Respiratorius: Minimal activity, case intact
Research Update
2024-02-14
07:15
Analyst Q&A
Closed
Martin Wahlström answered 6 questions.
Redeye finetunes its estimates following the Q4 2023 report from Respiratorius. The company is waiting for a licensing partner to take its lead candidate VAL-001 through phase III. The cash position was SEK1.9m at the end of Q4, with free cash flow of SEK-0.9m for the quarter. Until a licensing deal is announced, the cash burn is expected to remain minimal.
Martin Wahlström
Filip Einarsson
The cash position in the quarter was SEK1.9m, with a quarterly burn rate of SEK-0.9m. OPEX came in slightly higher than what we had anticipated, but this was counteracted by some positive effects from working capital. The reason for the increase in OPEX q/q is a direct result of taking year-end costs related to patent maintenance etc. Respiratorius basically remains a holding company with a strict focus on minimising the burn rate until it secures a licensing deal.
In this update, we provide a summary of a recent report from JP Morgan regarding the sentiment on the deal market within the life science sector. We view the deal sentiment as one of the few moving pieces in the case from this point forth, and more deals taking place will naturally be positive for Respiratorius. As for Q4 2024, the sentiment remained soft, with a downturn in activity since the go-go years of 2021-2022.
We make limited estimate changes following the report. We don’t make any changes to our fair value range, as deal sentiment has remained at the levels seen in previous quarters and the overall outlook for the company is the same as at the end of Q3. We maintain our assumption that the company will need cSEK1.5m in financing at the beginning of Q3 2024, which we believe could be solved through a loan. Our fair value range is SEK0.05 (0.05) to SEK1.00 (1.00), with a Base Case of SEK0.40 (0.40) per share.
| SEKm | 2022 | 2023 | 2024e | 2025e | 2026e |
| Revenues | 0.0 | 0.0 | 33.4 | 0.0 | 0.0 |
| Revenue Growth | nm. | nm. | nm. | -100% | nm. |
| EBITDA | -35.3 | -4.8 | 30.4 | -1.6 | -1.6 |
| EBIT | -39.0 | -8.0 | 29.2 | -2.9 | -2.9 |
| EBIT Margin | nm. | nm. | nm. | nm. | nm. |
| Net Income | -39.0 | -8.0 | 29.2 | -2.9 | -2.9 |
| EV/Revenue | nm. | nm. | 1.9 | nm. | nm. |
| EV/EBIT | -1.6 | -7.8 | 2.1 | -21.7 | -21.4 |
The Q4 2023 report in itself came in without any significant surprises, the total OPEX, which is very highly correlated to the burn rate for the company at this stage, was cSEK-1.3m, against our estimates of cSEK-0.7m. Although this is a large miss in relative terms, most of the difference can be derived from costs associated with “closing the year”. We are choosing to look at OPEX as a proxy for cash burn given that speculating about changes in NWC is highly uncertain and unlikely to add much value. The company remains focused on securing a deal and is likely to maintain exceptionally tight cost control while it waits.
Disclosures and disclaimers