Evolva's FY19 results were above our expectations in terms of sales and EBITDA. Cash flow was also far better than expected as the company has materially reduced its cash burn. Nootkatone is on track for EPA registration and a new product, EVE-X157/Z4, is due to be launched later this year, for the Flavours and Fragrances and Health Ingredients segments. Management has reiterated its commitment to reach cash break-even by FY23 (previous guidance was FY21/23) and is evaluating options to finance future growth until cash break-even, including a capital increase. We have cut our sales and profit forecasts to reflect the guidance that the FY19 growth trajectory will be replicated in FY20 and our fair value is now CHF0.42/share.
Total revenues of CHF11.6m were above our forecast of CHF10.9m, with product revenues (CHF5.5m) somewhat lower than expected, and R&D revenues (CHF6.1m) significantly higher. EBITDA loss was also better at CHF12.3m (forecast CHF15.1m loss), so the net loss was also better than expected. Net cash of CHF39.9m at end FY19 was higher than our forecast of CHF32.1m. Guidance has been refined, with cash break-even expected in FY23. We cut our product revenue estimates in line with guidance for the FY19 trajectory (+60% growth) to be maintained in FY20.
It is still early days, but the effect of the coronavirus in China was to temporarily soften demand for some of Evolva’s Flavours & Fragrances products. We expect this scenario is likely to be replicated as the pandemic spreads globally, although it is still too early to determine what the exact impact will be. We have moved our peak sales forecasts for all of Evolva’s products out by a year to reflect the temporary disruption.
We have updated our model to reflect current FX. We continue to value Evolva on a DCF basis with a 25-year model, assuming cash break-even in FY23 (we previously assumed FY22), in line with management guidance. As discussed, we have delayed our assumptions for each product’s peak sales by a year. We have also updated our model to reflect the higher than expected net cash at end FY19. Overall, our fair value decreases slightly to CHF0.42/share (from CHF0.51/share previously).