GOETZPARTNERS SECURITIES LIMITED Marinomed Biotech AG (MARI-AT): 2019E off to a good start. All eyes on Budesolv.

Transparency directive : regulatory news

07/05/2019 08:48

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

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

T +44 (0) 203 859 7725 | brigitte.delima@goetzpartners.com / healthcareresearch@goetzpartners.com

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