Nanexa: NEX-22, partner projects, and Novo Nordisk evaluation prioritized
Research Update
2024-02-22
09:00
Analyst Q&A
Closed
Fredrik Thor answered 3 questions.
Redeye updates its view of Nanexa following the Q4 report and recent events in the company. The report offered no surprises and we reiterate our stance that 2024 will be an important year for the company, as we hope for a breakthrough related to its partner deals and NEX-22 clinical trial.
FT
Fredrik Thor
Total revenue amounted to SEK14.96m (8m), including 6.8m in turnover and SEK8m in capitalized development costs. Out of the 6.8m in turnover, SEK1.73m related to revenues from Pharmashell evaluation agreements (including Novo Nordisk) and SEK5m related to accrual of deferred revenues from the USD4m exclusivity agreement with Novo Nordisk. OPEX amounted to SEK-66.3m (-25m). The increase in OPEX mainly relates to depreciation of the book value of capitalized development costs related to NEX-18 and NEX-20 of SEK-45m. Nanexa’s cash position amounted to SEK65m, and the company guides for a cash runway until mid-2025.
We like the company’s focused approach and believe that it should give the company some time to deliver, hopefully, a “full-scale” deal related to the Novo Nordisk evaluation, its other partner projects or possibly related to NEX-22. In the report, the company mentions that it is currently answering some questions related to the application to start a phase I trial with NEX-22, and that study start potentially could be pushed to Q2. However, data is still expected to be presented in H2 this year.
The company is also prioritizing its partnering projects, both the most public one with Novo Nordisk and others.
We did a more thorough review of our valuation in relation to the outcome of Nanexa's rights issue and largely reiterate our valuation, only making some model fine tuning with a net-zero effect. We reiterate our base case of SEK3.3 per share.
SEKm | 2021 | 2022 | 2023 | 2024e | 2025e |
Revenues | 18.0 | 28.2 | 59.5 | 71.3 | 15.0 |
Revenue Growth | 661% | 56.4% | 111% | 19.8% | -78.9% |
EBIT | -36.0 | -58.0 | -76.6 | 16.0 | -39.6 |
Net Income | -36.1 | -58.6 | -76.5 | 16.0 | -39.6 |
Overall, Nanexa’s OPEX (when excluding depreciation) has come down, and it is clear from yesterday’s conference call that cost control remains a priority. This includes (as previously announced) the pausing of NEX-20 and NEX-18, broader savings across the organization (for example, consultants), and also effectivizations related to the use of Nanexa’s production facility: Mr Svanström mentions during the call that GMP status only is needed when the company is producing for clinical studies, and thus that there are savings to be done in between. Overall, the report mentions that the company has a cash runway through H1 2025, which is a relatively long runway compared to other Swedish peers.
Source: Nanexa (historical); Redeye Research (estimates)
In other words, we like the company’s focused approach and believe it should give the company some time to deliver, hopefully, a “full-scale” deal related to the Novo Nordisk evaluation, its other partner projects or possibly related to NEX-22. In the report, the company mentions that it is currently answering some questions related to the application to start a phase I trial with NEX-22 and that the study start could potentially be pushed to Q2. However, that data will still be presented in H2 this year. We reiterate our stance that since a release profile of 28 days can be obtained, we judge that Nanexa has the potential to obtain a pharmacokinetic profile that meets the requirements, the TPP, and the therapeutic window in the clinical phase I trial. In other words, we think the trial will generate much useful information.
The company is also prioritizing its partnering projects, both the most public one with Novo Nordisk and others. We hope that Novo Nordisk, by the end of the year, has chosen to exercise its option and, together with Nanexa, enter into a licensing deal. In November 2023, the company announced that it had entered into an evaluation agreement with a large global pharmaceutical company about a depot formulation of a monoclonal antibody, which we think is an exciting area where Nanexa’s platform demonstrates great flexibility. While timelines are uncertain, we think there is a lot of optionality in the company’s several evaluation agreements, as we expect that one or several will lead to sharp agreements in the end. During yesterday's call, Nanexa also mentioned that it has optimized its processes in recent years to ensure that there are sharp substances that are evaluated and, overall, to ensure that the evaluation process is not too long.
We did a more thorough review of our valuation in relation to the outcome of Nanexa's rights issue and largely reiterate our valuation, only making some model fine tuning related to FX and share price assumptions with a net zero effect. We further adjust our OPEX estimates somewhat to align with the company's guidance for cash runway, and expect costs to follow the NEX-22 trial to a higher extent. We note that the company has made some room to deliver, given the cash runway into mid-25, and think that it will be vital for the company to deliver some form of commercial validation during the year. We still include some value related to NEX-20 (and to some extent NEX-18) but have earlier pushed our expectations for the next clinical activities. We may further adjust these parameters during the year. We reiterate our base case of SEK3.3 per share for now.
Asset | Originator Drug | LoA | Royalties | Peak sales (USDm) | Est. launch | Deal size (USDm) | rNPV (SEKm) | rNPV (Per share) | |
NEX-18 | Vidaza | 7% | 13% | 99 | 2030 | 120 | 57 | 0.3 | |
NEX-20 | Revlimid | 24% | 15% | 531 | 2029 | 150 | 573 | 2.9 | |
NEX-22 | Victoza | 11% | 15% | 688 | 2029 | 150 | 250 | 1.2 | |
Novo Deal | GLP-1 Class | 9% | 5% | 774 | - | 75 | 105 | 0.5 | |
Technology value (SEKm) | 985.04 | ||||||||
Net cash* (SEKm) | 104.60 | ||||||||
Shared costs** (SEKm) | -428.32 | ||||||||
Equity value (SEKm) | 661.32 | ||||||||
Shares outstanding (million) | 135.70 | ||||||||
Diluted shares outstanding (million) | 199.98 | ||||||||
Equity value per share (SEK) | 3.3 |
Case
Drug delivery case with early validation
Evidence
PharmaShell in place reduce burden for partners in more than one way
Challenge
Still at an early stage
Challenge
Additional capital required to advance all projects
Valuation
SOTP Suggests Upside
People: 3
Business: 3
Financials: 0
Income statement | |||||
SEKm | 2021 | 2022 | 2023 | 2024e | 2025e |
Revenues | 18.0 | 28.2 | 59.5 | 71.3 | 15.0 |
Cost of Revenue | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Operating Expenses | 54.0 | 86.2 | 136.1 | 55.3 | 54.6 |
EBITDA | -36.0 | -58.0 | -76.6 | 16.0 | -39.6 |
Depreciation | 7.5 | 10.5 | 59.9 | 0.00 | 0.00 |
Amortizations | 0.00 | 0.00 | 0.00 | 6.0 | 8.0 |
EBIT | -36.0 | -58.0 | -76.6 | 16.0 | -39.6 |
Shares in Associates | 0.00 | 0.00 | 0.03 | 0.03 | 0.03 |
Interest Expenses | 0.19 | 0.67 | 0.94 | 0.00 | 0.00 |
Net Financial Items | -0.19 | -0.66 | 0.12 | 0.00 | 0.00 |
EBT | -36.2 | -58.6 | -76.5 | 16.0 | -39.6 |
Income Tax Expenses | -0.01 | -0.06 | 0.00 | 0.00 | 0.00 |
Net Income | -36.1 | -58.6 | -76.5 | 16.0 | -39.6 |
Balance sheet | |||||
Assets | |||||
Non-current assets | |||||
SEKm | 2021 | 2022 | 2023 | 2024e | 2025e |
Property, Plant and Equipment (Net) | 9.7 | 15.1 | 14.2 | 15.7 | 17.2 |
Goodwill | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Intangible Assets | 45.7 | 65.2 | 40.5 | 48.0 | 53.5 |
Right-of-Use Assets | 0.08 | 0.00 | 0.00 | 0.00 | 0.00 |
Other Non-Current Assets | 0.06 | 0.10 | 0.21 | 0.21 | 0.21 |
Total Non-Current Assets | 55.5 | 80.5 | 55.0 | 64.0 | 71.0 |
Current assets | |||||
SEKm | 2021 | 2022 | 2023 | 2024e | 2025e |
Inventories | 0.27 | 0.49 | 0.00 | 1.0 | 2.0 |
Accounts Receivable | 3.5 | 8.1 | 1.9 | 0.00 | 5.0 |
Other Current Assets | 0.00 | 0.00 | 10.7 | 0.00 | 3.0 |
Cash Equivalents | 105.7 | 81.2 | 65.2 | 67.7 | 57.1 |
Total Current Assets | 109.5 | 89.7 | 77.8 | 68.7 | 67.1 |
Total Assets | 165.0 | 170.2 | 132.8 | 132.6 | 138.0 |
Equity and Liabilities | |||||
Equity | |||||
SEKm | 2021 | 2022 | 2023 | 2024e | 2025e |
Non Controlling Interest | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Shareholder's Equity | 151.3 | 109.1 | 95.8 | 111.8 | 117.2 |
Non-current liabilities | |||||
SEKm | 2021 | 2022 | 2023 | 2024e | 2025e |
Long Term Debt | 0.00 | 0.00 | 2.1 | 2.1 | 2.1 |
Long Term Lease Liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Other Non-Current Lease Liabilities | 2.6 | 22.3 | 3.8 | 3.8 | 3.8 |
Total Non-Current Liabilities | 2.6 | 22.3 | 5.9 | 5.9 | 5.9 |
Current liabilities | |||||
SEKm | 2021 | 2022 | 2023 | 2024e | 2025e |
Short Term Debt | 1.3 | 0.00 | 0.00 | 0.00 | 0.00 |
Short Term Lease Liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Accounts Payable | 3.7 | 4.7 | 7.8 | 0.00 | 5.0 |
Other Current Liabilities | 6.1 | 34.2 | 23.2 | 15.0 | 10.0 |
Total Current Liabilities | 11.1 | 38.8 | 31.1 | 15.0 | 15.0 |
Total Liabilities and Equity | 165.0 | 170.2 | 132.8 | 132.6 | 138.0 |
Disclosures and disclaimers