Combining anti-viral and anti-inflammatory actions, ABX464 looks ideally placed for the COVID therapy. Data from the on-going COVID Phase 2b / 3 would be transformational with a still immediate need for treatment; effective vaccines still face substantial manufacturing and distribution hurdles. With strong Phase 2 safety and efficacy data in ulcerative colitis, Abivax also remains substantially undervalued on the basis of its ABX464 chronic inflammatory programme alone. Now fully funded to complete and capitalise on its on-going Phase 2b in UC, we see strong probability of a major partnering deal with or without COVID. While success in COVID would drive valuation beyond €70 / share, the inflammatory programme supports a DCF valuation of €34 share. We strongly reiterate our OUTPERFORM recommendation with an increased target price of €50 / share (from €40 / share).
Companies: Abivax SA
Abivax announced today that ABX464 had been cleared to start Phase 2b / 3 clinical trials in the treatment of COVID-19 infection in diagnosed high risk patients. Orally delivered ABX464 has a combined anti-inflammatory and anti-viral action that could make it a game-changer in COVID-19 therapy. Developed originally as an HIV antiviral, ABX464 has already been shown in clinical trials in ulcerative colitis ("UC") to repress effectively many of the inflammatory mediators that also underlie the severe lung inflammation that forces some COVID-19 patients onto ventilators and too frequently leads to death. New data from a robust in-vitro model now indicates that ABX464 also has a COVID-19 anti-viral action on a par with remdesivir recently given emergency use approval by the FDA for COVID-19 treatment. Uncertainty surrounding the progression of the disease and potential impact of a vaccine makes the opportunity difficult to model. At the very least, we would expect this to be a gamechanger in expanding partnering and financing opportunities for Abivax in the shortterm underpinning the value the existing ABX464 anti-inflammatory programme. We reiterate our OUTPERFORM recommendation and increase our TP to €40 (from €31.30 / share).
Data presented at the United European Gastroenterology Conference ("UEG") further support the impact of Abivax's ABX464 on ulcerative colitis ("UC"). While response to biologic therapies such as anti-TNFs often wains with time and alternatives including JAK inhibitors are associated with serious safety issues, 12-month Phase 2a extension endoscopic data indicate sustained and improving clinical remission with ABX464 in 75% of patients observed. Matched by improvements in both Mayo Score and faecal calprotectin, these impressive results provide confidence for the on-going confirmatory Phase 2b trial as well as potential in Crohn's disease and rheumatoid arthritis ("RA"). These data provide an even stronger basis for a licensing / development deal expected by mid 2020E in a > $70bn market. We reiterate and maintain both our OUTPERFORM recommendation and €31.30 target price.
The €12m investment by a leading healthcare investor (Sofinnova Partners), is a strong endorsement of Abivax and anti-inflammatory ABX464 in particular. As highlighted in our recent report (25th June 2019), clinical data to date suggests that ABX464 could take a meaningful share of the $70bn anti-inflammatory market. The unmet potential of the inflammatory market is well illustrated by the recently announced $5.1bn deal between Gilead Sciences Inc. and Galapagos NV. With future financing expected from partnering. the Sofinova investment adds to our confidence for Abivax securing a major licensing deal over the the next 12 months. Now funded until Q2/2020E, we believe the ABX464 data provide a strong basis for licensing to provide development funding thereafter. We reiterate both our OUTPERFORM and €31.30 target price.
Focussed on identification and exploitation of regulators of immunity and inflammation, Abivax has two major products in clinical trials. With Phase 2a efficacy on a par with recently approved tofacitinib, ABX464 shows sustained benefit in ulcerative colitis ("UC") without the safety concerns of JAK or anti-TNF drugs. Moving into confirmatory Phase 2b for UC and Phase 2a in Crohn's and rheumatoid arthritis ("RA"), ABX464 promises a meaningful share of the $70bn anti-inflammatory market and a substantial licensing agreement by 2020E. Entering Phase 1/2, ABX196 is a powerful activator of iNKT cells with with potential to extend the benefits of PD-1 / PD-L1 immune checkpoint inhibitors ("ICI"). Sustained by ICIs iNKT cells act directly on cancer cells as well as promote the anti-tumour activity of key ICI-activated cells; a strong rational for synergy. Funded until Q1/2020E, we believe the ABX464 data provide a strong basis for licensing to provide development funding thereafter. We reiterate our OUTPERFORM and increase our TP to €31.30 (from €28.80).
Data presented at the ECCO (European Crohn's and Colitis Organisation) support the potential of Abivax's ABX464 in ulcerative colitis ("UC") While response to biologic therapies such as anti-TNF often wains with time and alternatives including JAK inhibitors are associated with serious safety issues, six month Phase 2a extension data indicate safety and progressive improvements from ABX464 in key UC disease markers, including Mayo Score and faecal calprotectin over the eight months since the original trial began. We are optimistic that clinical studies planned for 2019E should confirm the UC results and may suggest efficacy in Crohn's Disease and rheumatoid arthritis ("RA"). There appears a firm basis for a licensing / development deal expected during 2019E in a > $70bn market. We reiterate and maintain both our OUTPERFORM recommendation and €28.80 target price.
With proof-of-concept trials in ulcerative colitis ("UC") suggesting efficacy on a par Abivax's ABX464 looks a real alternative to approved therapies. A new class of oral drug releasing a natural inflammatory brake, ABX464 could alleviate the treatment failures and possibly safety issues of existing drugs. This would open a significant opportunity in a > $70bn market. We are optimistic that clinical studies planned for 2019E should confirm the UC results and may suggest efficacy in Crohn's Disease and rheumatoid arthritis ("RA"). There appears a firm basis for a licensing / development deal expected during 2019E. We reiterate our OUTPERFORM recommendation and increase our target price ("TP") to €28.80 (from €19.50 / share).
Phase 2a ulcerative colitis ("UC") data indicates real promise for the ABX-464 in the $15bn inflammatory bowel disease ("IBD") market. A small early stage trial, positive read-out on all key parameters suggests real benefits from this oral once a day drug for patients seeking to avoid repeated intravenous infusions or at worst surgical bowel removal. Already showing promise in the depletion of latent HIV reservoirs, these new data should significantly de-risk the drug's path to market potentially opening the door to an even larger opportunity in inflammatory disease. We reiterate both our OUTPERFORM recommendation and €19.50 target price.
Data released from the second cohort of the ABX-464-005 trial indicates that ABX-464 can reduce the latent HIV reservoir in gut as well as in peripheral blood in patients receiving anti-retroviral therapy. Compared to the first trial cohort, these data suggest that the drug is safe when used over a longer period (3 months vs. 28 days) and has an impact on multiple latent viral reservoirs in HIV-infected patients; even when u sed at a third of the dose (50mg/day vs. 150mg/day). While full data from the trial is not expected until late Q3 / early Q4 2018E, these preliminary data should be seen as encouraging, suggesting that the trial should form a strong platform for movement into a Phase 2b study. We reiterate our OUTPERFORM recommendation and €19.50 target price.
While retroviral therapy now sees patients survive into their seventies, latent residual infection still condemns the HIV-infected to life time therapy, chronic health problems and shortened lives. Compelling preclinical data now supported by two Phase II human trials indicate that Abivax's ABX464 could be the first drug to drain the latent HIV reservoir. With its novel mode of action ("MoA"), the drug may not only act to reduce or even eradicate residual infection untouched by existing antiretrovirals, but also provide relief from the inflammation that blights the lives of patients with HIV as well as other major unrelated diseases such as inflammatory bowel disease ("IBD"). ABX464 has potential as an HIV curative therapy or as adjunct to existing treatments. Risk adjusted modelling suggests fair values for curative and adjunctive scenarios of €28.5 and €16.3 / share, rising to €48 and €27 respectively should on-going clinical trials in HIV and IBD yield positive results during 2018.
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Robust FY21 performance forecast, despite pandemic
Companies: SDI Group plc
Ongoing strong demand for EKF’s products, both in the core business and the Primestore MTM Covid-19 sample collection device, means the FY20 outturn will be “comfortably ahead” of already upgraded expectations. This pattern is expected to persist throughout Q1’21 and beyond and management is confident that the performance in Q1 will be materially ahead of expectations. Having previously left FY21 estimates untouched, we are today putting through the first in what we expect to be a series of material upgrades. Given the dynamic situation around Covid-19, we expect regular updates throughout the course of the year and will adjust our forecasts accordingly as visibility over ordering patterns increases.
Companies: EKF Diagnostics Holdings plc
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
For many reasons, 2020 was a transformational year for Circassia as the new management team set to work streamlining the business, addressing legacy issues and positioning the group to benefit from the strong market position of NIOX, a gold standard diagnostic device for asthma. Whilst the pandemic has had an impact, recovery is underway, with Q4 revenues back to 86% of Q1 levels. The EBITDA breakeven point of the business has been reduced further to £32.0m and there was £7.4m of net cash on the balance sheet at the year end. Whilst the pace of recovery remains difficult to predict, the business looks well set for the medium term.
Companies: Circassia Group PLC
Q4 trading has led sales to guidance being raised 8%. This has been driven by better than expected UK sales, incl. success with new customers like Wilko/Tesco. Some of the benefit is offset by a non-cash FX debit, but it still leads to an upgrade and higher net cash. As a result of successful trials in Tesco Express, W7 is also being rolled out to 469 more stores. This, and previously announced distribution gains, bodes well for incremental sales/PBT in 2021, and underlines the appeal of its value-for-money brands. On 11x 2019 cash-adjusted EV/EBITDA, valuation is undemanding, particularly with the added attraction of dividends/income.
Companies: Warpaint London PLC
After an eventful 2020, ReNeuron released updated 12-month Phase ll data in January on its lead human retinal progenitor cell (hRPC) project. This continues to show a consistent and robust, sustained average gain in visual acuity in retinitis pigmentosa (RP). A continuation study in nine patients using two million cells is underway with three- and six-month data due over H2 CY21 and the first three patients treated. This will facilitate partnering negotiations. A pivotal hRPC study may start in 2022. Deals are possible in CY21 on the exosome genetic drug delivery platform, which could be very valuable. The valuation remains at £190m with strong cash.
Companies: ReNeuron Group plc
Allergy Therapeutics’ European commercial business remains resilient despite COVID-19 impacts. The H121 trading statement indicates sales growth of 7% (+5% CER), while steady pipeline progress is also being made. Recruitment and treatment in the G309 Grass MATA MPL Phase III study is on track, with post period key events including initiation of the P001 ex vivo peanut allergy biomarker study and publication of positive challenge chamber results for ImmunoBON in a peer reviewed journal. This bodes well for news flow delivery over the rest of calendar 2021. G309 results in the autumn are expected to inform design of the G306 pivotal grass trial; P001 data in the spring will support IND submission; and ImmunoBON is set to launch in Germany later this month. A record cash balance of £48m (at end-December 2020) covers nearterm requirements taking the company through to material value-inflection points. Ahead of H121 results on March 3, we maintain our £325m (51p/share) valuation.
Companies: Allergy Therapeutics plc
Diaceutics has rebased itself for growth. While the pathway to normalised expenditure patterns in the pharma industry will not be helped by new lockdowns, we believe the second half of 2021 onwards will see continuous budget improvements. Customer engagement with the new platform is positive and this is the key to securing the incremental financial benefits offered by taking the business fully online.
Companies: Diaceutics Plc
A year in which we expect the company to make significant advancements in the development and commercialisaon of LIGHT, AVO kicked off 2021 with a new financing partnership with specialist asset financing company DiamedCare and technical updates. With its differenated technical and commercialsoluon supported by growing clinical evidence base for proton therapy ("PT"), AVO remains well posioned to disrupt the radiotherapy market. We expect further progress in 2021 to connue to de-risk the AVO story, with much of the risk now lying on commercial execuon, in our view. Part of AVO's turnkey PT soluon, the new lessor financing agreement with DiamedCare covering Europe and the US should facilitate faster adopon in smaller radiotherapy centers which currently represent an underserved and largely untapped market. We maintain and reiterate both our OUTPERFORM recommendaon and 135 GBp target price.
Companies: Advanced Oncotherapy Plc
STX is a commercial-stage company delivering specialty products that address patients’ unmet medical needs, with an initial focus on treating iron deficiency (ID). Feraccru®/Accrufer® has been approved by the regulators in both Europe and the US. For various reasons, STX has been unable to secure a commercial partner for Accrufer in the US. Consequently, the board is now considering an STX-led launch option, thereby retaining all the US profits. Financial modelling shows the logic of this option, but it would necessitate financing the working capital requirements covering the next two years in the region of £25m-£30m.
Companies: Shield Therapeutics Plc
ReNeuron’s Dec’20 £17.5m raise now means the Group is sufficiently funded through key upcoming milestones for its lead hRPC candidate and the exosome platform – mitigating a previous pivotal issue. 2021 could promise to be the critical year for the Group, with the potential to unlock value from its programmes well beyond its current modest market value. We refresh our forecasts post yesterday’s analyst briefing, and reiterate our positive stance.
The six-month trading update to 31 December demonstrates solid underlying growth, with revenues rising 7% to £54.0m, or c.5% at constant exchange rates (CER), despite ongoing COVID-19 restrictions. Period-end cash was £48.3m, which implied a c.30% increase (+£11.3m) in underlying cashflows in the period. With relevant and potentially significant commercial and regulatory newsflow through 2021, we expect the shares to perform well. We leave our forecasts unchanged for FY 2021 at this point and reiterate our 45p target price, pointing out the substantial and unwarranted discount to its nearest peer (ALK-abello - 6.1x EV/Sales). This target also excludes the value for US market entry for Grass MATA MPL or its early-stage pipeline, including VLP Peanut allergy vaccine.
Alcon, a dominant force in the $25bn ophthalmology space, is set to outgrow the industry in the mid-term – driven by the pick-up in demand for recently-launched products, PanOptix and Precision1. Moreover, with robust margin expansion potential – led by an improving product mix and targeted cost-savings – earnings should grow healthily. A sturdy balance sheet increases its appeal further. Interestingly, Alcon is recovering faster than rivals from the COVID-19-hiccups and its sales and profitability profile should inflect once the situation normalises. Add.
Companies: Alcon, Inc.
It has been a year the likes of which we have never seen before, and hope never to see again. The description of the impact of the CV19 pandemic as K-shaped certainly feels accurate, with some sectors being well placed to benefit from the creative disruption that has engulfed the world, accelerating structural changes, while others through no fault of their own have been severely impacted. This has been the case for the Dowgate portfolio of corporate clients, with our quoted clients falling into three groups. The first, comprising Cambridge Cognition, GRC, The Panoply, S4 Capital and Water Intelligence have on average seen their share prices double this year as structural changes accelerated by CV19 have been accompanied by strong execution. The second, comprising Franchise Brands, OTAQ and SEEEN, have experienced share price declines averaging a third as their businesses have either been directly impacted by CV19 or their growth aspirations curtailed. The final group comprises those companies which have been bid for this year, namely Be Heard, Hunters Property, Huntsworth and Reach4Entertainment. Looking into 2021, we expect continued strong performance from the first group and a rebound in the second as the world returns to normal. Finally, having completed Series A/B rounds for a range of private companies this year, we hope to bring these entrepreneur-led, growth companies to market in 2021.
Companies: COG FRAN GRC OTAQ TPX SFOR SEEN WATR
Carbios is a cleantech company, focused on developing enzymatic bioprocesses for the recycling of plastic wastes and their biodegradation. Its technological lead and first-class ecosystem should see its technology being adopted widely as key milestones are crossed. Unique proprietary enzymes Carbios'' enzymes allow for 100% yield recycling for all forms of PET plastics without the need for extensive sorting in undemanding industrial conditions (water-based process, low temperature and atmospheric conditions). It can be done endlessly in fully-closed loops. This is currently unique. Differentiated player in a highly competitive environment Carbios'' technology overcomes mechanical recycling''s limits. Compared to other chemical recycling technologies, Carbios'' strengths are evident: cleaner, safer and easier. Fully patented, praised by the scientific community and endorsed by a consortium of first-class CPG companies, adoption should follow as key milestones are reached (demonstration plant under construction). Under-supplied market driven by a powerful trio: governments, consumers and brands Tighter regulations, rising consumer awareness and growing brand commitments are all pointing toward a drastic expansion of the rPET market. By 2025, demand from Carbios'' brand owner consortium alone should exceed rPET market capacities by 50%. IP licensing model pointing to robust profitability Carbios has virtually no revenues today. Clinching license deals and re-selling enzymes (JDA in place with Novozymes) as a consumable should allow Carbios to achieve sales of more than EUR280m by 2030 with an EBITA margin over 40%. This would imply a 2.3% global market share. Valuation range of EUR28 to EUR54 Our valuation range is derived from a DCF and two key inputs (enzyme selling prices and installed capacity). Risks include access to and price of PET waste, execution, competition and cash burn.
Companies: Carbios SA
