Ryvu Therapeutics: Milestones payments from Exelixis, Share issue and 4Q22 results & Conference highlights
Aa
Share
Milestones payments from Exelixis
On January 26, company informed that company’s STING agonist sold to Exelixis reached milestone. As a result company is entitled to receive milestone payments in the amount of USD 1mn. We underlined that earlier company informed that it expects with high probability to receive this milestone in 2023e, therefore, we assumed this milestone with 100% probability in our last report. Hence, this information has no impact on our valuation.
Share issue
In December, company conducted share issue of 4.8mn shares sold to institutional and individual investors at PLN 55/sh and to BioNTech at PLN 48.86/sh. We underline that in our last report, we assumed that company will issue 4.8mn shares in 2022e and the remaining part from shares approved by the Supervisory Board of 8.5mn in 2023e and we assumed price of share issue at PLN 36.2/sh (market price at the date of our report). Now, taking into account that company received EUR 20mn from BioNTech and the amounts raised in share issue, we do not expect that company will issue remaining 3.7mn in 2023e or 2024e.
4Q22 results & Conference highlights
Ryvu Therapeutics reported 4Q22 results with the following highlights:
- Revenues PLN 35mn (+108% y/y, 65% below our estimates and 65% below market consensus). Significant underperformance is related to the fact that company was allowed to book in P&L only PLN 25mn (i.e. EUR 5.3mn) from the upfront payment received from BioNTech. The total amount received from this deal is EUR 20mn, the remaining part (EUR 15mn) will be recognized in the upcoming years. Revenues from grants amounted to PLN 10mn (vs. PLN 6mn year ago, vs. PLN 5.4mn expected by us).
- Total operating expenses amounted to PLN -36mn (+2% y/y). Total expenses excluding non-cash cost of incentive program amounted to PLN 32mn (vs. PLN 26mn year ago, vs. PLN 30mn in 3Q22). Cost of incentive program amounted to PLN 2mn (vs. PLN 8 year ago).
- Reported EBITDA amounted to PLN 2mn (vs. PLN -15mn year ago, vs. PLN 68.6mn expected by market consensus, vs. PLN 68.5mn expected by us).
- EBITDA adjusted by incentive program amounted to PLN 6mn (vs. PLN - 7mn year ago, vs. PLN 71.7mn expected by us)
- Net loss amounted to PLN -9mn (vs. PLN -18mn year ago, vs. PLN 58mn expected by market consensus, vs. PLN 53mn expected by us).
- Net cash came in at PLN 102mn (vs. PLN 41mn in 3Q22, vs. PLN 89mn expected by us).
Our view: SLIGHTLY POSITIVE
Company’s results came visibly below market expectation and our estimates, however, it is primarily related to the way of recognition of upfront payment from BioNTech. In 4Q22 results, company recognized PLN 25mn (EUR 5.3mn) and the remining part will be recognized in the coming years, while the market participants assumed that all EUR 20mn will be recognized in 4Q22.
Assuming that company would recognize EUR 20mn company’s revenues would come at PLN 104mn (vs. PLN 100.5mn expected by market consensus), EBITDA would come at PLN 71mn (vs. PLN 68.6mn expected by market consensus), EBIT would come at PLN 68mn (vs. PLN 65mn expected by market consensus). Therefore, we could say that result beat slightly market expectations and our estimates which is related to higher subsidies which came at PLN 10mn vs. PLN 5mn expected by us.
Additionally, we underline that company’s has strong balance sheet position of PLN 102mn, which came above our expectations of PLN 89mn. This positioning has been additionally supported in 1Q23 from the revenues from share issue and on March 17, company owns PLN 320mn.
In total, we see company’s result slightly to the positive side. The underperformance of the result is related only to the way of recognition of upfront payment from BioNTech. Cost are under control. Balance sheet position is strong.
Highlights from conference and online chat with individual investors:
- Competitive projects for RVU120. Company highlights that there are several clinical projects with high 20-30% clinical response but this responses has short durations.
- Development of RVU120. Company confirmed that it plans to launch phase II in solid tumors in 2Q23 and in AML/HR-MDS in 3Q23. Company assumes that phase II will last two years.
- SEL24. Currently, company do not see the risk of termination of the project by Menarini as high, however, already no further clinical development plans have yet been approved by the Menarini management.
- Galapagos collaboration. The project is ongoing, however company sees that this project is not very important for the Galapagos and Management Board would not be surprise if Galapagos would decide to cancel this project.
- Merck collaboration. Company do not have an information on the potential termination of this collaboration, however, Management Board do not expect to receive any payments from this cooperation in the short term. The project is not going on.
- Financing and balance sheet position. Company confirmed that it has secured of PLN 493mn (including venture debt from EBI) which is almost on par with expected spending of PLN 498mn in the period 2023-2024e.
- Potential partnering deal. Company confirmed it plans to conclude one partnering deal per year.
- Milestone payments. Company, expect to see potential to receive milestone payments from cooperation with BioNTech and Exelixis.
- Synthetic lethality. Parentships in this fields could have similar parameters to deal concluded with BioNTech for STING agonist.
Our view: NEUTRAL
Continue reading: Ryvu Therapeutics: Termination of partnering deal with Galapagos, Valuation summary and more| FXMAG.COM
Marcin Gornik +48 691 701 088 marcin.gornik@pekao.com.pl
