KBC Securities:
1H15 update: keeping 100% control on capla
Ablynx announced in its 1H15 update that it will keep full control over caplacizumab in both the US and Europe. Financials were broadly in-line with forecasts, confirming the strong cash position. PT and rating reiterated.
Our View:
Ablynx’ 1H15 revenues were up 73% to € 38m, largely driven by non-cash upfront recognitions now that the ALX-61 phase 2b study is initiated and FTE payments. For the same reason, R&D expenses increased by 64% to € 40m, resulting in an OPEX of € 46m (+54% y/y). As flagged in our preview note, the company had to book a non-cash financial cost of € 9m due to the revaluation of its convertible bond. As such, despite the strong top-line increase the net results arrived at € 15m (1H14: € 6m). The net cash burn was € 35m (1H14 -€ 4m) as no major upfront or milestone cash payments were recorded in the first half. At the end of June, the cash was € 268m
In its business update, Ablynx announced its decision to keep full control over its anti-vWF product caplacizumab for TTP in all geographies, creating clarity that it will not partner in certain geographies. The product is currently undergoing stability testing and process validation to support the filing for conditional approval in Europe by early 2017. For the phase 3 study in the US, trial sites will open in 3Q15 with the goal to complete recruitment by YE17, allowing for BLA submission in the US in 2018.
Regarding the anti-RSV project, sites are opening in the Asia Pacific region where the RSV season is ongoing and the company detailed that the trial is expected to be completed in Europe when the RSV season starts later this year, explaining the guidance for phase 2 results in 1H16.
The phase 2b RA study with ALX-61 continues to be on track to deliver results in 2H16 and the first patients are being rolled-over into the open-label extension study. Later this year, the anti-IL17A/F nanobody in partnership with Merck-Serono is expected to be completed, which, if positive, we expect to trigger a milestone payment.
On a corporate level, Ablynx anticipate to increase its staff by 10% to 350 during 2015 to fulfil the requirements stipulated in the recently extended Merck immune-oncology deal, which can go up to 17 programmes. It was also disclosed that the chief operational officer dr Simonsen left the company.
There were no surprises in the outlook for the remainder of the year. Next to the capla and RSV timelines discussed above, the company expects to receive milestone payments from ongoing collaborations. The FY15 net cash burn of € 70-80m was reiterated.
Conclusion:
We welcome Ablynx’ decision to maintain full ownership (and value) over caplacizumab at this stage. The current cash position is sufficiently strong to support that business plan. Given the diversified and maturing portfolio and positive outlook, we believe Ablynx is trading below fair value. Buy reiterated. Conference call at 4PM.