Patience is a virtue… hopefully
Patience is a virtue… hopefullyEARNINGS/SALES RELEASES
The group took the market by surprise, issuing a press release on the progress made in its US strategy and a (very summarized) set of results for FY23. We mostly see negative points in this release and the hope of Zeneo reaching the US market through an EUA in FY24 have vanished… we will downgrade our numbers after the release of the FY23 detailed results, in particular by postponing the launch of the group’s NTEs.
FACT
Crossject issued a press release to detail its US strategy as well as to publish its (partial) annual accounts for FY23 (full report due on 24 April).
ANALYSIS
First and foremost, this release came as a surprise since, as already mentioned, the annual report is due on 24 April.
Second, the release is rather bad news for investors. Actually:
- The group now expects the EUA for Zepizure in the US no sooner than in Q125 (the last target communicated was FY23/Q124 and today’s news can only disappoint investors).
- The group has also indicated that it is able to finance its business plan until… September 2024. Note that it issued €7m in bonds in February (see our Latest dated 28 Feb 2024) and the release clearly underscores that there will be other financing in the short-erm, implying further dilution in our view.
- This will prevent the group from requesting the total or partial drawdown of the Second Tranche of the latest bond issuance (up to €5m) in the short-term (which could have been the case as of July otherwise) since the conditions will not be met soon (at best next year).
- To a lesser extent, the P&L still shows a fairly hefty loss (€-12.3m vs -13.3m a year ago at the operating level) and this despite the amount invoiced to the BARDA (€6.7m vs €1.8m). While this had been expected – i.e. more costs on the development side partly compensated by the BARDA – it remains that the P&L does not look much better than last year and implies that the group is still burning a significant amount of cash.
- We fail to understand why the full set of accounts has not been released (or why we have this very partial report), which hardly makes investors’ lives easier.
The group also expects to file in H125 for an NDA (New Drug Application) of Zepizure and is “working on activities related to its registration and pre-commercialization in the United States, since Crossject intends to retain U.S. commercial rights to Zepizure”. The group will “only” have to demonstrate the bioequivalence of Zepizure (as compared to other injectables). Fair enough. But this means that these products will certainly not be able to reach the market before FY26 at best. Now the key issue in the short-term remains financing and the market will probably be happy to wait to know more on this point before the momentum on the stock can improve and the short-term market reaction is very likely to be negative.
IMPACT
We will adjust our model after the release of the FY23 detailed results (24 April). The big difference will be the timing of product launches as well as the dilution (on which we will have to make a number of assumptions). These two elements can clearly only lead to a lower valuation, as we had already underscored after the announcement of the bond issue last February.
Crossject SA is a France-based company that designs and develops medical injection systems. The Company specializes in needle-free, pre-filled, single-use injection systems for intradermal, subcutaneous and intramuscular applications for pharmaceutical companies. Is also has a pipeline and three drugs in the preclinical or clinical phase of research. The Company's products, which are based on well-known injectable drugs (chemicals and biologics), are designed to enhance patients' safety, compliance and comfort. Crossject's first ZENEO SUPERGENERIC product is expected to reach the market in the year 2015. The Company has industrial partnerships with Hirtenberger and Recipharm.
AlphaValue Corporate Services capitalise on the research and credit analysis expertise deployed by AlphaValue with major institutional investors at European level over the past nine years. The proprietary tools and processes enabling AlphaValue Corporate Services to establish a valuation and/or a credit risk assessment are identical to those used by AlphaValue to the benefit of its institutional clients. The only difference is the recognition that a company evaluation cannot be dissociated from the fact that the latter is paying for the service (AlphaValue Corporate Services), as opposed to the investor footing the bill (AlphaValue). AlphaValue’s research tools are characterised by the transparency of the valuation methodologies, their responsiveness to market data and by nine years’ experience of a universe numbering more than 450 European companies. Through its coverage and sector exhaustiveness, AlphaValue ranks alongside the major research houses in Europe and constitutes the only new entrant to the European space in the past decade. This significant presence is reflected in an unrivalled distribution capability via platforms commonly adopted by investors to access research: Factset, Bloomberg, Capital IQ and the numerous websites. AlphaValue is one the largest research contributors to these platforms, to the benefit of AlphaValue Corporate Services issuer clients. The AlphaValue Corporate Services analysts are AlphaValue’s sector specialists. Their robust knowledge of the business models in their sectors enables the rapid generation of incisive, relevant research and advantageous interaction with the management teams.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.