Trinity Delta Equity Research & Stock Reports

Q218 results confirm the progress made during this transition year, as Bonesupport implements several important strategic changes. As we highlighted in our June initiation, focus on commercial execution with direct US distribution (from October 2018) and a stronger European commercial footprint should accelerate global CERAMENT sales, catalysing a return to growth in FY19. Upcoming Capital Markets events will provide detail on the longer-term growth drivers and plans for expanding the product offering. However, there are clear signs of optimism for the future, with management confident of achieving annual growth of c40% beyond 2019. Our forecast and DCF-based valuation of SEK1.325bn (SEK26/share) are unchanged.

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Tissue Regenix Group

Tissue Regenix is employing its proprietary technologies, dCELL and BioRinse, to develop a regenerative medicine business addressing a broad range of applications. The diverse product portfolio targets sizeable market opportunities in orthopaedics, spine, dental, wound/general surgery, and cardiac care settings. Last year’s acquisition of CellRight Technologies brought a complementary product line and, importantly, the production infrastructure to address the significant US market. We value, using a DCF model, the company at £245m, or 20.9p a share.

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MaxCyte

FDA clearance of the IND for MCY-M11 is a watershed moment. It is MaxCyte’s first next-generation CAR (chimeric antigen receptor) candidate to approach the clinic, and significantly will be studied in solid tumours. Regulatory clearance of the Phase I trial means first patient dosing – and detail on trial design - is on track for H218. Clearance, while expected, provides important validation of the proprietary mRNAbased CARMA platform, and MaxCyte’s scientific and regulatory expertise in the fastevolving cell therapy field. The H118 trading statement confirms solid progress in both growing and advancing the number of cell therapy licenses, underpinning Board confidence that FY18 revenue will meet market expectations. We maintain our £166m or 327p/share valuation, pending interims and updated financial guidance.

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BerGenBio’s bemcentinib already has broad commercial potential in various cancer settings, and now new preclinical data shows that this compound (or the Axl monoclonal antibody BGB149) could be used to treat fibrosis. There are limited treatments available in this therapeutic field, and the data suggests that inhibiting Axl could reduce fibrosis. BerGenBio is yet to announce any development plans in fibrosis. The company has recently raised NOK187m ($24m) in a private placement and is now well positioned to start such a programme. We raise our valuation to NOK2,880m (NOK52.65/share), which, in line with our conservative approach, excludes the potential of bemcentinib/ BGB149 in fibrosis.

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Karolinska Development

The strategic shift in investment strategy implemented since 2014 appears to be bearing fruit. The greater emphasis on commercial considerations means Karolinska Development is now focussed on nine active investments in mid- and late-stage opportunities. A number of major value inflection points, across several of the portfolio companies, are expected over the next 12-18 months. The convertible debt remains an issue, as does the complexity of the Rosetta Capital share-out. However, our DCF valuation based on the five primary investments suggests a value of SEK1,055m, SEK16.65 per share, with other portfolio assets and earn-outs representing further possible upside.

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BerGenBio is making excellent progress towards achieving its ambitious goals. All six Phase II trials with bemcentinib (BGB324) are on track to report data in 2018, with results from most of them expected at the ASCO meeting in June. The first efficacy data with bemcentinib in immuno-oncology settings should be reported there, from the three Phase II studies in combination with Merck’s pembrolizumab. BerGenBio continues to control its costs carefully and is funded to operate into FY19. Our valuation is maintained at NOK50.46/share.

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