Medigene — Update 26 July 2016

Medigene — Update 26 July 2016

Medigene

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Medigene

Expansion of platform technology

US patent grant

Pharma & biotech

26 July 2016

Price

€7.22

Market cap

€142m

Net cash (£m) at 31 March 2016

46.3

Shares in issue

19.7m

Free float

62.6%

Code

MDG1

Primary exchange

XETRA

Secondary exchange

Frankfurt

Share price performance

%

1m

3m

12m

Abs

15.5

(14.5)

(32.7)

Rel (local)

8.3

(13.7)

(25.1)

52-week high/low

€10.3

€5.2

Business description

Medigene is a German biotech company with a core technology platform in cancer immunotherapy. Dendritic cell (DC) vaccines are in Phase I/II clinical studies, while a T-cell receptor (TCR) candidate should enter the clinic in 2017.

Next events

Interim results (six-month report)

5 August 2016

TCR (IIT) clinical trial initiation

H117

First TCR (CIT) clinical trial initiation

H217

Analysts

Dr Linda Pomeroy

+44 (0)20 3077 5738

Lala Gregorek

+44 (0)20 3681 2527

Medigene is a research client of Edison Investment Research Limited

Medigene has announced that it has expanded its TCR platform technology with the grant of a US patent focused on a method for identifying T-cell antigens. This demonstrates Medigene’s continued advancement of its TCR technology, including providing a new source for potential TCR candidates and establishing a more efficient method for identifying tumour-specific antigens. We maintain our rNPV-based valuation at €214m, or €10.8 per share, with upside expected as it executes its clinical strategy.

Year end

Revenue (€m)

PBT* (€m)

EPS* (€)

DPS (€)

P/E (x)

Yield (%)

12/14

13.8

(5.3)

(0.42)

0.0

N/A

N/A

12/15

6.8

(12.8)

(0.74)

0.0

N/A

N/A

12/16e

7.1

(13.1)

(0.66)

0.0

N/A

N/A

12/17e

7.3

(13.5)

(0.67)

0.0

N/A

N/A

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

Expansion of TCR platform technology – US patent

Medigene has expanded its TCR platform technology with the grant of a US patent, which claims a method for the identification of antigens recognised by CD4+ T-cells, including tumour-infiltrating CD4+ T-cells. The patent has a significant period of time to expiry (2030) and is important to Medigene as it offers an effective additional source for potential TCR candidates. It also enables the identification of patient-specific neoantigens seen by CD4+ cells. Neoantigens are potentially good targets for cancer immunotherapy as they are specifically expressed in the tumour, which potentially enables therapies to be specifically targeted.

Building on a broad patent base

Medigene has four patent families relating to its TCR platform, which comprise 47 granted patents and 14 pending applications. These patents are granted in a number of jurisdictions including Europe, the US, Australia and Canada.

Advancing immunotherapies

Medigene is making solid progress with the development of its immunotherapy franchise. Its DC vaccine programmes include a company-initiated trial (a Phase I/II study in 20 AML patients) and investigator-initiated trials (IIT) in AML and prostate cancer. In its TCR division, we expect the start of a planned IIT by mid-2017 following the announcement of a co-operation agreement, with grant funding, to conduct a Phase I. Two company-initiated trials are due to start in 2017 and 2018.

Valuation: Maintained at €214m, or €10.8/share

We maintain our rNPV-based valuation at €214m, or €10.8/share. Medigene’s announcement continues to build on recent positive developments such as the co-operation agreement, with grant funding to conduct an IIT Phase I trial. We expect upside to our valuation as Medigene executes its clinical development strategy over the next few years.

Exhibit 1: Financial summary

€'000s

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

13,784

6,808

7,056

7,330

of which: Veregen revenues (royalties/milestones/supply)

5,195

3,101

3,462

3,737

R&D partnering (SynCore/Falk Pharma/grants)

6,096

1,214

1,100

1,100

Non-cash income (Eligard)

2,493

2,493

2,493

2,493

Cost of sales

(2,086)

(1,103)

(1,305)

(1,415)

Gross profit

11,698

5,705

5,751

5,915

Selling, general & administrative spending

(7,081)

(7,615)

(7,833)

(8,057)

R&D expenditure

(7,498)

(8,529)

(9,808)

(10,789)

Other operating spending

0

.

0

0

Operating profit

(2,881)

(10,439)

(11,890)

(12,931)

Goodwill & intangible amortisation

(527)

(526)

(525)

(524)

Exceptionals

0

0

0

0

Share-based payment

(66)

(111)

(50)

(50)

EBITDA

 

 

(2,005)

(9,384)

(11,090)

(12,132)

Operating profit (before GW and except.)

 

 

(2,288)

(9,802)

(11,315)

(12,357)

Net interest

(1,774)

(2,914)

(2,529)

(2,361)

Other (forex gains/losses; associate profit/loss)

(1,257)

(46)

719

1,204

Profit before tax (norm)

 

 

(5,319)

(12,762)

(13,126)

(13,514)

Profit before tax (FRS 3)

 

 

(5,912)

(13,399)

(13,701)

(14,088)

Tax

155

400

0

0

Profit/(loss) from discontinued operations

0

0

0

0

Profit after tax (norm)

(5,164)

(12,362)

(13,126)

(13,514)

Profit after tax (FRS 3)

(5,757)

(12,999)

(13,701)

(14,088)

Average number of shares outstanding (m)

12.2

16.8

19.9

20.2

EPS - normalised (€)

 

 

(0.42)

(0.74)

(0.66)

(0.67)

EPS - FRS 3 (€)

 

 

(0.47)

(0.77)

(0.69)

(0.70)

Dividend per share (€)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed assets

 

 

46,617

53,631

45,730

46,309

Intangible assets & goodwill

38,377

37,792

35,188

34,664

Tangible assets

951

2,502

3,605

4,708

Other non-current assets

7,289

13,337

6,937

6,937

Current assets

 

 

24,666

59,900

54,364

37,836

Stocks

4,406

6,654

6,654

6,654

Debtors

1,733

763

763

763

Cash

14,976

46,759

45,679

29,151

Other

3,551

5,724

1,268

1,268

Current liabilities

 

 

(7,755)

(9,664)

(8,376)

(8,376)

Trade accounts payable

(1,785)

(1,354)

(1,354)

(1,354)

Short-term borrowings

0

0

0

0

Deferred income

(57)

(226)

(226)

(226)

Other

(5,913)

(8,084)

(6,796)

(6,796)

Long-term liabilities

 

 

(14,457)

(13,879)

(13,879)

(13,879)

Pension provisions

(413)

(359)

(359)

(359)

Long-term borrowings

0

0

0

0

Other liabilities (Deferred taxes; Trianta milestones)

(3,221)

(2,915)

(2,915)

(2,915)

Deferred revenues (Eligard non-cash income)

(10,823)

(10,605)

(10,605)

(10,605)

Net assets

 

 

49,071

89,988

77,839

61,890

CASH FLOW

Operating cash flow

 

 

(8,765)

(10,585)

(9,495)

(14,339)

Net interest

9

(20)

(1,029)

(861)

Tax

0

0

0

0

Capex

(873)

(1,328)

(1,328)

(1,328)

Expenditure on intangibles

0

0

0

0

Acquisitions/disposals

0

0

9,953

0

Equity financing

14,502

43,695

819

0

Other

(62)

21

0

0

Net cash flow

4,811

31,783

(1,080)

(16,528)

Opening net debt/(cash)

 

 

(10,166)

(14,976)

(46,759)

(45,679)

HP finance leases initiated

0

0

0

0

Other (foreign exchanges differences)

(1)

0

(0)

0

Closing net debt/(cash)

 

 

(14,976)

(46,759)

(45,679)

(29,151)

Source: Company accounts, Edison Investment Research

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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

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Theraclion — Update 25 July 2016

Theraclion

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