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Companies mentioned in this edition include: RBS, Vodafone, Crest Nicholson, GCP Student Living, SDCL Energy Efficiency Income Trust, *Avation, Aquis Exchange and *ImmuPharma.
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*Capital Access represents Avation and ImmuPharma - if you would like more information or access to the Management teams of either of these companies, please get in touch.
Companies: AVAP IMM SEIT
Companies: HZD SAVE MPE GAN HUW HUR GTLY AFS IMM CDM
Following the recent announcement that Avion Pharmaceuticals has entered into a licence to pay up to $25m to develop (through the second phase III trial) and commercialise its major drug Lupuzor ™, ImmuPharma presents a very different opportunity compared to even a few weeks ago.
Companies: ImmuPharma plc
ImmuPharma announced a major US licensing deal on 28 November 2019 with Avion Pharmaceuticals (“Avion”), a US specialty business that has a focus on Rheumatology, Women’s health (Lupus afflicts women more) Dermatology and other therapeutic areas. Avion have a strong marketing and commercialisation operation (with over 100 specialist sales reps). Avion has exclusively in-licensed LupuzorTM for the US market for Lupus (SLE) and other indications and agreed to fund an international Phase III clinical trial for up to US$25m. In addition, Avion will pay up to US$70m in milestones and a royalty stream tiered to 17% has been agreed. We have always believed that ImmuPharma could deliver such a successful deal for the US market (given the track record of the previous deal executed with Cephalon). This deal with Avion was aided by the strength of the clinical data (and safety profile) from the Phase III trial announced last year. Our detailed analysis of the respective cohort data, driven by the performance of the peptide in the auto ds-DNA antibody positive patients validated our assumptions of the value of LupuzorTM. We now see LupuzorTM as having the ability to generate blockbuster sales in the US (US$1bn+) alone (previously US and EU combined) – which when coupled with a royalty stream of up to 17% on revenues, could see an annual royalty to ImmuPharma’s bottom line of US$170m per year. What is particularly impressive about this deal is not only ImmuPharma’s ability to identify and execute a new licensing partner for LupuzorTM but also the opportunity available for ImmuPharma to find new distribution and marketing partners outside the US for LupuzorTM, for e.g. in Europe, where a new trial would not even be required given Avion’s funding commitment. This means that there is a distinct possibility that further licensing deals could follow bringing in an attractive additional royalty stream, and additional upfront and milestone payments. Outside of LupuzorTM, we believe that ImmuPharma has the potential to generate news-flow on its other pipeline assets including Nucant and UreKa. Based on the financial assumptions for this deal, and a lower risk profile (reduction in risk premium in our DCF model) we increase our target price (which is 50% discounted) from 76p to 100p / share. BUY.
Faron Pharma (FARN.L): IND approval for Clevegen®
Companies: Faron Pharmaceuticals Oy (FARN:LON)ImmuPharma plc (IMM:LON)
Yesterday, Biogen made a significant announcement for its shareholders and the broader sector alongside a strong set of Q3 results. Biogen announced that its Alzheimer’s drug, Aducanumab (monoclonal antibody), which it had been developing for early stage Alzheimer’s disease, and that had recently failed two Phase III (named: ENGAGE and EMERGE) clinical trials for futility (announced in March 2019), had gone on to demonstrate a strong signal of efficacy. In a subgroup of patients who elected to continue treatment at a higher dose, allowing sufficient exposure to the drug, it was clearly demonstrated that Aducanumab was able to achieve a statistically significant reduction of clinical decline in early Alzheimer’s Disease patients in a study called EMERGE (Biogen also stated that it believes that a sub-group of patients in ENGAGE also support the positive data seen). This is the first time that in the history of Alzheimer’s drug development, that a clinical study has demonstrated this type of effect. Further analysis of the ENGAGE study for Biogen does, we believe, potentially demonstrate a strong read-across for Lupuzor™, wherein Lupus patients who were ds-DNA positive (a sub-group – of European patients) and who were given Lupuzor™, a statistically and clinically meaningful reduction in Lupus disease symptoms were seen. Biogen believes that the lessons learnt from the EMERGE trial (with Aducanumab) could have positive implications for a number of other trials that the company is conducting in indications such as Tau-targeted Alzheimer’s, Parkinson’s disease and amyotrophic lateral sclerosis (ALS). The receptiveness of the FDA in advice to Biogen, to file for regulatory approval for its Alzheimer’s drug Aducanumab, is a clear signal that regulators are willing to be pragmatic about how they assess clinical data from ‘failed’ trials in diseases where there is a significant unmet or poorly met medical need. We continue to expect positive updates from ImmuPharma from its pipeline and reiterate our BUY rating and a Target Price of 76p.
ImmuPharma released its interim results this morning. The results statement highlights key activities around the Company’s lead drug, Lupuzor including: the successful conclusion of the open label study, meeting its primary endpoint (safety), and the important work in fully understanding the Phase III data from the Lupuzor study which concluded in H1 2018. Taken together, the overall data (incl. the European data from the Phase III clinical trial) around Lupuzor continues to mature positively. Against a backdrop of progress in the Lupus field as highlighted in our update notes (See TLSD reports: 09/09/2019 and 23/09/2019), we believe the company is making significant progress in fully exploiting the potential for Lupuzor as a novel therapeutic; this is strengthened and complemented by recent updates by competitors in the market. Further value is being generated as broader pipeline products such as Ureka Sarl (platform peptide) and Elro Pharma (Nucant), create further value for investors through a potential partnering or divestment approach. Importantly, given the clinical data behind Lupuzor and its unique mechanism of action, there are other indications that will be available for development within the auto-immune space for Lupuzor beyond Lupus. We believe that the coming months will further demonstrate the progress the company is making towards these goals. BUY.
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Oxford University and AstraZeneca announced the first interim analysis from the Phase III study of its COVID-19 vaccine candidate, which was found to be 70% effective in preventing COVID-19. This follows similar announcements from Moderna, and Pfizer/BioNTech in the previous two weeks, and the caveats we mentioned at the time remain the same. While all of these results have been highly encouraging, we reiterate that they do not diminish the urgent need for COVID-19 treatments and testing, which will be required for years to come. We consider Synairgen, Avacta, genedrive, Omega Diagnostics and Open Orphan to offer good buying opportunities.
Companies: AVCT ODX SNG GDR ORPH
Venture Life has developed significant momentum through 2020, reflected in the strong share performance over the year. Building on this momentum, the company has announced it is conditionally raising £34m via an equity raise to help it secure additional M&A opportunities. At this time, Venture Life has identified three opportunities, which we estimate could deliver significant earnings accretion if all are completed. We have updated our forecasts to reflect the raise but at this time have left our underlying assumptions unchanged. We expect Venture Life to maintain the momentum it has developed, supported by the proposed raise and M&A opportunities; we re-iterate our Buy recommendation.
Companies: Venture Life Group Plc
Interim results were in line with the 28 October trading update, reflecting the impact of the pandemic, with sales down 27% and LBITDA of £1.3m. However, c.10% LFL growth for Health & Nutrition (HN) in October and November is encouraging and points to long-term growth. Together with confirmation that first shipments against the initial 1m order for AbC-19 rapid antibody tests have taken place as well as first shipments of VISITECT CD4 Advanced Diseases tests to Africa, we expect a strong H2 (c.75% of FY sales), with potential upside driven by a currently poorly visible, yet anticipated long-term opportunity from its three key value drivers: Food Detective in China, VISITECT CD4 and COVID-19 lateral flow devices (LFDs). We leave our forecasts unchanged until we have further clarity on the unfolding COVID-19 opportunities. Whilst this implies c.£9.4m sales in H2, this is still eminently achievable given that supply has the ability to generate in excess of £9m of sales in Q4 FY 2021, should the demand materialise.
Companies: Omega Diagnostics Group PLC
ReNeuron, a UK-based stem-cell therapy developer, has announced today a fundraising of up to £17.5m (gross) through the means of a placing, subscription and open offer. The Company has also announced its FY’21E interim results as well as the latest data from its lead candidate hRPC in the ongoing Phase I/IIa clinical trial for Retinitis Pigmentosa (RP). The additional funding aims to provide liquidity for the next 18 months, and through key clinical development milestones for the hRPC programme and exosome collaborations. **** As joint broker to ReNeuron, we are restricted and can therefore provide factual comment only. Shareholder approval for the transaction will be sought at the General Meeting to be held on the 11th December 2020 ****
Companies: ReNeuron Group plc
ReNeuron Group (RENE.L): Interim results
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
Companies: AVO ARBB ARIX CLIG DNL FLTA ICGT PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
A positive AGM update from CVS this morning, illustrating a continuation of solid trading momentum since the Sept finals. LFL sales in the first four months were ahead by 5.1% vs a stiff 8% comp. This implies an acceleration to 6.3% over Sep-Oct - an excellent showing, reflecting resilience and ongoing self-help to optimise revenue generation. Significantly, this flows through to a healthy EBITDA margin back above 15%. Trading during the current lockdown has not been much impacted and this bodes well for any future restrictions. The balance sheet has further deleveraged. With guidance remaining suspended we hold off reinstating forecasts, but on our illustrative analysis the shares are trading on an FY21/FY22 EV/EBITDA rating of 14x/13x and a P/E of 22x/21x. Given the structural tailwind, underlying momentum and sector M&A at >15x EV/EBITDA, we see scope for rating expansion.
Companies: CVS Group plc
One of the original assumptions in our forecast for Destiny’s first product, XF-73 for the prevention of post-surgical staphylococcal infections, was that it would share the US market with GlaxoSmithKline’s Bactroban Nasal - despite Bactroban Nasal not being approved for this indication. We also referenced Bactroban Nasal’s US price in estimating the price for XF73 in all markets. Bactroban Nasal has now been discontinued in the US, so we adjust some of our modelling for its removal. This has resulted in our valuation increasing.
Companies: Destiny Pharma Plc
EKF has confirmed it expects a strong Q4 from both the core business and ongoing demand for the Primestore MTM sample collection device. As a result, FY20 performance is now expected to comfortably exceed market expectations, which have already been upgraded several times through the year. We upgrade our FY20 EBITDA forecasts by a further 6% to £24.4m and look forward to further updates in due course. EKF is a Best Idea for 2020 and we expect strong momentum to continue.
Companies: EKF Diagnostics Holdings plc
After Pfizer and Moderna, AstraZeneca-Oxford reported (preliminary) late-stage results for their COVID-19 vaccine candidate. Based on logistics and pricing, Astra’s vaccine has clear advantages.
However, with results for other (major) countries still awaited and considering past safety concerns, it is pre-mature to decide if Astra has won this race. Also, considering the firm’s ‘no-profit’ commitment as long as the pandemic is on, any major earnings uptick seems unlikely.
Companies: AstraZeneca PLC
IXICO has provided a trading update for the fiscal year to 30 September 2020, expecting revenues of £9.5m, up 26% and ahead of our current £9.1m estimate. EBITDA is expected to be at least in line with our £1.1m forecast. This represents the fourth consecutive year of +25% revenue growth and a period over which EBITDA has progressed from -£2.1m (FY16A) to +£1.1m. FY21E revenues and beyond are underpinned by an order book which has increased by c£5.8m over the year supported by new contracts booked of over £15m, approximately twice the amount booked in FY19A. We believe IXICO is a strong position to deliver ongoing growth and we maintain our Buy recommendation.
Companies: IXICO Plc
Venture Life aims to become a global leader in the self-care branded product market, where there are a number of structural growth drivers. It has a unique and scalable platform to develop, manufacture and distribute products, including its own brands and international customers’ brands. What is already a high margin business is poised to deliver a compelling mixture of top line growth with significant operating leverage. Performance in H1 (EBITDA +347%) highlights the potency of VLG’s model. Acquisitions can also leverage the platform to drive growth, and management has a very strong track record here. On top of this exciting growth play, there is also a chance that its Dentyl dual-action mouthwash could have applications to slow/reduce CV19 transmission, adding to the upside potential.
4D pharma has announced a merger with the Longevity Acquisition Corporation (NASDAQ: LOAC), a Special Purpose Acquisition Company that provides a NASDAQ listing and $14.6m (gross) of cash for 4D pharma shareholders. The statement notes that this additional capital is expected to extend the current operational runway another 6 months into early Q3 2021 (vs. Q1 2021 previously) providing capital to support the ongoing clinical development of its pipeline. 4D pharma will maintain its AIM listing and will remain headquartered in the UK. The merger was agreed at an valuation of £1.10 per 4D pharma ordinary share, representing a 18% premium to last night’s close of £0.93. Post-completion, 4D pharma will issue approx. 19,783,827 new ordinary shares, and 4D pharma shareholders will own approx. 86.9% of the issued share capital of the enlarged group. The merger is expected to become effective in early 2021, subject to shareholder meetings for both companies, and approval of all necessary US / SEC documentation
Companies: 4d Pharma PLC
RUA have announced an earlier than expected update on the testing of its Elast-Eon-coated tri-leaflet artificial heart valve from its pilot pulsatile flow program. This testing is meant to simulate not just the flow of blood through the valve, but the viscous patterns that occur during the opening and closing of the valve, in the simulation of typical natural conditions. Not only have the minimum ISO Standard performance requirements been easily surpassed, but there were indications of reproducibility and ease of manufacture.
Companies: RUA Life Sciences Plc
Beximco Pharma (BXP.L): Notification of AGM | Evgen Pharma (EVG.L): First patient enrolled in COVID-19 trial
Companies: Beximco Pharmaceuticals Limited Sponsored GDR RegS (BXP:LON)Evgen Pharma Plc (EVG:LON)