Hepion Pharmaceuticals — Phase IIa readout upcoming

Hepion Pharmaceuticals (US: HEPA)

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Research: Healthcare

Hepion Pharmaceuticals — Phase IIa readout upcoming

Despite a challenging operating environment due to COVID-19, Hepion was able to advance its CRV431 development program (for the treatment of non-alcoholic steatohepatitis, NASH) without major disruption, despite widespread issues for many companies in enrolling clinical studies. The company completed Phase I testing during 2020 and initiated a Phase IIa study that is nearing completion (Q221).

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Written by

Healthcare

Hepion Pharmaceuticals

Phase IIa readout upcoming

Earnings update

Pharma & biotech

7 April 2021

Price

US$1.91

Market cap

US$146m

Net cash ($m) YE20 + offering

122.7

Shares in issue

76.23m

Free float

99.9%

Code

HEPA

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

2.7

(8.6)

17.9

Rel (local)

(3.2)

(15.9)

(22.9)

52-week high/low

US$4.59

US$1.31

Business description

Hepion Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing therapeutics for chronic liver disease. The company’s lead asset is CRV431, a cyclophilin inhibitor being developed for the treatment of non-alcoholic steatohepatitis.

Next events

Phase IIa study complete

Q221

Analyst

Nathaniel Calloway

+1 646 653 7036

Hepion Pharmaceuticals is a research client of Edison Investment Research Limited

Despite a challenging operating environment due to COVID-19, Hepion was able to advance its CRV431 development program (for the treatment of non-alcoholic steatohepatitis, NASH) without major disruption, despite widespread issues for many companies in enrolling clinical studies. The company completed Phase I testing during 2020 and initiated a Phase IIa study that is nearing completion (Q221).

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/19

0.0

(7.9)

(3.42)

0.00

N/A

N/A

12/20

0.0

(17.9)

(1.86)

0.00

N/A

N/A

12/21e

0.0

(19.6)

(0.26)

0.00

N/A

N/A

12/22e

0.0

(17.0)

(0.21)

0.00

N/A

N/A

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

Final stages of Phase IIa

Hepion’s Phase IIa study is currently examining patients in the ‘high dose’ (225mg) cohort, which is expected to be complete in Q221 and provide topline results shortly thereafter. The study already reported some very encouraging data from the low dose (75mg) arm in early 2021 showing a reduction in liver enzymes (18.4% decline in ALT and a 12.1% decline in AST). The primary endpoints of the study are safety, tolerability and pharmacokinetics, but we expect readouts from biomarker data gathered in the study to determine if this drug is active in these patients.

Biomarker data to provide ‘first look’ into activity

Historically it has been difficult to run smaller exploratory studies in NASH patients due to difficulties in quantifying fibrosis and heterogeneity in the study population. Hepion is aiming to provide some insight into the activity of the molecule using biomarkers in this smaller study (28 days, n=36) before committing to a bigger Phase IIb. Additionally, these data will be processed with the company’s AI-POWR platform it is developing, with the intent of improving the prediction of activity in this disease.

Valuation: Increased to $182.9m from $102.4m

We have increased our valuation to $182.9m from $102.4m, although it is lower on a per-share basis: $2.40 from $3.20 per basic share, previously. This increase is driven by the very large offering that was completed by the company in February 2021: $88.4m gross (44.2m shares at $2.00). This offering tripled the company’s equity on a pro-forma basis. Additionally, we have rolled forward our net present values (NPVs). We expect to update our valuation when data from the Phase IIa study are released.

Phase IIa to provide illuminating biomarker data

The major operational goal for Hepion in 2020 was to advance the clinical program for CRV431, and the company was able to complete its Phase I study and initiate and advance a Phase IIa study in NASH patients during the year. Many other pharmaceutical and biotech companies encountered significant hurdles running clinical studies in 2020 because COVID-19 affected enrolment rates in very significant ways. Medical resources were directed away from non-essential clinical studies, and patients were less likely to seek any type of non-COVID-19 related medical treatment, let alone enroll in clinical studies. Despite these headwinds, the company has been able move forward with only minor delays: the completion of the Phase IIa study has been moved to Q221 from Q121. The high dose cohort of 225mg is currently being examined.

The Phase IIa AMBITION study has a target enrolment of 36 F2 and F3 stage NASH patients after 28 days of treatment (Exhibit 1). The company reported some very encouraging data (albeit not rising to the level of statistical significance) on ALT and AST enzymes in January 2021 (18.4% decline in ALT and a 12.1% decline in AST, n=12, compared to a 0.65% reduction and a 2.52% increase respectively in the placebo arm, n=6). We discuss this data in more detail in our previous report. The primary endpoints of the study are safety, tolerability and pharmacokinetic parameters of the drug, but the company will also be examining a large number of other metrics to investigate the clinical activity of the drug. These include markers of fibrosis, lipid metabolism and genetic markers. The company is developing a platform for evaluating these parameters (AI-POWR) with the goal of finding useful biomarkers (or combinations thereof) that indicate clinical activity. This being said, although this will be the first look into the activity of the drug in patients, the study is small and NASH patients are very heterogeneous, so the study may not be powered for a statistical significance of p<0.05, but we believe that the results will be very meaningful despite this. It has proven very difficult to quantify NASH related fibrosis, which has limited the ability of companies to run smaller studies like this one, so we consider the company’s plan to gather rich biomarker data as a reasonable way to provide meaningful insight given this limitation.

Exhibit 1: Phase IIa trial design

Source: Hepion

The company is planning to run a much larger (n=300) Phase IIb study following the completion of the Phase IIa (guidance is for initiation in Q2 or Q321). The current plan for this study is to examine the same two dosing levels (75mg and 225mg) for six months. It will use the AI-POWR platform trained using data from the current Phase IIa study to evaluate patients as well as liver biopsy, with an endpoint of reduction in fibrosis.

Valuation

We have increased our valuation to $182.9m from $102.4m, although it is lower on a per share basis: $2.40 from $3.20 per basic share, previously. This increase is driven by updated net cash following the company’s February public offering ($82.1m net, more information below) to $122.7m from $45.2m previously (Q320 pro forma). We have also rolled forward our NPVs to 2021. Otherwise our forecasts remain unchanged. We expect to update our models with the results from the Phase IIa study.

Exhibit 2: Valuation of Hepion

Program

Market

Prob. of success

Launch
year

Peak revenue ($m)

Valuation ($m)

CRV431

US

15%

2026

370.8

38.89

Europe

15%

2027

373.0

31.87

R&D & milestones

(10.56)

Total

60.20

Net cash and equivalents (YE20 + offering)

122.65

Total firm value ($m)

182.85

Total basic shares (m)

76.23

Value per basic share ($)

2.40

Convertible preferred stock (m)

0.02

Dilutive options and warrants (m)

0.69

Total diluted shares (m)

76.94

Value per diluted share ($)

2.39

Source: Hepion reports, Edison Investment Research

Financials

Hepion recently reported its 2020 results, which were largely within our expectations. The company reported a net loss of $20.4m for the year, of which a majority was attributable to R&D costs ($12.0m). We had modelled some cost increases for 2020 on account of COVID-19 that we expect will not be required in 2021, but we expect this to be offset by a $3m milestone payable (to former Ciclofilin shareholders), which is included in our R&D line. G&A expenses for the year were $8.15m, which was slightly higher than expectations ($7.2m) and we have adjusted our run rate going forward.

In February the company completed a major offering of 44.2m shares at $2.00 per share, for gross proceeds of $88.4m ($82.1m net). We are impressed by the company’s ability to pull off an offering of such a size, as it effectively tripled the company’s equity ($40.5m in equity at YE20). We expect this to be sufficient to finance the company through to completion of its Phase IIb clinical study. We have reduced our financing requirement for the company to $25m (in 2025) from $100m previously.

Exhibit 3: Financial summary

$000s

2019

2020

2021e

2022e

Year-end 31 December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

0.0

0.0

0.0

0.0

Cost of Sales

0.0

0.0

0.0

0.0

Gross Profit

0.0

0.0

0.0

0.0

R&D

(3,184.1)

(11,997.3)

(13,537.3)

(10,724.4)

SG&A

(4,586.0)

(8,148.8)

(8,393.3)

(8,645.1)

EBITDA

 

 

(7,677.2)

(17,732.2)

(19,551.2)

(16,990.1)

Normalised operating profit

 

 

(7,703.9)

(17,766.7)

(19,551.2)

(16,990.1)

Amortization of acquired intangibles

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

Share-based payments

(66.2)

(2,379.4)

(2,379.4)

(2,379.4)

Reported operating profit

(7,770.1)

(20,146.1)

(21,930.5)

(19,369.5)

Net Interest and financial income

(175.9)

(177.3)

0.0

0.0

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(7,879.8)

(17,944.0)

(19,551.2)

(16,990.1)

Profit Before Tax (reported)

 

 

(7,946.0)

(20,323.4)

(21,930.5)

(19,369.5)

Reported tax

908.7

(30.6)

(33.0)

(29.1)

Profit After Tax (norm)

(6,978.7)

(17,971.0)

(19,580.6)

(17,015.7)

Profit After Tax (reported)

(7,037.3)

(20,353.9)

(21,963.5)

(19,398.6)

Minority interests

0.0

0.0

0.0

0.0

Deemed Dividend

(5,442.9)

(5.3)

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

Net income (normalised)

(6,978.7)

(17,971.0)

(19,580.6)

(17,015.7)

Net income (reported)

(12,480.3)

(20,359.2)

(21,963.5)

(19,398.6)

Basic average number of shares outstanding (m)

2.0

9.7

76.2

80.0

EPS - normalised ($)

 

 

(3.42)

(1.86)

(0.26)

(0.21)

EPS - diluted normalised ($)

 

 

(3.42)

(1.86)

(0.26)

(0.21)

EPS - basic reported ($)

 

 

(6.11)

(2.10)

(0.29)

(0.24)

Dividend ($)

0.00

0.00

0.00

0.00

BALANCE SHEET

Fixed Assets

 

 

6,222.9

6,011.0

5,847.0

5,683.0

Intangible Assets

1,870.9

1,870.9

1,870.9

1,870.9

Tangible Assets

57.2

108.4

108.4

108.4

Investments & other

4,294.8

4,031.6

3,867.6

3,703.6

Current Assets

 

 

14,388.7

42,634.3

104,319.1

87,148.1

Stocks

0.0

0.0

0.0

0.0

Debtors

0.0

0.0

0.0

0.0

Cash & cash equivalents

13,923.0

40,726.8

102,411.6

85,240.6

Other

465.7

1,907.5

1,907.5

1,907.5

Current Liabilities

 

 

(1,609.5)

(4,661.8)

(3,643.2)

(3,327.4)

Creditors

(491.6)

(3,722.4)

(2,703.8)

(2,388.0)

Tax and social security

0.0

0.0

0.0

0.0

Short term borrowings

0.0

0.0

0.0

0.0

Other

(1,117.9)

(939.4)

(939.4)

(939.4)

Long Term Liabilities

 

 

(3,385.4)

(3,463.0)

(3,463.0)

(3,463.0)

Long term borrowings

0.0

(176.6)

(176.6)

(176.6)

Other long term liabilities

(3,385.4)

(3,286.5)

(3,286.5)

(3,286.5)

Net Assets

 

 

15,616.7

40,520.4

103,059.8

86,040.6

Minority interests

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

15,616.7

40,520.4

103,059.8

86,040.6

CASH FLOW

Op Cash Flow before WC and tax

(7,677.2)

(17,732.2)

(19,551.2)

(16,990.1)

Working capital

(826.2)

1,628.8

(1,018.7)

(315.8)

Exceptional & other

29.7

(31.2)

164.0

164.0

Tax

908.7

(30.6)

(33.0)

(29.1)

Net operating cash flow

 

 

(7,565.1)

(16,165.2)

(20,438.8)

(17,171.0)

Capex

(51.5)

(88.0)

0.0

0.0

Acquisitions/disposals

0.0

2.2

0.0

0.0

Net interest

0.0

0.0

0.0

0.0

Equity financing

19,826.5

42,878.3

82,123.6

0.0

Dividends

0.0

0.0

0.0

0.0

Other

(1,119.4)

0.0

0.0

0.0

Net Cash Flow

11,090.5

26,627.3

61,684.8

(17,171.0)

Opening net debt/(cash)

 

 

(1,392.4)

(13,922.9)

(40,550.3)

(102,235.0)

FX

0.0

0.0

0.0

0.0

Other non-cash movements

1,440.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(13,922.9)

(40,550.3)

(102,235.0)

(85,064.0)

Source: Hepion reports, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Hepion Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by Hepion Pharmaceuticals. 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).

Australia

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.

United States

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

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London +44 (0)20 3077 5700

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1185 Avenue of the Americas

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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 Hepion Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by Hepion Pharmaceuticals. 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).

Australia

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.

United States

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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Research: Industrials

AAC Clyde Space — Building the platforms for growth

AAC Clyde Space has agreed the proposed acquisition of Swedish scientific instrument maker Omnisys Instruments for an initial consideration of c SEK75m in a cash and equity deal. It has also undertaken a contingent directed share issue raising SEK100m gross. Prior to the deals, management had indicated revenues of SEK500m are in prospect as soon as 2024. We expect a positive EBITDA in 2021 with positive operating cash flow to be followed by further strong organic progress in FY22, with positive EPS and net cash generation. Omnisys is well established and profitable with market leading positions that should further enhance group performance.

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