinue treatment (functional cure). Therefore, we believe these are encouraging preliminary data that provide first clinical insights into inecalcitol’s potential in CML. The study is expected to complete in H218. Our valuation stands at 146.1m.

Year
end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/14

6.8

(2.2)

(8.5)

0.0

N/A

N/A

12/15

6.5

(3.9)

(11.4)

0.0

N/A

N/A

12/16e

7.5

(4.2)

(11.8)

0.0

N/A

N/A

12/17e

8.0

(4.4)

(12.4)

0.0

N/A

N/A

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

Improvements in 43% of patients

The efficacy endpoint in this Phase II study is the proportion of responders, defined as patients achieving DMR within 12 months of inecalcitol treatment. Achieving and sustaining DMR may be considered a functional cure and stopping treatment can be an option. Other studies report that 1-3% of imatinib-treated patients achieve DMR after 12 months of treatment, increasing to 31-33% after five years. Thus, 33% of patients in this trial achieving a DMR with the addition of inecalcitol within 12-months is encouraging.

A potentially meaningful impact

Tyrosine kinase inhibitors (TKIs) are the current treatment paradigm in CML. Since a high percentage of patients achieve response, there are reasonable expectations to not only improve survival, but also to cure the disease. Current guidelines recommend TKI treatment indefinitely in all responding patients. However, drawbacks are side effects and the economic burden for healthcare systems (Gleevec costs $120k/year in the US). Although preliminary, these data show the potential impact of inecalcitol on the CML treatment paradigm due to its benign safety profile and potential to further improve molecular responses leading to discontinuation of treatment and functional cures.

Valuation: No changes to our rNPV of €146.1m

Our valuation stands at 146.1m or €4.1/share. We estimate c 14,250 new CML patients per year in the EU/US and forecast peak sales for inecalcitol of $260m. We maintain the probability of success for inecalcitol in CML at 30%. We look to update our valuation as more clinical data from inecalcitol trials become available.

Exhibit 1: Financial summary

€'000s

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

6,774

6,483

7,542

8,010

Cost of sales

(3,417)

(3,858)

(4,244)

(4,583)

Gross profit

3,357

2,625

3,298

3,426

EBITDA

 

 

(2,081)

(3,811)

(4,266)

(4,380)

Operating profit (before GW and except)

 

(2,170)

(3,961)

(4,416)

(4,530)

Intangible amortisation

(89)

(150)

(150)

(150)

Exceptionals

0

0

0

0

Share-based payments

(201)

(225)

(236)

(248)

Operating profit

(2,539)

(4,414)

(4,880)

(5,006)

Net interest

(26)

49

177

87

Profit before tax (norm)

 

 

(2,209)

(3,874)

(4,239)

(4,444)

Profit before tax (reported)

 

 

(2,499)

(4,327)

(4,703)

(4,920)

Tax

0

(14)

0

0

Profit after tax (norm)

(2,209)

(3,888)

(4,239)

(4,444)

Profit after tax (reported)

(2,578)

(4,341)

(4,703)

(4,920)

Average number of shares outstanding (m)

25.9

34.2

35.8

35.8

EPS - normalised (c)

 

 

(8.5)

(11.4)

(11.8)

(12.4)

EPS - FRS 3 (c)

 

 

(9.7)

(12.7)

(13.1)

(13.7)

Dividend per share (c)

0.0

0.0

0.0

0.0

Gross margin (%)

50%

40%

44%

43%

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

 

 

1,837

1,717

1,463

1,233

Intangible assets

1,023

820

670

520

Tangible assets

598

585

504

423

Investments

216

312

289

290

Current assets

 

 

15,708

19,584

15,348

11,907

Stocks

262

150

165

126

Debtors

1,701

1,513

1,760

1,869

Cash

9,644

11,716

7,218

3,707

Other

4,101

6,205

6,205

6,205

Current liabilities

 

 

(3,018)

(2,135)

(2,139)

(2,142)

Creditors

(2,116)

(1,787)

(1,789)

(1,791)

Short-term borrowings

(862)

(288)

(288)

(288)

Other

(40)

(60)

(62)

(64)

Non-current liabilities

 

 

0

(629)

(629)

(1,629)

Long-term borrowings

0

(114)

(114)

(1,114)

Other

0

(515)

(515)

(515)

Net assets

 

 

14,527

18,537

14,043

9,369

CASH FLOW

Operating cash flow

 

 

(3,042)

(5,262)

(4,528)

(4,450)

Net interest

49

28

177

87

Tax

0

(14)

0

0

Capex

(455)

(395)

(147)

(147)

Payment of deferred consideration

0

0

0

0

Capitalisation of development costs

0

0

0

0

Expenditure on intangibles

0

0

0

0

Acquisitions/disposals

0

(153)

0

0

Financing

11,619

8,331

0

0

Dividends

0

0

0

0

Net cash flow

8,171

2,535

(4,498)

(4,510)

Opening net debt/(cash)

 

 

(1,611)

(8,782)

(11,314)

(6,816)

HP finance leases initiated

0

0

0

0

Other

(1,000)

(3)

0

0

Closing net debt/(cash)

 

 

(8,782)

(11,314)

(6,816)

(2,305)

Source: Company 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 Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Hybrigenics 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 Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. 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 2017. “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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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 Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Hybrigenics 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 Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. 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 2017. “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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Trifast — Update 16 February 2017

Trifast

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free