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goetzpartners securities Limited
Elanix Biotechnologies AG (ELN-DE): Progenitor cells for accelerated tissue
healing
22-March-2018 / 11:08 GMT/BST
Free to access research and investor meetings in a post-MiFID2 world
Elanix Biotechnologies AG (ELN-DE): Progenitor cells for accelerated tissue
healing
Recommendation: OUTPERFORM
Target Price: EUR6.40
Current Price: EUR1.96 (cob on 21st March 2018)
KEY TAKEAWAY
We initiate coverage of Elanix Biotechnologies with an OUTPERFORM
recommendation and a target price of EUR6.4/share. Elanix is a
commercial-stage Swiss regenerative medicine company focused on tissue
regeneration products and specialty cosmetics for dermatology and gynaecology
applications. The company's core competence is its proprietary progenitor cell
technology and the main focus is advanced wound care: the first product
candidate, FirstCover, is expected to be launched in early 2020E for the
treatment of acute wounds and in 2022E for chronic wounds. Elanix is already
generating revenues from its specialty cosmetic GYNrepair for women's health,
launched in May 2017. A second product, SKINrepair for eczema, is projected to
enter the market in H1/2018E. We forecast strong top-line growth, as reflected
in our 2017A-2022E revenue CAGR of 146%, and expect Elanix to achieve
sustainable profitability in 2020E.
FirstCover: differentiated treatment for acute and chronic advanced wound care
FirstCover is an off-the-shelf product based on progenitor skin cell
derivatives in development for acute and chronic advanced wound care, a
c.$6.9bn market growing at c.4% per year. Elanix intends to start a 30-40
patient trial in the acute wound setting by YE2018E, paving the way for
approval by early 2020E. Elanix plans to enter the larger, but more
competitive and lower priced chronic wound care market (e.g. diabetic foot,
pressure ulcers, venous leg ulcers) in 2022E. We forecast combined revenues of
nearly EUR30m in 2024E, based on in-market sales of EUR72m, and believe that
the product could reach peak sales of c.EUR250m ten years after launch.
Specialty Cosmetics backed by clinical data
The specialty cosmetics portfolio, which is based on animal-derived progenitor
cell derivatives, includes GYNrepair for the treatment of vulvodynia, a
painful gynaecological condition that affects at least 8% of women, and
SKINrepair for atopic dermatitis (eczema). GYNrepair was launched in May 2017
and generated an estimated EUR300k in sales in 2017E, while SKINrepair is due
to reach the market in H1/2018. We forecast combined sales of nearly EUR30m in
2021E and peak sales of c.EUR175m in 2028E, of which we expect Elanix to book
c.40% as revenues.
Valuation analysis suggests ample room for upside
We value Elanix based on an EV/sales multiple using our EUR33m revenue
estimate for 2022E, and further validate our analysis using a discounted cash
flow model that better captures the long-term growth potential. Our EV/Sales
analysis, which is based on a multiple of 3.6x, a discount rate of 12% and
assumes a 65% probability of Elanix achieving our forecasts, yields a fair
value of EUR6.4/share, which is the basis of our target price. Our DCF
analysis yields a higher fair value of EUR10.4/share.
Kind regards,
Brigitte de Lima, PhD, CFA | Analyst
Martin Piehlmeier | Analyst
goetzpartners Healthcare Research Team | Research Team
goetzpartners securities Limited
The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.
T +44 (0) 203 859 7725 | healthcareresearch@goetzpartners.com /
brigitte.delima@goetzpartners.com / martin.piehlmeier@goetzpartners.com
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(END) Dow Jones Newswires
March 22, 2018 07:08 ET (11:08 GMT)
