ASIT Biotech: Building To A Crescendo
Edison | Sep 19, 2019 04:52AM ET
Having reported H119 financials, Asit C Mehta Financial Services Ltd (BO:ASIT) main focus remains on the results of the second Phase III study of gp-ASIT+ for the prevention of grass pollen allergy. These are expected towards the end of 2019 and the H119 results reflected an increased cash burn of €6.0m (vs €4.1m in H118) on the back of the ongoing study. The first tranche of the €9.225m convertible bond, which funds ASIT through the trial results, closed in July.
H119 financials
ASIT’s H119 operating loss increased to €7.8m from €5.4m in H118 due to the costs of the second Phase III (ABT011) study. R&D remained the largest operating expense at €6.9m compared to €4.5m in H118. Consequently, net loss was higher at €7.8m (from €5.4m in H118). Cash at end H119 was €2.5m (vs €13.5m at end H118), although this is now academic after the company received the first €5.0m tranche from the convertible note offering in July. We now estimate ASIT’s cash position at c €8m and to last through to the second convertible note tranche after the results of the ABT011 study in December. The second tranche should extend the cash runway until the end of Q320, by which time we expect gp-ASIT+ to have been filed and ex-European partnerships to have been signed. We have revised our financials to account for the higher R&D costs of the Phase III study and its extension to 2020.
€9.225m convertible note placing completed
The purpose of the €9.2m convertible note financing in July was to complete the ABT011 study, including the preparation of the data package for filing with the German regulators, the extension of the ABT011 study through a second pollen season in 2020, building and qualification of manufacturing capacity and finalising the preclinical packages that would enable ASIT’s peanut allergy and house dust mite products to be out-licensed. To minimise the risk for investors, the convertible note offering has two tranches. The first was paid-up at issue and covers the cash requirements until the ABT011 study reports the primary endpoints (a statistically significant and at least 0.3 reduction in combined clinical symptoms and medication scores at the peak of the season, equalling a 20% treatment effect between active and placebo arms).
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Valuation: Updated for note financing
We have updated our valuation for the first tranche of the convertible note (received in July), the higher cash burn and spot exchange rates. All in all, our valuation remains unchanged at €119m or €6.4 per share. The Phase III study results in December will be the main share price catalyst for ASIT in 2019.
Business description
ASIT biotech is a clinical-stage company focused on the development of short-course therapies for allergies. ASIT’s products are based on the proprietary ASIT+ technology platform, allowing the development of products containing highly purified allergen fragments in an adjuvant-free formulation, selected to be safe while maintaining the capacity to stimulate immune tolerance.
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