DJ Marinomed Biotech AG (MARI-AT): 2019E off to a good start. All eyes on Budesolv.
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goetzpartners securities Limited
Marinomed Biotech AG (MARI-AT): 2019E off to a good start. All eyes on
Budesolv.
07-May-2019 / 07:48 GMT/BST
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*Published to the market and investors on 7th May 2019 @ 7.01am (BST). *
*Marinomed Biotech AG (MARI-AT): 2019E off to a good start. All eyes on
Budesolv.*
*Recommendation: OUTPERFORM*
*Target Price: EUR98.00 (increased from EUR95.00) *
*Current Price: EUR78.50 (CoB on 6th May 2019) *
*KEY TAKEAWAY*
Marinomed's maiden FY2018 results following its initial public offering
("IPO") on the Vienna Stock Exchange on 1-Feb-2019 were broadly in line with
our expectations with regards to revenues and key expenditure items. Total
revenues (incl. other income) declined slightly to EUR5.3m (-4% YoY) as
previously indicated by the company and the net loss was much larger than in
the previous year due to increased R&D and personnel expenses, but also
one-off items related to the IPO and the convertible bond. We anticipate
double-digit revenue growth in 2019E and beyond as the global roll-out of the
marketed products continues, and an increase in the underlying net loss due to
rising R&D expenses. However, following the EUR22.4m equity fund raise in
connection with the IPO and a EUR15m loan from the European Investment Bank
("EIB"), we expect Marinomed to have sufficient financial resources to execute
on its strategy and until operating profitability is achieved in 2022E. We
increase our target price ("TP") to EUR98 (from EUR95) following positive
top-line results for the Budesolv Phase III trial and reiterate our OUTPERFORM
recommendation.
*Carragelose product sales to drive revenue growth from 2019E*
Marinomed's revenues are currently entirely driven by the six
Carragelose-based over-the-counter ("OTC") products for the common cold, which
generated sales of EUR4.4m in 2018 vs. EUR4.6m in 2017 (-4% YoY). The decline
was due to stocking by new distributors. 2019 is off to a strong start and
Marinomed expects double-digit growth in 2019E, driven by continued roll-out
in >30 countries where Carragelose products are already launched plus new
product launches. These include the new sorbitol-based decongestant, which has
exceeded expectations in Marinomed's home market, Austria, and
xylomethazoline-based decongestant Carravin, on track for market entry in
2020E. We forecast Carragelose product sales of EUR6.6m in 2019E (+50% YoY)
and EUR9.1m in 2020E (+38% YoY), reaching a peak of >EUR40m by 2028E, based on
in-market sales of c.EUR267m.
*Budesolv to accelerate growth from 2021E*
We expect revenue growth to accelerate from 2021E onwards once the lead asset
from the Marinosolv platform, Budesolv (budesonide nasal spray) reaches the
market in 2021E at the latest. Marinomed recently reported that the Phase III
trial in allergic rhinitis ("AR") had met the primary endpoint of
non-inferiority vs. reference product Rhinocort Aqua, J&J's budesonide
suspension, allowing the company to proceed with the regulatory filing as
planned. The full data set is currently being analysed and further information
should become available in the coming 1 - 2 months. We look forward to further
clarity on the secondary endpoint assessing whether Budesolv leads to a faster
onset of action compared to Rhinocort. This is a key differentiating factor,
in our view, and underpins our peak sales forecast of c.EUR760m (c.4% market
share).
*Partnership discussions to intensify*
Marinomed is now intensifying its partnership discussions for the
commercialisation of Budesolv, with all options currently on the table. These
include selling Budesolv through current distributors and finding a global
partner. We note that the company already signed a term sheet with Link Health
Pharma Co. Ltd. for the Chinese market, an agreement that includes an upfront
payment of EUR3m and low double-digit milestones per product (both already
baked into our forecasts).
*Increasing TP to EUR98 following positive Budesolv Phase III trial*
We increase our fair value and TP for Marinomed to EUR98 (from EUR95) on
increasing the probability of success for the second Marinosolv asset
Tacrosolv (tacrolimus eye drops) to 20% (from 15%) in allergic conjunctivitis
and 15% (from 10%) in dry eye disease. Our forecasts and chance of success of
75% for Budesolv remain unchanged pending detailed Phase III data in the
coming weeks.
Kind regards,
Brigitte de Lima, PhD, CFA | Research Analyst
goetzpartners Healthcare Research Team | Research Team
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T +44 (0) 203 859 7725 | brigitte.delima@goetzpartners.com /
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