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Intelligent Energy Holdings — Trading in line with expectations

Intelligent Energy Holdings — Trading in line with expectations

Intelligent Energy’s interims were in line with the guidance given at the AGM in March. The results demonstrate that management has succeeded in reducing cash burn to its stated target of c £1.6m/month. It intends to bring the group to a cash break-even position within the next two years through volume roll-out of standard air-cooled products. Project wins during the period indicate there is appetite for Intelligent Energy’s fuel cell stacks in the target markets, although we note that additional funding will be required to support this process. We leave our estimates unchanged.

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Written by

Intelligent Energy Holdings

Trading in line with expectations

Interim results

Alternative energy

17 July 2017

Price

7.10p

Market cap

£15m

Net debt (£m) at end March 2017
*Convertible loan notes treated as £22.0m debt

9.0

Shares in issue

206.2m

Free float

58.9%

Code

IEH

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.1)

20.3

(17.7)

Rel (local)

(2.7)

19.6

(26.5)

52-week high/low

17.2p

4.5p

Business description

Intelligent Energy Holdings delivers clean energy solutions for the distributed energy, diesel replacement, automotive and aerial drone markets. Working with international companies, Intelligent Energy aims to embed its fuel cell stack technology into applications across its target markets.

Next events

Preliminary results

November 2017

Analysts

Anne Margaret Crow

+44 (0)20 3077 5700

Roger Johnston

+44 (0)20 3077 5722

Intelligent Energy Holdings is a research client of Edison Investment Research Limited

Intelligent Energy’s interims were in line with the guidance given at the AGM in March. The results demonstrate that management has succeeded in reducing cash burn to its stated target of c £1.6m/month. It intends to bring the group to a cash break-even position within the next two years through volume roll-out of standard air-cooled products. Project wins during the period indicate there is appetite for Intelligent Energy’s fuel cell stacks in the target markets, although we note that additional funding will be required to support this process. We leave our estimates unchanged.

Year
end

Revenue (£m)

EBITDA*
(£m)

PBT**
(£m)

EPS
(p)

DPS
(p)

P/E
(x)

09/14

13.6

(52.4)

(58.0)

(30.4)

0.0

N/A

09/15

78.2

(46.2)

(51.8)

(21.4)

0.0

N/A

09/16

91.8***

(33.4)

(42.8)

(20.2)

0.0

N/A

09/17e

24.6

(13.2)

(21.7)

(9.1)

0.0

N/A

Note: *Adjusted as per company presentation. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. ***Including £85.1m revenues from power management activity.

Cash-burn reduction target achieved

Stripping out revenues from the power management activity, which was discontinued in November (£16.7m H117, £40.9m H116), revenues dropped from £3.0m to £2.0m. Total adjusted EBITDA losses more than halved from £21.6m to £9.1m, reflecting the cost-reduction programme implemented during H216. Cash consumption during the half-year period totalled £7.7m, of which £2.0m was interest on the convertible loan notes, leaving £13.0m at the end of March. Our model shows that if costs are maintained at these levels, the group has sufficient cash to support the expected growth in commercial products during FY17, but will need to secure additional funding to reach positive cash flow. Management is in discussions with potential customers to deliver a trading-related solution.

First sales of commercial B2B products

During H117, Intelligent Energy was reshaped to focus on driving sales of commercially ready B2B products. The group exited from its Indian energy management business and won contracts in two of its target segments: stationary power and drones. It sold technology demonstration units for stationary power applications in China, India, Japan and the US. In May, it was appointed technology lead on a €3.5m EU programme involving Toyota Motor Europe, among others, to provide a blueprint for fully automated mass manufacture of fuel cell stacks for the automotive market. The existing relationship with Suzuki continues.

Valuation: Negative impact of funding uncertainty

Our analysis indicates that Intelligent Energy is trading on EV/sales multiples that are towards the lower end of the range of its peers. We believe that removal of the funding uncertainty will be a key catalyst for the share price performance.

Product roll-out

During H117, Intelligent Energy was reshaped to focus on near-term opportunities to deliver products for deployment in distributed power generation and UAVs. It has already won contracts in both segments. The first is to supply 600 1kW fuel cell modules to US-based Luxfer-GTM Technologies for integration into Luxfer-GTM’s Zero-Set Lite portable light towers. These are used to supply portable lighting for events and entertainment, roadside construction, military and disaster response situations. Fuel cells are an ideal substitute for diesel generators at entertainment and sporting events because the technology is silent and does not generate harmful particulates. The second contract is with PINC to supply fuel cell systems for powering UAVs. Switching from battery to fuel cell more than trebles flight times, which substantially improves drone efficiency.

Intelligent Energy will be providing the fuel cell stacks for a fleet of Suzuki Burgman scooters that will be used as part of a hydrogen fuel cell fleet trial by the London Metropolitan Police planned for this summer. The programme confirms that the relationship of over ten years with Suzuki continues. The scooters will deploy IEH's 4kW air-cooled fuel cells. This is a compact, lightweight package that meets automotive requirements, standards and safety criteria. In May, Intelligent Energy was also appointed as technology lead on a €3.5m EU programme involving Toyota Motor Europe, among others, to provide a blueprint for fully automated mass manufacture of fuel cell stacks for the automotive market.

In line with its focus on commercially ready B2B products, in June the group launched a range of fuel cell module products designed specifically for portable and stationary power applications including telecommunications, disaster recovery, portable power generation, back-up power, micro-grids, auxiliary power units and material handling equipment. The new products deliver a range of power outputs from 1kW-4kW and are optimised for hybridisation with batteries, enabling further efficiency.

Financial performance

P&L

Stripping out revenues from the power management activity, revenues dropped from £3.0m to £2.0m. Revenues from the power management operation in India fell from £40.9m to £16.7m as activity was discontinued on 30 November 2016. Total adjusted EBITDA losses more than halved from £21.6m to £9.1m, £2.3m of which was attributable to the discontinued power management activity. The narrowing of losses reflects the cost reduction programme implemented during H216. R&D costs (excluding £3.7m restructuring costs in H116) declined from £6.9m to £1.5m, as effort was focused on the air-cooled technology. The group retains the IP and capability for the evaporatively cooled technology and consumer applications, and will be able to engage in funded projects deploying this IP going forward. Operations and Application Engineering costs (excluding £19.3m write-downs in H116) decreased from £11.1m to £6.9m. Administration costs were cut from £4.5m to £2.6m. However, finance costs increased from £1.1m to £3.2m because of the interest on the convertible loan notes issued in H216 (13.0% per annum on £30.0m), £2.0m of which was a cash charge.

Cash flow

Cash consumption during the half-year period totalled £7.7m, of which £2.0m was interest on the convertible loan notes, leaving £13.0m at the end of March. Working capital reduced by £0.8m, as stocks fell by £0.6m, primarily because there is no longer need to hold diesel for the power management activity. A minimal £0.1m was expended on capex and £0.7m on patent application activity as the group continued to invest its IP portfolio.

Estimates

The contracts discussed above underpin our assumptions of £5.0m revenues from the provision of engineering services and £3.0m from product sales during FY17, so we leave our estimates unchanged. The stacks for the contracts discussed above are being manufactured on an existing line at IEH’s headquarters in Loughborough. Current staffing levels are sufficient for this and for the provision of engineering services. While management is not able to reduce the R&D and operating cost base further without adversely affecting core capability, management is implementing c £0.3m/pa savings by reducing the costs relating to being a listed company, while retaining plc status. These measures include non-executive director Mike Muller stepping down from the board at end FY17. Paul Heiden, non-executive chairman, also intends to step down at that point.

Our model shows that if costs are maintained at H117 levels, the group has sufficient cash to support the expected growth in commercial products during FY17 but will need to secure additional funding to reach positive cash flow. Management is in discussions with potential customers to deliver a trading-related solution. We note that the last date for conversion of the loan notes, which is at the holders’ option, is 17 May 2019.

Valuation: Removal of funding uncertainty required

Exhibit 1: EV/sales multiples for listed peers

Company

Market cap

Historical EV/sales (x)

Current EV/sales (x)

AFC Energy

£42m

39.9

9.2

Ballard Power Systems

£372m

4.9

3.8

Ceres Power Holdings

£116m

98.4

39.8

Electro Power Systems

£48m

7.7

3.4

FuelCell Energy

£58m

0.7

1.0

Heliocentris Energy Solutions

£0.2m

0.4

-

Hydrogenics

£95m

4.0

2.4

ITM Power

£53m

25.7

8.9

Proton Power Systems

£19m

27.8

-

Plug Power

£352m

5.5

3.4

SFC Energy

£31m

0.9

0.7

Mean

11.7

4.1

Intelligent Energy (excluding Power Management revenues)

£16m

2.5

2.1

Intelligent Energy (excluding Power Management revenues) – all convertible loan notes converting

£45m

3.7

3.1

Source: Bloomberg, Edison Investment Research. Note: Grey shading indicates exclusion from mean. Prices at 10 July 2017.

For calibration, we examine sales-based peer group multiples. (Note: IEH’s multiples strip out the revenues attributable to the Indian energy management activity because this has been discontinued and generated minimal margins.) The comparison shows that IEH is trading on multiples towards the lower end of the range of its peers. However, until the company’s funding issues have been resolved, this valuation gap is largely irrelevant. Nonetheless, it does indicate the potential for valuation upside in the event of successful funding leading to product volume-based revenues and, in due course, positive cash flows. We note the potential impact of the convertible loan notes issued in May 2016 (£30.0m at 8p). This action secured financing through to FY18, but introduced a source of significant potential dilution. If all of these loan notes are converted to shares, this represents an additional 375m shares to the 206m currently in issue.

Exhibit 2: Financial summary

£m

2014

2015

2016

2017e

Year end 30 September

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

13.6

78.2

91.8

24.6

Cost of Sales

(9.9)

(75.9)

(90.0)

(23.7)

Gross Profit

3.7

2.3

1.8

0.9

EBITDA

 

 

(52.4)

(46.2)

(33.4)

(13.2)

Operating Profit (before amort. and except.)

 

 

(46.0)

(51.2)

(38.1)

(17.8)

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

Exceptionals

(7.1)

(0.3)

(21.6)

(0.5)

Share based payments

(2.6)

(2.3)

(0.2)

0.0

Operating Profit

(55.6)

(53.8)

(59.9)

(18.3)

Net Interest

(4.0)

(1.3)

(2.7)

(3.9)

Share of losses from JVs and exceptionals

0.0

0.7

(2.0)

0.0

Profit Before Tax (norm)

 

 

(58.0)

(51.8)

(42.8)

(21.7)

Profit Before Tax (FRS 3)

 

 

(59.6)

(54.4)

(64.6)

(22.2)

Tax

11.4

11.6

(18.1)

3.0

Profit After Tax (norm)

(46.6)

(40.2)

(39.0)

(18.7)

Profit after tax (FRS 3)

(48.2)

(42.8)

(82.7)

(19.2)

Average Number of Shares Outstanding (m)

153.4

188.2

193.3

206.2

EPS - normalised (p)

 

 

(30.4)

(21.4)

(20.2)

(9.1)

EPS - normalised fully diluted (p)

 

 

(30.4)

(21.4)

(13.5)

(2.5)

EPS - (IFRS) (p)

 

 

(31.4)

(22.7)

(42.8)

(9.3)

Dividend per share (p)

0.00

0.00

0.00

0.00

Gross Margin (%)

27.4

2.9

2.0

3.7

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

37.9

59.8

10.7

8.5

Intangible Assets

14.7

29.4

7.9

6.8

Tangible Assets

6.9

8.5

2.8

1.7

Deferred tax assets

16.3

21.9

0.0

0.0

Current Assets

 

 

107.5

45.2

33.0

17.1

Stocks

4.1

5.3

1.6

1.6

Debtors

11.1

11.5

7.8

9.1

Cash and short-term deposits

88.9

24.2

20.6

3.4

Current tax assets

3.4

4.2

3.0

3.0

Current Liabilities

 

 

(17.6)

(14.3)

(8.7)

(9.8)

Creditors

(17.6)

(14.3)

(8.4)

(9.5)

Short term borrowings

0.0

0.0

(0.3)

(0.3)

Long Term Liabilities

 

 

0.0

(3.0)

(22.8)

(24.0)

Long term borrowings

0.0

0.0

(21.0)*

(22.2)**

Other long term liabilities

0.0

(3.0)

(1.8)

(1.8)

Net Assets

 

 

127.8

87.7

12.2

(8.2)

CASH FLOW

Operating Cash Flow

 

 

(50.6)

(51.5)

(31.4)

(13.9)

Net Interest

0.3

0.1

(1.1)

(3.9)

Tax

3.8

4.8

5.1

3.0

Capex

(6.8)

(19.4)

(3.8)

(2.4)

Acquisitions/disposals

1.1

1.0

0.0

0.0

Equity financing

108.4

0.2

1.1

0.0

Dividends

0.0

0.0

0.0

0.0

Forex/Other

(0.0)

0.1

0.1

0.0

Net Cash Flow

56.1

(64.7)

(30.0)

(17.2)

Opening net debt/(cash)

 

 

(13.1)

(88.9)

(24.2)

0.7

HP finance leases initiated

0.0

0.0

0.0

0.0

Other

19.7

0.0

5.1

(1.2)

Closing net debt/(cash)

 

 

(88.9)

(24.2)

0.7

19.1

Source: *Including £20.7m liability of convertible loan notes. **Including £22.0m liability of convertible loan notes.

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 Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Intelligent Energy Holdings 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 Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. 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 2017. “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.

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 12, 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 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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 Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Intelligent Energy Holdings 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 Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. 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 2017. “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.

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 12, 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 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Biondvax Pharmaceuticals — New funds to support M-001’s Phase III initiation

The €20m loan agreement with the European Investment Bank (EIB) is a game changing event for BiondVax, we believe. The agreement was signed on 19 June 2017 and over the next three years the company will be able to drawdown all the money presuming the development milestones related to the lead universal flu vaccine candidate M-001 are met. BiondVax now aims to initiate Phase III activities and also invest in a new manufacturing facility securing the supply of M-001 for the remaining development and commercial launch. We have revised our model to reflect the changes and value BiondVax at $111m (NIS398m), up from $77m (NIS278m).

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