Crossject — On track for filings next year

Crossject — On track for filings next year

Crossject recently reported FY17 results and that it remains on track for regulatory filings for several programmes in 2019, including Zeneo Sumatriptan, Midazolam, Epinephrine/Adrenaline, Hydrocortisone, and Naloxone with Terbutaline and Methotrexate in 2020. A key upcoming catalyst would be a US licensing agreement for Zeneo Sumatriptan for the treatment of acute migraine, which could come in H118.

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Written by

Crossject

On track for filings next year

Financial results

Pharma & biotech

22 March 2018

Price

€4.30

Market cap

€39m

Net cash (€m) at 31 December 2017

0.3

Shares in issue

9.0m

Free float

80.4%

Code

ALCJ

Primary exchange

Euronext

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.4)

(0.47)

(14.4)

Rel (local)

(3.3)

1.8

(19.4)

52-week high/low

€6.80

€3.91

Business description

Crossject has several programmes in development based on its proprietary needle-free injection system, Zeneo. The first to market will be Zeneo Sumatriptan, which the company expects to be commercialised in 2020. Over the course of 2020 and 2021, Crossject expects to launch proprietary versions of six other products on its Zeneo platform.

Next events

Zeneo Sumatriptan partnership

H118

Analysts

Maxim Jacobs

+1 646 653 7027

Nathaniel Calloway

+1 646 653 7036

Crossject is a research client of Edison Investment Research Limited

Crossject recently reported FY17 results and that it remains on track for regulatory filings for several programmes in 2019, including Zeneo Sumatriptan, Midazolam, Epinephrine/Adrenaline, Hydrocortisone, and Naloxone with Terbutaline and Methotrexate in 2020. A key upcoming catalyst would be a US licensing agreement for Zeneo Sumatriptan for the treatment of acute migraine, which could come in H118.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/16

1.4

(7.3)

(0.85)

0.0

N/A

N/A

12/17

4.1

(8.5)

(0.82)

0.0

N/A

N/A

12/18e

0.0

(12.1)

(1.04)

0.0

N/A

N/A

12/19e

0.0

(12.8)

(0.98)

0.0

N/A

N/A

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

Manufacturing capabilities progressing

Crossject is continuing to improve its manufacturing capabilities, an important component of the company’s ability to meet its regulatory and commercial timelines. It has been able to produce ready-to-fill sterile tubes since the end of 2017 and the production line for the gas generators has been operational since the beginning of 2018.

Sumatriptan partnership possible by H118

Crossject is in discussions to license its lead product, Zeneo Sumatriptan, for the acute treatment of migraine in the US and, according to the company, a deal is possible in H118. Ease of use and fast onset should be key selling points for the product. Additionally, a tender process for US rights to Zeneo Midazolam (which recently received orphan drug designation from the FDA) for the acute treatment of epilepsy was commenced in December of 2017.

New publication highlights the ease of use of Zeneo

In early March, the results of a human factors study in 134 healthy volunteers were published. Importantly, 93.9% could use the device without major errors (note that in previous studies of EpiPen as few as 18% of participants used the device properly), 97.0% consider the device to be easy to use and 99.3% would ask the physician for it if they were ever in need of requiring regular injections.

Valuation: €136.3m or €15.21 per share

We have increased our valuation for Crossject to €136.3m or €15.21 per basic share from €121m or €13.72 per basic share due to rolling forward our NPVs from 2017 to 2018. This was partly mitigated by a lower net cash balance and a higher share count. As of the end of 2017, the company had a cash position of €2.8m, although it raised an additional €5.25m in a convertible debt offering in February. It also announced a free allotment of warrants to existing shareholders, which could yield an additional €4.0m. Between now and projected profitability in 2020, we forecast a total funding need of €16.5m.

Making progress towards commercialisation

Crossject is coming closer to bringing its proprietary needle-free injection platform to commercialisation as its manufacturing capabilities are coming on line. It has been able to produce ready-to-fill sterile tubes since the end of 2017 and the production line for the gas generators has been operational since the beginning of 2018. The company is currently finalising its documentation to start producing clinical batches, which would allow it to begin clinical studies for its products.

Exhibit 1: Crossject pipeline

Product

Indication

Current expectation for submission (US/EU)

Notes

Sumatriptan

Acute migraine

2019

Bioequivalence study expected to be completed in 2018

Midazolam

Acute epilepsy seizures

2019

Bioequivalence study given regulatory go-ahead and expected to be completed in 2018

Epinephrine/Adrenaline

Anaphylactic shock

2019

Bioequivalence study expected to be completed in 2018

Methotrexate

Rheumatoid arthritis

2020

Bioequivalence study completed

Hydrocortisone

Acute adrenal insufficiency

2019

Bioequivalence study expected to be completed in 2018

Naloxone

Opioid overdose

2019

Expect to confirm formulation and pre-stability studies and receive regulatory authorisation for bioequivalence studies

Terbutaline

Severe asthma

2020

Expect to confirm formulation and pre-stability studies

Apomorphine

Parkinson’s disease

2021

Expect to confirm formulation and pre-stability studies

Source: Crossject, Edison Investment Research estimates

One of the main benefits of the Zeneo platform was recently highlighted in a publication of Crossject’s 134 healthy volunteer human factors study.1 93.9% could use the device without major errors, 97.0% consider the device to be easy to use and 99.3% would ask the physician for it if they were ever in need of requiring regular injections.

  Allaert F. et al., Panminerva Medica 2018 June;60(2):52-9.

The ease of use of the Zeneo device is a major positive over other devices, including the EpiPen, which is an auto-injector. A major issue with the EpiPen is that only a minority of patients and physicians know how to use it correctly. According to one study, just 18% of participants were able to perform all steps correctly (one of the major weaknesses being not keeping the EpiPen in place for the full 10 seconds recommended).2 In another study, 32% of participants were able to, but only 18% of paediatricians were able to correctly demonstrate use of the device.3 With such an ease of use differential, Zeneo could become the device of choice for both patients and physicians.

  Sicherer S. et al., Journal of Pediatrics 2012 Apr;160(4):651-6.

  Sicherer S. et al., Journal of Pediatrics 2000 Feb;105(2):359-362.

Valuation

We have increased our valuation for Crossject to €136.3m or €15.21 per basic share from €121m or €13.72 per basic share due to rolling forward our NPVs from 2017 to 2018. This was partly mitigated by a lower net cash balance and a higher share count. We expect to review our valuation on completion of bioequivalence studies, as well as the announcement of partnerships, especially in the US market.

Exhibit 2: Crossject valuation

Product

Main Indication

Prob. of success

Launch year

WW Peak sales (€m)

Patent protection

Royalty

rNPV (€m)

Methotrexate

Rheumatoid arthritis

30%

2021

€100

2036

20%

€9.9

Sumatriptan

Acute migraine

60%

2020

€82

2036

20%

€16.4

Adrenaline

Anaphylactic shock

60%

2020

€133

2036

25% US/20% EU

€39.1

Midazolam

Acute epileptic seizures

60%

2020

€58

2036

20%

€11.3

Hydrocortisone

Acute adrenal crisis

60%

2020

€9

2036

20%

€1.3

Naloxone

Opioid overdose

60%

2020

€34

2036

20%

€7.4

Terbutaline

Severe asthma

60%

2021

€161

2036

20%

€38.9

Apomorphine

Parkinson's disease

30%

2022

€53

2036

20%

€11.8

Total

 

 

 

 

 

 

136.0

Net cash (2017) (€m)

€0.29

Total firm value (€m)

136.28

Total basic shares (m)

8.96

Value per basic share (€)

15.21

Stock options (m)

1.52

Weighted average exercise price (€)

€3.75

Cash on exercise (€m)

€5.70

Total firm value (€m)

€141.97

Total number of shares

10.5

Diluted value per share (€)

€13.55

Source: Edison Investment Research

Financials

As of 31 December 2017, Crossject had €2.8m in cash, cash equivalents and short-term investments on hand, as well as €2.5m in long-term debt. In February, the company raised an additional €5.25m in convertible debt with a 0% coupon and a maturity date of 11 February 2020. Additionally, it announced a warrant offering for existing shareholders such that each shareholder would receive one warrant per share owned, and 10 warrants would be required to purchase an additional share (ie 10% warrant coverage). The warrants have an exercise price of €4.50 per share, which is slightly above the current share price, and if all warrants are exercised an additional €4m would be raised, although it is difficult to predict how many will be. The warrants may be exercised at any time from 10 April to 30 June 2018, so they expire relatively soon. Additionally, the company received €500,000 in repayable assistance from the French government in early 2018, with a two-year grace period.

Based on the recent results, we have increased our operating spending estimates by approximately €0.9m in 2018 (due to slightly higher R&D and SG&A expenditures). Between now and projected profitability in 2020, we forecast a total funding need of €16.5m, which does not take into account any funding received from the warrant offering to existing shareholders. This requirement could be further mitigated somewhat by additional upfront payments from partners, as well as milestone payments on product approvals.

Exhibit 3: Financial summary

€000s

2015

2016

2017

2018e

2019e

Year end 31 December

French GAAP

French GAAP

French GAAP

French GAAP

French GAAP

PROFIT & LOSS

Revenue

 

 

2,370

1,427

4,142

0

0

Cost of Sales

(0)

0

0

0

0

Gross Profit

2,369

1,427

4,142

0

0

R&D Expenses

(3,077)

(4,384)

(7,186)

(8,264)

(8,760)

SG&A and Other Expenses

(4,808)

(2,630)

(3,321)

(3,587)

(3,520)

EBITDA

 

 

(5,516)

(5,587)

(6,365)

(11,851)

(12,280)

Operating Profit (before amort. and except.)

(7,013)

(7,291)

(8,621)

(11,851)

(12,280)

Intangible Amortisation

0

0

0

0

0

Other

0

0

0

0

0

Exceptionals

0

0

0

0

0

Operating Profit

(7,013)

(7,291)

(8,621)

(11,851)

(12,280)

Net Interest

(19)

(38)

159

(294)

(493)

Other

299

(429)

(278)

0

0

Profit Before Tax (norm)

 

 

(6,720)

(7,329)

(8,462)

(12,145)

(12,773)

Profit Before Tax (FRS 3)

 

 

(6,732)

(7,758)

(8,740)

(12,145)

(12,773)

Tax

1,045

1,095

1,129

2,479

2,628

Deferred tax

0

0

0

0

0

Profit After Tax (norm)

(5,675)

(6,234)

(7,333)

(9,666)

(10,145)

Profit After Tax (FRS 3)

(5,687)

(6,663)

(7,611)

(9,666)

(10,145)

Average Number of Shares Outstanding (m)

6.7

7.3

9.0

9.3

10.3

EPS - normalised (€)

 

 

(0.86)

(0.85)

(0.82)

(1.04)

(0.98)

EPS - FRS 3 (€)

 

 

(0.86)

(0.91)

(0.85)

(1.04)

(0.98)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

5,936

9,252

11,418

14,353

14,460

Intangible Assets

2,330

2,506

4,057

4,057

4,057

Tangible Assets

1,727

5,636

5,471

8,406

8,513

Other

1,878

1,109

1,890

1,890

1,890

Current Assets

 

 

7,943

4,997

6,298

5,947

5,757

Stocks

761

398

1,201

1,201

1,201

Debtors

1,991

1,966

2,291

2,291

2,291

Cash

5,139

2,634

2,806

2,455

2,265

Other

52

0

0

0

0

Current Liabilities

 

 

(3,261)

(3,321)

(4,273)

(4,273)

(4,273)

Creditors

(3,261)

(2,566)

(4,273)

(4,273)

(4,273)

Short term borrowings

0

(755)

0

0

0

Long Term Liabilities

 

 

(1,820)

(4,645)

(7,358)

(19,608)

(29,671)

Long term borrowings

0

(3,235)

(2,517)

(14,767)

(24,767)

Other long term liabilities

(1,820)

(1,409)

(4,841)

(4,841)

(4,904)

Net Assets

 

 

8,797

6,284

6,085

(3,581)

(13,727)

CASH FLOW

Operating Cash Flow

 

 

(4,796)

(4,403)

(4,974)

(8,353)

(8,065)

Net Interest

0

0

0

0

0

Tax

0

0

0

0

0

Capex

(1,805)

(6,065)

(4,248)

(4,248)

(2,124)

Acquisitions/disposals

0

0

0

0

0

Financing

0

3,961

7,412

0

0

Dividends

0

0

0

0

0

Other

483

(252)

3,285

0

0

Net Cash Flow

(6,118)

(6,759)

1,475

(12,601)

(10,189)

Opening net debt/(cash)

 

 

(10,927)

(5,139)

1,357

(289)

12,312

HP finance leases initiated

0

0

0

0

0

Exchange rate movements

0

0

0

0

0

Other

330

264

170

0

0

Closing net debt/(cash)

 

 

(5,139)

1,357

(289)

12,312

22,502

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 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 Crossject 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 Ltd (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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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

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Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Crossject 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 Ltd (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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London +44 (0)20 3077 5700

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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

Immunovia — IMMray PanCan-d approaches the market

Immunovia is preparing to market its IMMray PanCan-d for self-pay patients at high risk of pancreatic cancer (PC) in Q418, after preparatory activities were pushed back slightly from mid-2017 to 2018. To achieve reimbursement, a prospective trial in this population is being run and if positive, the test could be reimbursed in 2020. Immunovia is pursuing other groups ie patients with new-onset T2 diabetes aged 50+ and those with early gastric symptoms. Our revised valuation is SEK3.6bn as we now include early gastric symptoms. Autoimmune diseases represent upside.

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