Yondelis: Approaching Japan and US filings in STS :Filings in STS (soft tissue sarcoma) in Japan (end-2014) and in the US (mid-2015) could lead to approvals in 2015/16, significantly boosting revenue through royalties and near-term milestones. Japan approval would trigger a Taiho milestone, with up to $20m potentially due from Janssen for the US.
Clinical data due for PM01183 and Aplidin :
Read out of ADMYRE (Aplidin multiple myeloma Phase III) in 2015 could facilitate EMA filing within a year. Updates from ongoing PM01183 trials (eg Phase II BRCA data at the San Antonio Breast Cancer Symposium, 9-13 Dec) could catalyse an ex-European deal. Partnership prior to Phase III-start would accelerate profitability, although PharmaMar has the resources to fund some of the pivotal trials internally.
Financials: Revenues increasing; net debt falling :
9M14 net sales increased 7% to €116.9m with growth in both biopharma and consumer chemical. Net Yondelis sales were €57.4m, up 8% on the prior period; this excludes milestones ($25m received from Janssen in 2014). Growing revenues coupled with stable opex (ex-R&D) will drive bottom-line growth; we forecast EBITDA improvement to €27.8m in FY14. Increased operating cash flow should further reduce net debt (9M14: €58.0m; FY14e: €55.9m).
Valuation: €930m SOTP, PM01183 prospects ignored :
Our €930m (€4.19/share) valuation is based on a sum-of-the-parts DCF to 2025 (rNPV for the biopharma business; DCF for the chemicals division). It suggests the current market cap is largely supported by Yondelis, with limited value ascribed to earlier-stage assets, such as PM01183, which could drive significant value as part of a life cycle management strategy. Japan/US approval decisions for Yondelis in STS represent near-term upside as would Aplidin data or a PM01183 partnership.
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