Imperial Innovations — Update 20 June 2016

Imperial Innovations — Update 20 June 2016

Imperial Innovations

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Imperial Innovations

Circassia Phase III study misses primary endpoint

CIR cat allergy Phase III results

Pharma & biotech

20 June 2016

Price

435.13p

Market cap

£701m

Net cash (£m) at 31 January 2016 including post-period £97m net equity raise

189

Shares in issue

161.2

Free float

9%

Code

IVO

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

Business description

Imperial Innovations is a technology transfer, incubation and venture investment company. It invests in ventures from Imperial College London, Cambridge and Oxford universities and UCL. Over 90% of its portfolio value is in 20 companies, with most (c 77%) of its investments in healthcare.

Analysts

Lala Gregorek

+44 (0)20 3681 2527

Daniel Wilkinson

+44 (0)20 3077 5734

Imperial Innovations is a research client of Edison Investment Research Limited

Imperial Innovations (IVO) portfolio company Circassia has announced that its Phase III cat allergy study did not meet the primary endpoint. Both placebo and treatment arm demonstrated a significant reduction in symptoms and combined score, but the strength of the placebo response resulted in no statistically significant differences between either arm. While the allergy pipeline is being reassessed, Circassia’s broader business strategy (NIOX and respiratory franchises) remains unchanged. At 31 January IVO has a 9.3% interest in Circassia’s issued share capital.

Year end

Net portfolio
value* (£m)

Cash**
(£m)

Net fair value
gain (£m)

Net asset
value (£m)

NAV/share
(p)

DPS
(p)

07/14

252.0

176.5

40.5

404.8

295.1

0.0

07/15

327.2

128.1

21.3

420.1

306.3

0.0

07/16e

404.1

142.6

6.9

515.2

320.6

0.0

07/17e

489.1

88.8

15.0

519.5

323.3

0.0

Note: *Net value, excludes provisions. **Cash, cash equivalents and short-term investments.

Circassia has announced that its lead product, Cat-SPIRE, which was in a Phase III trial for treating cat allergy, has missed its primary endpoint. The primary endpoint was defined as the difference in combined TRSS/rescue medication use one year after the start of treatment (single course or two sequential courses) vs placebo. While both treatment arms demonstrated significant improvement in combined score over baseline (58.2% for 4x6 nmol [n=417] and 59.8% for 8x6 nmol [n=414]), the response was not statistically different to placebo (58.5% for placebo [n=414]). Circassia will now analyse the full dataset to better understand the marked placebo effect. Until this is complete, it has decided to minimise expenditure on the grass registration study and dose-ranging ragweed allergy study. The birch Phase II study will continue as it is close to completion. Meanwhile, the Phase IIb house dust mite study is well advanced and the company will therefore assess the pros and cons of continuing that trial. Circassia’s broader strategy remains unchanged and we await further clarity on this at the interim results. IVO holds a 9.3% interest in Circassia Pharmaceuticals’ share capital, which accounted for c 22% of NAV as of H116. Circassia has cash of £139m at 31 May 2016. Our forecasts for IVO remain unchanged at this time.

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New Zealand

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 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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