logo

e-Therapeutics - FY 2018 Results Show Good Progress

Writen by Riccardo Lowi

KEY INVESTOR MESSAGES

  • Business on track and focused on four key areas (immuno-oncology, fibrosis, further NDD discovery and artificial intelligence collaborations)
  • Expect more collaborations and licensing deals for the further development of in-house candidates in the coming quarters
  • Solid cash balance provides funding well into the second half of calendar year 2019
  • Our SOTP valuation yields an intrinsic value of about 4x current market cap

RESULTS SUMMARY

e-therapeutics reported results for the full year to Jan 31st 2018; business updates reflect good progress on the main research programs. Cash balance of £9.6mn was slightly higher than we expected, thanks to careful cost management.
 
Under the leadership Ray Barlow since April 2017, the business has undergone a strategic review in mid-2017 and decided to allocate resources to four high-potential areas: two Network-Driven Drug Discovery (NDD) programs in immuno-oncology, NDD programs in fibrosis, enhancing the capabilities of the NDD platform and leveraging the recently established collaborations with two AI companies (Intellegens and Biorelate).

Source: Company presentation, March 2018

With £9.6mn cash on hand at the end of January (and a £1.4mn tax credit expected in the coming months), the business is funded at least toward the end of calendar 2019, at the current cash burn rate.
 
Potential income from new partnerships and the ability to fine-tune R&D expenses may extend the cash runway into calendar 2020.

VALUATION

As discussed in our initiation note of October 2017, we value e-therapeutics using a SOTP approach.
 
We value their leading programs about £60mn and attribute a value of £50mn to e-therapeutics' NDD platform.
 
Taking into consideration the cash balance at the end of January 2018 and the £1.4mn tax credit due in 1H19 (Feb-Jul of calendar year 2018), we get to a valuation of about £120mn.
 
Applying a 30% discount to account for potential future dilution, we reach our intrinsic value of £83mn, about 4x current market cap.

 

LEGAL NOTICE – IMPORTANT – PLEASE READ:

Proactive Research is a trading name of Proactive Investors Limited which is regulated and authorised by the Financial Conduct Authority (FCA) under firm registration number 559082. This document is published by Proactive Research and its contents have not been approved as a financial promotion by Proactive Investors Limited or any other FCA authorised person. This communication is made on the basis of the 'journalist exemption' provide for in Article 20 of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and having regard to the FCA Rules, and in particular PERG 8.12.

This communication has been commissioned and paid for by e-Therapeutics plc and prepared and issued by Proactive Research for publication. All information used in the preparation of this communication has been compiled from publicly available sources that we believe to be reliable, however, we cannot, and do not, guarantee the accuracy or completeness of this communication.

The information and opinions expressed in this communication were produced by Proactive Research as at the date of writing and are subject to change without notice. This communication is intended for information purposes only and does not constitute an offer, recommendation, solicitation, inducement or an invitation by, or on behalf of, Proactive Research to make any investments whatsoever. Opinions of and commentary by the authors reflect their current views, but not necessarily of other affiliates of Proactive Research or any other third party. Services and/or products mentioned in this communication may not be suitable for all recipients and may not be available in all countries.

This communication has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Before entering into any transaction, investors should consider the suitability of the transaction to their individual circumstance and objectives. Any investment or other decision should only be made by an investor after a thorough reading of the relevant product term sheet, subscription agreement, information memorandum, prospectus or other offering document relating to the issue of securities or other financial instruments.

Nothing in this communication constitutes investment, legal accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate for individual circumstances or otherwise constitutes a personal recommendation for any specific investor. Proactive Research recommends that investors independently assess with an appropriately qualified professional adviser, the specific financial risks as well as legal, regulatory, credit, tax and accounting consequences.

Past performance is not a reliable indicator of future results. Performance forecasts are not a reliable indicator of future performance. The investor may not get back the amount invested or may be required to pay more.

Although the information and date in this communication are obtained from sources believed to be reliable, no representation is made that such information is accurate or complete. Proactive Research, its affiliates and subsidiaries do not accept liability for loss arising from the use of this communication. This communication is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, such communications are prohibited.

This communication may contain information obtained from third parties, including ratings from rating agencies such as Standard & Poor's, Moody's, Fitch and other similar rating agencies. Reproduction and distribution of third-party content in any form is prohibited except with the prior written consent of the related third-party. Credit ratings are statements of opinion and are not statements of fact or recommendations to purchase, hold or sell securities. Such credit ratings do not address the market value of securities or the suitability of securities for investment purposes, and should not be relied upon as investment advice.

Persons dealing with Proactive Research or members of the Proactive Investors Limited group outside the UK are not covered by the rules and regulations made for the protection of investors in the UK.

Notwithstanding the foregoing, where this communication constitutes a financial promotion issued in the UK that is not exempt under the Financial Services and Markets Act 2000 or the Orders made thereunder or the rules of the FCA, it is issued or approved for distribution in the UK by Proactive Investors Limited.

Latest Research