Extra-financing to increase visibility
Crossject announced it has issued zero-coupon convertible bonds (€5.7m) at 92% of their nominal value, maturing on 31 December 2021, convertible at the lowest price between €2.30 and an average market price less 10%. Gemmes Venture (Crossject’s main shareholder) has invested €2.1m in this issue, in line with its shareholding.
23 Dec 19
The 2018 bonds fully converted (Crossject)
The 2018 bonds fully converted EPS CHANGE CHANGE IN EPS2019 : € -0.48 vs -0.51 ns 2020 : € -0.34 vs -0.39 ns We have increased the total number of shares (from 13.6m at year-end 2018 to 18.4m in March 2019) following the conversion of all convertible bonds issued last year, which by the way confirms shareholders’ confidence in the company. The valuation does not significantly change (dilution on one side, a lower net debt position on the other one), but of course the apparent loss per share is smaller over the next two years. No other changes to our model.
18 Apr 19
No major change post FY18 results (Crossject)
No major change post FY18 results EPS CHANGE CHANGE IN EPS2019 : € -0.51 vs -0.50 ns 2020 : € -0.39 vs -0.39 ns We have only fine-tuned our numbers after the release of FY18 results, which are anyway insignificant before the group’s products actually reach the market in FY2021, i.e. results (losses) before 2021 are almost simply the sum of operating costs. CHANGE IN NAV€ 10.0 vs 11.9 -15.4% The SOTP goes down a tick after the dilution stemming from the conversion of bonds at the beginning of the current year, the total number of shares rising from 13.6m to 15.7m. CHANGE IN DCF€ 15.0 vs 13.9 +7.91% The DCF goes up, despite the increased number of shares (partly compensated by a lower debt level) since the positive cash flows are actually “nearer” (by a year), with our forecasts now starting from FY19 on.
18 Mar 19
Adjustment in the number of shares (Crossject)
Adjustment in the number of shares EPS CHANGE CHANGE IN EPS2018 : € -0.73 vs -0.76 ns 2019 : € -0.50 vs -0.53 ns The new number of shares has been adjusted to take into account the exercise of options since September, while the last capital increase (December) was already in our numbers. Therefore, the loss per share seems lower, which is only due to this impact, all other numbers being unchanged. CHANGE IN NAV€ 11.9 vs 12.7 -6.81% The lower NAV per share stems from the higher number of shares after the exercise of options since September (and not from the capital increase which was already accounted for). CHANGE IN DCF€ 13.8 vs 14.8 -6.81% The lower NAV per share stems from the higher number of shares after the exercise of options since September (and not from the capital increase which was already accounted for).
24 Dec 18
Success of the capital increase
Crossject has announced that the c.€4m capital increase had been subscribed with, among others, c. 1,656k shares by Gemmes Venture (the group’s historic shareholder, which now controls 30.6% of the share capital) out of a total of c.3.4m new shares. The new number of shares stands at 13.6m and new shares will be listed as from 28 December.
21 Dec 18
A €3.9m capital increase before year-end (Crossject)
A €3.9m capital increase before year-end TARGET CHANGE CHANGE IN TARGET PRICE€ 11.1 vs 14.9 -25.6% Our target price is revised downward on the capital increase to come (December), which will lead to the issuance of c. 3.4m new shares. CHANGE IN EPS2018 : € -0.76 vs -0.91 ns 2019 : € -0.53 vs -0.73 ns Our forecasts have not changed. The higher number of shares simply implies that short-term losses are divided by a bigger number, thus the (wrong) impression on an EPS basis that forecast losses have shrunk. CHANGE IN NAV€ 12.7 vs 17.2 -26.1% Our NAV valuation is adjusted one the one hand by a decrease in net debt thanks to the capital increase and, on the other, by the increase in the number of shares, from c.9.3m to 12.7m. CHANGE IN DCF€ 14.8 vs 19.8 -25.4% Our forecasts remain unchanged. The higher number of shares post the capital increase and the injection of €3.9m in the balance sheet lead to a lower target price, due to the significant dilution caused by the capital increase.
29 Nov 18
Crossject has announced that Gemme Venture, the company’s main shareholder, had converted 100% of the convertible bonds (869,565) it had subscribed to in July, at a price of €1.4892, thus leading to the creation of 591,304 new shares (+6.3%) and raising its stake to 24.3% (from c.20%).
23 Oct 18
The delayed launch of Zeneo implies a lower target price (Crossject)
The delayed launch of Zeneo implies a lower target price TARGET CHANGE CHANGE IN EPS2018 : € -0.91 vs -0.94 ns 2019 : € -0.73 vs -0.79 ns Our EPS forecasts only move marginally in the short term and are not very significant since the company will start selling Zeneo as of 2021. They mostly depend on the level of external charges and staff costs engaged to prepare for the commercial launch of Zeneo. CHANGE IN NAV€ 17.2 vs 19.0 -9.66% Our SOTP valuation goes down in line with a smaller than expected turnover over 2020-23, which is the basis for our calculation of the average level of sales by NTE, due to the one-year postponement of registration filings announced on 27 September. CHANGE IN DCF€ 19.8 vs 24.9 -20.7% Our DCF valuation goes quite substantially down, mainly due to the fact the group's first sales are postponed by a year (i.e. 2021 instead of 2020) for most NTEs (and 2022 for the last one). This implies a higher discount due to time obviously, while our other assumptions have not materially changed.
03 Oct 18
H1 18: insignificant; some more time needed to reach the market
Crossject released its H1 18 results. Revenues reached €2,840k (vs €1,635k), operating result €-5,337k (vs €-4,256k), and the net result €-4,744k (vs €-3,360k). Net cash at the end of H1 18 was €796k vs €6,096k a year ago and €2,500k at the end of FY17, to which should be added €5.6m cashed in July (subsidies, tax credit and the last convertible bond issued).
27 Sep 18
On its way to reaching the market (Crossject)
On its way to reaching the market TARGET CHANGE CHANGE IN EPS2018 : € -0.94 vs -0.36 ns 2019 : € -0.79 vs -0.06 ns We have fine-tuned our numbers in the back of the group’s latest comments as well as integrating the new NTE to be developed (Terbutaline) instead of Apomorphine which is now on stand-by. This said, short-term numbers have little meaning (other than the group’s cash-burn) since first sales should be booked in FY20. CHANGE IN NAV€ 19.0 vs 18.2 +4.78% We have adjusted our numbers to take into account Terbutaline, the new therapeutic entity the group expects to develop alongside the six previous ones (already in our numbers). Some minor short-term changes have also impacted current net debt. CHANGE IN DCF€ 24.9 vs 21.5 +16.2% Our DCF valuation goes up quite significantly after we integrated Terbutaline and fine-tuned our numbers (volumes and prices) for the other NTEs the group plans to market.
05 Sep 18
A convertible bond and potential options for existing shareholders
Crossject announced the principle of granting of free options (“BSA”) to existing shareholders (to compensate for the fact the ones granted in February could not be exercised) as well as the issue of another convertible bond (€2.5m). The convertible bond (maturity two years after issuance) will not bear interest and Gemme Ventures, the company’s historic shareholder, will contribute €0.8m to the total subscription. The subscription price will be 92% of nominal value and the conversion price will be the lowest between €3.36 and a weighted average share price less 10% prior to the conversion.
13 Jul 18
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.
22 Mar 18
A convertible bond and options for existing shareholders
Crossject announced the granting of free options (“BSA”) to existing shareholders as well as the issue of a convertible bond (€5.25m). Existing shareholders will be granted one option for ten shares held, each option enabling them to purchase a share for €4.50 as of 10 April 2018 and until 30 June 2018. The convertible bond (maturity 20 February 2020) does not bear interest and SNPE and Gemme Ventures, the company’s historic shareholders, will contribute €1.5m to the total subscription. The subscription price will be 92% of the nominal value and the conversion price will be the lowest between €4.50 and a weighted average share price less 10% prior to the conversion.
14 Feb 18
Crossject has developed a deep pipeline of products that are based on its proprietary needle-free injection system, Zeneo, across a variety of indications, with a focus on emergency-related areas. In addition to avoiding needles, Zeneo provides a simple and quick (~1/10th of a second) delivery of the drug. Recently, the company has added Zeneo Terbutaline for the acute treatment of exacerbations in severe asthmatics. This is a large market (~2.5m in the US) in need of better choices for patients.
03 Oct 17
H1 17: a new NTE in the pipeline...and further delays
Crossject released its H1 17 results. Revenues reached €1,635k (vs €1,600k), operating result €-4,256k (vs €-2,779k), and the net result €-3,360k (vs €-2,831k). Net cash at the end of H1 17 was €6,096k vs €2,634k at the end of FY16, including the €4,985k capital increase carried out in March. The company also announced it will engage in the development of a new product (Zeneo Terbutaline) in the field of acute asthma. Lastly, the group indicated that the priority US filings will be delayed by c. 6 months, due to the “PARC” production line in Dijon (tubes “Prêts A Remplir” ready-to-fill tubes).
25 Sep 17
A reinforced cash position
Crossject recently announced that it has received regulatory approval to launch the bioequivalence study for Zeneo Midazolam (being developed for the acute treatment of epileptic seizures) in healthy volunteers. This puts the company on track for the expected H218 EU filing and the H119 US filing. Due to this milestone, Crossject has received €2.9m from Bpifrance as part of the Programme des Investissements d’Avenir (PIAVE). Also, the company has successfully completed a €5m rights offering.
07 Apr 17
FY16 results - untelling (as expected) and a €4.3m capital increase
Crossject released its FY16 results. Revenues reached €1.43m vs €2.73m in FY15 (-48%), operating result €-7,291k (vs €-7,013k), and the net result €-6,663k (vs €-5,687k). Net cash at the end of FY16 amounted to €2.6m (vs €5.2m a year before). The company also announced a capital increase (€4.3m at €4.5 per share with subscription rights), which is 75% underwritten by the main shareholder, Gemmes Ventures.
13 Mar 17
As part of its revised strategic plan, Crossject has expanded its partnership with CENEXI to fill and finish all of Crossject’s products in all regions for a period of five years, with a potential extension up to 10 years. Also, the timelines for its expected regulatory submissions have shifted across the board; most notably, the EU filing for ZENEO Methotrexate has been pushed back from H216 to H218 due to its non-emergency nature and higher requirement for manufacturing resources than other products. As a result, we reduce our valuation to €9.91 per share (from €12.07).
09 Dec 16
A strategic review… and some adjustments to our forecasts (Crossject)
A strategic review… and some adjustments to our forecasts TARGET CHANGE CHANGE IN TARGET PRICE€ 19.3 vs 24.4 -21.0% Our target price goes down, mainly due to the lower DCF valuation after the group presented its new strategy in mid-november, which is based on a focus on emergency products, the US and a larger agreement with Cenexi, which should spend over €5m to bring total capacities to over 10m units a year (vs 2m). Timing remains the main issue and is of course the first reason behind our lower valuation, which also captures the disappointment after the group postponed again the market launch of Zeneo, by at least a year (2019 at the earliest vs late 2017 previously). CHANGE IN EPS2016 : € -0.90 vs -0.90 2017 : € -0.50 vs -0.36 ns Our EPS goes marginally down for FY17, where we initially had the first revenues stemming from Methotrexate, which are now postponed to FY19. Other than this, we have not changed our short–term forecasts. CHANGE IN NAV€ 24.5 vs 28.7 -14.7% Our SOTP valuation also goes down, since it is computed on average sales over the first year after each product reaches the market (FY19-21). In particular, sales are lower per product since US sales will typically come a year after first European sales, while average prices are higher in the US, explaining the bulk of the lower valuation obtained through this method, which leads to very similar results to the DCF. CHANGE IN DCF€ 23.0 vs 31.6 -27.2% We have revised our forecasts, based on later-than-expected product launches (with, for each product, a first launch in Europe and a year later in the US). We have also lowered the level of capex from 2017 onwards, since the bulk of capex will be spent by Cenexi, the group’s global industrial partner. We have so far considered that the level of margins is unchanged compared to the scenario where Crossject was investing and producing Zeneo devices instead of subcontracting. Our valuation, unsurprisingly, goes down, in line with our view that timing is the biggest issue the group currently has to face and despite a lower future capex level.
24 Nov 16
When apparent threats are also opportunities
Mylan’s EpiPen was subject to fierce criticism from politicians including “President-to-be” Hillary Clinton after the generics maker raised the price of its emergency allergy injector by some 500% (!) in the past five years to over US$300 per unit (i.e. over US$600 for a pack of two, sold for €76 in France for instance).
29 Aug 16
Recently, Crossject disclosed the identity of the product behind its L15 programme. L15 is its needle-free version of hydrocortisone, which Crossject will develop for the treatment of acute adrenal insufficiency, a potentially fatal condition. The company expects the commercial launch of the product in H118, although we believe peak sales will be a modest €9m as it is a niche market with little pricing power.
23 Jun 16
Making injections simple, quick and needle-free
Crossject has developed a deep pipeline of products that are based on its proprietary needle-free injection system, ZENEO, across a variety of indications. The benefits of ZENEO include no need for needles, as well as a simple and quick (~1/10th of a second) delivery of the drug. Its first commercial product, ZENEO Methotrexate for rheumatoid arthritis, should reach the market in 2017. We value the company at €11.96 per share, which is based on the value of four of its nearer-term disclosed programmes.
13 Jun 16
Finalising supply chain for 2017 launch plan
Crossject develops proprietary versions of generic drugs to be used with its needle-free injection system, ZENEO, a drug delivery and manufacturing platform for multiple potential products, including biologics and vaccines. Crossject's needle-free, pre-filled, single-use ZENEO injection systems are designed to be self-administered and can be tailored to deliver drugs via intradermal, subcutaneous and intramuscular routes, allowing the system to be used in a broad range of indications. A 2014 study by the University of Texas showed that fewer than 20% of patients used their epipens correctly. ZENEO has been successfully tested in more than 10,000 humans, including seven preclinical and eight clinical trials. Crossject has seven products in development including products for rheumatoid arthritis, anaphylactic shock, migraine, Parkinson’s and epileptic seizures.
29 Feb 16
Initiating coverage of Crossject.
Recommendation and upside We initiate coverage of Crossject, a new entrant in the New Therapeutic Entities field. Its differentiating feature is its delivery mechanism, Zeneo, a pretty unique injection system. Crossject has completed clinical trials on a first well-known molecule, Methotrexate, with another six to go in the pipeline. The current market capitalisation stands at c. €50m based on a share price of €7.5, while we see a massive potential upside (over 220%), with a target price of €24.5, reflecting the company’s huge growth prospects. Business and Trend Today, Crossject has a portfolio of seven products under development: Methotrexate (anti-rheumatic), Sumatriptan (acute migraine), Epinephrin (treatment of anaphylactic shocks), Naloxone (opioid overdoses), Apomorphine (Parkinson disease) Midazolam (epilepsy) and L15 (name and indication confidential). The first sales are expected in FY17 (Methotrexate in H2, with clinical studies already done), while clinical studies are currently being carried out for Sumatriptan, which should get market approval and be commercially launched in H1 18 as well as for L15, while Midazolam should be filed in H2 17 for a market launch in FY18. Epinephrin should be on shelves in FY18 and Apomorphine a year later together with Naloxone. Based on our estimates, Crossject should be able to generate total turnover of over €190m as soon as 2021, which should breakdown as follows: Need to know Zeneo, an automatic, single-use needle-free injection device was orginally developed within Laboratoires Fournier in its « drug delivery » division, together with SNPE (Société Nationale des Poudres et Explosifs, which is a shareholder of Crossject). In 2001, the technology was sold to the newly-created Crossject. GSK was originally the main partner of Crossject, with a view to developing a solution for its vaccines. This market was ultimately considered as too risky in terms of investment needs, low margins and the high volumes required. Therefore, Crossject was restructured in 2011-13, with a change in the group’s strategy: the goal of Crossject is no longer to sell a device to the Big Pharmas to market their own chemical entities, but to provide the market with its own pre-filled devices, on the basis of New Therapeutic Entities, using a known drug (generic) with an innovative delivery system. New industrial partnerships were also signed with Hirtenberger (for the pyrotechnical and mechanical sides) and Cenexi (aseptic filling and final packaking). Today, the Zeneo device is protected by over 400 patents covering 80% of the market (including the US, Europe and Japan) valid until 2035.
25 Feb 16
Making injections quick and easy
Crossject develops new therapeutic entities (proprietary versions of generic drugs) to be used with its needle-free injection system, ZENEO. ZENEO is a drug delivery and manufacturing platform for multiple potential products, including biologics and vaccines, and has the potential to improve therapeutic delivery, safety, patient compliance and comfort for many conditions. In November, Crossject received a €6.7m grant to expand development and manufacturing capabilities to include new ZENEO products for drug overdose, Parkinson’s disease and epileptic seizures.
17 Dec 15