Nicox — Key programmes continue to advance

Nicox (Euronext Growth: ALCOX)

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Research: Healthcare

Nicox — Key programmes continue to advance

Nicox’s Q1 results, reported on 19 April, were largely in line with our expectations. The company continues to make progress with its leading clinical programmes, with lead candidate NCX-470 having reached 50% of its enrolment target in the Phase III Mont Blanc trial assessing the drug candidate’s ability to reduce intraocular pressure (IOP). As NCX-470 expands on an already-established dual IOP-lowering mechanistic approach, we believe, if approved, it could become the most potent single-agent glaucoma drug on the market in terms of IOP-lowering efficacy. Top-line data are expected in Q222. NCX-4251’s Phase IIb study in acute blepharitis is tracking well and results continue to be expected in Q421.

Written by

Pooya Hemami

Analyst - Healthcare

Healthcare

Nicox

Key programmes continue to advance

Q121 update

Pharma & biotech

23 April 2021

Price

€4.11

Market cap

€152m

$1.19/€

Net cash (€m) at 31 March 2021

24.2

Shares in issue

37.1m

Free float

98%

Code

COX

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.4)

(13.0)

6.6

Rel to TA-100

(10.6)

(22.1)

(24.9)

52-week high/low

€5.88

€3.28

Business description

Based in France, Nicox develops therapeutics for the treatment of ocular conditions. Lead development candidate NCX-470 is in Phase III studies for the treatment of glaucoma. Nicox also receives licence revenue from its partners for its FDA-approved drugs Vyzulta and Zerviate.

Next events

H121 financial results

September 2021

Phase IIb NCX-4251 top-line results

Q421

Analysts

Pooya Hemami, CFA

+1 646 653 7026

Maxim Jacobs, CFA

+1 646 653 7027

Nicox’s Q1 results, reported on 19 April, were largely in line with our expectations. The company continues to make progress with its leading clinical programmes, with lead candidate NCX-470 having reached 50% of its enrolment target in the Phase III Mont Blanc trial assessing the drug candidate’s ability to reduce intraocular pressure (IOP). As NCX-470 expands on an already-established dual IOP-lowering mechanistic approach, we believe, if approved, it could become the most potent single-agent glaucoma drug on the market in terms of IOP-lowering efficacy. Top-line data are expected in Q222. NCX-4251’s Phase IIb study in acute blepharitis is tracking well and results continue to be expected in Q421.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

8.3

(16.0)

(0.40)

0.0

N/A

N/A

12/20

14.4

(10.2)

(0.30)

0.0

N/A

N/A

12/21e

10.2

(16.1)

(0.43)

0.0

N/A

N/A

12/22e

12.0

(16.0)

(0.43)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Normalised 2020 figures differ from reported amounts due primarily to the €6.9m loss reported following the divestment of Nicox’s holdings in VISUfarma.

Vyzulta and Zerviate prescriptions increase

Nicox obtains recurring revenue from two out-licensed commercial assets, Vyzulta (latanoprostene bunod) and Zerviate (topical cetirizine); its royalty rates are no lower than mid-single digits. Nicox reported Q121 net royalties (thus net of payments due to Pfizer) of €0.6m (vs €0.7m in Q120). We believe the timing of royalty payments from Vyzulta licensee Bausch + Lomb (B+L) likely accounted for the year-on-year decline, given that actual Q121 US Vyzulta prescriptions were up 10.6% y-o-y. Our H121 Vyzulta net royalty estimate remains €2.3m and we will review our forecasts when the company reports mid-year results. B+L indicated that it plans to launch Vyzulta in Taiwan in 2021 and South Korea in 2022. This, combined with Vyzulta’s recent regulatory approval in Brazil, should help support continued growth for the product, although we continue to expect that the predominant portion of sales will come from the US market. Zerviate, which was launched in the United States in March 2020, had a robust 29% q-o-q increase in prescriptions from Q420.

Cash utilisation tracking slightly ahead of forecasts

Nicox reported Q121 gross cash of €42.0m and financial debt of €17.8m, resulting in net cash of €24.2m (excluding lease liabilities). This compares with FY20 net cash of €29.3m, suggesting a Q1 burn rate of c €5m, tracking mildly ahead of our 2021 burn estimate of €17m. We continue to estimate Nicox has sufficient funds on hand to operate into H222, and will review once mid-year financials are released.

Valuation: rNPV of €322m unchanged

We maintain our current forecasts and valuation assumptions, resulting in an unchanged rNPV of €322.4m. After adding €24.2m in net cash, we obtain an equity value of €351.7m, or €9.34 per share. We continue to model that Nicox will raise €40m between 2022 and 2024 before launching NCX-470 in 2024.

Exhibit 1: Financial summary

€’000s

2018

2019

2020

2021e

2022e

2023e

2024e

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

4,717

8,260

14,423

10,182

11,965

18,699

34,228

Cost of Sales

(690)

(1,405)

(1,516)

(1,881)

(2,367)

(4,777)

(9,111)

Gross Profit

4,027

6,855

12,907

8,301

9,598

13,923

25,116

General & Administrative

(9,506)

(7,666)

(6,677)

(6,777)

(7,074)

(10,445)

(28,693)

Net Research & Development

(15,491)

(16,883)

(11,991)

(16,700)

(17,350)

(12,350)

(7,350)

Amortisation of intangible assets

0

(659)

(1,252)

(1,162)

(1,141)

(1,121)

(1,101)

Operating profit before exceptionals

(20,970)

(18,353)

(7,013)

(16,338)

(15,967)

(9,993)

(12,027)

EBITDA

 

 

(20,718)

(17,230)

(5,270)

(14,822)

(14,476)

(8,528)

(10,515)

Depreciation & other

(252)

(464)

(491)

(354)

(351)

(344)

(411)

Operating Profit (before amort. and except.)

(20,970)

(17,694)

(5,761)

(15,176)

(14,826)

(8,872)

(10,926)

Exceptionals including asset impairment

302

(6,115)

(6,621)

0

0

0

0

Other

0

0

0

0

0

0

0

Operating Profit

(20,668)

(23,809)

(12,382)

(15,176)

(14,826)

(8,872)

(10,926)

Net Interest

2,390

1,690

(4,436)

(877)

(1,152)

(2,103)

(2,999)

Profit Before Tax (norm)

 

 

(18,580)

(16,004)

(10,197)

(16,053)

(15,978)

(10,976)

(13,925)

Profit Before Tax (FRS 3)

 

 

(18,278)

(22,778)

(18,070)

(17,215)

(17,120)

(12,097)

(15,026)

Tax

(113)

3,856

(28)

0

0

0

0

Profit After Tax and minority interests (norm)

(18,693)

(12,148)

(10,225)

(16,053)

(15,978)

(10,976)

(13,925)

Profit After Tax and minority interests (FRS 3)

(18,391)

(18,922)

(18,098)

(17,215)

(17,120)

(12,097)

(15,026)

Average Number of Shares Outstanding (m)

29.6

30.3

33.7

37.2

37.5

37.8

38.1

EPS - normalised (€)

 

 

(0.63)

(0.40)

(0.30)

(0.43)

(0.43)

(0.29)

(0.37)

EPS - normalised and fully diluted (€)

 

(0.63)

(0.40)

(0.30)

(0.43)

(0.43)

(0.29)

(0.37)

EPS - (IFRS) (€)

 

 

(0.62)

(0.62)

(0.54)

(0.46)

(0.46)

(0.32)

(0.39)

Dividend per share (€)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

112,498

110,660

89,745

88,585

87,422

86,425

85,769

Intangible Assets

71,397

72,120

64,848

63,686

62,545

61,424

60,323

Tangible Assets

25,628

27,517

24,829

24,831

24,809

24,933

25,378

Investments in long-term financial assets

15,473

11,023

68

68

68

68

68

Current Assets

 

 

26,092

32,146

52,521

36,133

28,468

29,790

34,755

Short-term investments

0

0

0

0

0

0

0

Cash

22,059

28,102

47,195

30,056

21,929

20,207

23,478

Other

4,033

4,044

5,326

6,077

6,540

9,583

11,276

Current Liabilities

 

 

(8,069)

(9,828)

(15,405)

(17,232)

(17,657)

(20,183)

(18,095)

Creditors

(8,069)

(7,751)

(10,116)

(11,943)

(12,368)

(14,894)

(12,806)

Short term borrowings

0

(2,077)

(5,289)

(5,289)

(5,289)

(5,289)

(5,289)

Long Term Liabilities

 

 

(16,868)

(23,681)

(26,051)

(22,551)

(29,051)

(37,551)

(57,551)

Long term borrowings

0

(9,045)

(12,687)

(12,687)

(22,687)

(32,687)

(52,687)

Other long term liabilities

(16,868)

(14,636)

(13,364)

(9,864)

(6,364)

(4,864)

(4,864)

Net Assets

 

 

113,653

109,297

100,810

84,935

69,183

58,481

44,877

CASH FLOW

Operating Cash Flow

 

 

(21,533)

(17,741)

(956)

(15,906)

(16,647)

(9,151)

(12,874)

Net interest and financing income (expense)

2,390

1,690

(4,436)

(877)

(1,152)

(2,103)

(2,999)

Tax

0

0

0

0

0

0

0

Capex

(268)

(95)

(20)

(356)

(328)

(467)

(856)

Acquisitions/disposals

0

0

0

0

0

0

0

Financing

0

11,290

13,321

0

0

0

0

Dividends

0

0

0

0

0

0

0

Net Cash Flow

(19,411)

(4,856)

7,909

(17,139)

(18,127)

(11,722)

(16,728)

Opening net debt/(cash)

 

 

0

(37,532)

(28,003)

(29,287)

(12,148)

5,979

17,701

HP finance leases initiated

0

0

0

0

0

0

0

Other

56,943

(4,673)

(6,625)

0

0

0

(0)

Closing net debt/(cash)

 

 

(37,532)

(28,003)

(29,287)

(12,148)

5,979

17,701

34,430

Lease debt

N/A

1,527

1,099

1,099

1,099

1,099

1,099

Closing net debt/(cash) inclusive of IFRS 16 lease debt

(37,532)

(26,476)

(28,188)

(11,049)

7,078

18,800

35,529

Source: Company reports, Edison Investment Research


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1185 Avenue of the Americas

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United States of America

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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 Nicox and prepared and issued by Edison, in consideration of a fee payable by Nicox. Edison Investment Research standard fees are £49,500 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 2021 Edison Investment Research Limited (Edison).

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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.

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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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