Epigenomics (ECX-DE): Liver boost - less dependency on epiColon

World News: . []

goetzpartners securities Limited

10-Aug-2018 / 11:08 GMT/BST


Free to access research and investor meetings in a post-MiFID2 world.

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.

 

Epigenomics (ECX-DE): Liver boost - less dependency on epiColon
Recommendation: OUTPERFORM
Target Price: EUR6.82
Current Price: EUR2.36 (cob on 9th August 2018)

KEY TAKEAWAY

The financial results were slightly better than we expected with disciplined cost management in R&D and SG&A. The main value of Epigenomics lies within the health economic value of its two main tests. We feel that investors are under appreciating the significant value to healthcare systems world-wide. The reimbursement is hinging on robust data and the demonstration of real cost savings. While the concept of avoiding metastatic liver and colon cancer by testing is clear, we believe. Thus, current trading levels represent an attractive value proposition over a two to three-year period.

Results and Guidance - Epigenomics has maintained its guidance for the full year with revenues to come in between EUR2.0m and EUR4m. Management expects EBITDA before share-based payment expenses to be in a range EUR-11.5m and EUR-14.0m in 2018

Pricing of the test - Price increase in the US remains a positive - CMS published preliminary rate for Epi proColon screening test. The proposed reimbursement rate is $192 per Epi proColon test. Based on the proposed preliminary rate, CMS will determine the final rate. The publication of the final rate is expected in November 2018 - As a reminder, on 22nd September 2017 the US CMS published their decision on test code and reimbursement price for Epi proColon, which was cross walked to a different test code. The newly determined payments rates according to PAMA see the price increasing to $124 (from $83), a 50% upside.

Liver - the new kid on the block - We are excited by the company's new liver test. we see a double benefit coming from this test. Firstly, the most obvious upside on population health by catching a significant number of cancer risk patients early. Secondly, we believe that reimbursement could be supported by a significant decrease of redundant MRI/CT scan following an inaccurate ultrasound ('US') test, which leads to many false positives. The significant higher specificity and sensitivity of US combined with EpiLiver will reduce diagnostic tests for liver cancer significantly. We have seen plenty of examples in Europe, where new test has arrived to national guidelines after showing cost benefits on the diagnostics level.

Commercialisation of EpiLiver - Epigenomics, will aim to obtain the CE mark for its liver cancer detection by year-end 2018 for detecting liver cancer of cirrhosis patients. There will be a prospective clinical trial in the U.S. commencing in early 2019 to support its submission to the FDA. Epigenomics is evaluating a go to market strategy in China. The liver cirrhosis cancer testing market could yield up to ten million tests per annum. This would result in a multibillion market potential.

Decreased dependency on epiColon - The test still needs to progress through the US national coverage determination following inclusion into medical guidelines. Epi proColon is the first blood-based biomarker test approved by the US FDA for CRC screening. It improves on convenience, acceptance, is less embarrassing and avoids the need for multiple tests. Epi proColon is in the process of being incorporated into US medical guidelines and now the price for reimbursement is set.

Valuation - ECX share price became undemanding, in our view. Guidance was maintained and diversification if its tests is the right strategy. However, the variables of national coverage determination and medical guideline incorporation still need to be met. The commercial potential of Epi proColon and proLiver is highly attractive. Despite the near-term revenue visibility is not clear over the next 12 months, we believe that the value of such a test for a third party is significantly above the current trading price. Although, shares will come under pressure if there is a negative reimbursement decision, the potential takeout scenario provides a valuation floor and future upside to today's trading levels. We maintain and reiterate both our OUTPERFORM recommendation and DCF-derived target price of EUR6.82.

Kind regards,

Martin Brunninger | 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 | healthcareresearch@goetzpartners.com / martin.brunninger@goetzpartners.com

www.goetzpartnerssecurities.com

Registered in England No. 04684144.

Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.


Click here to see our privacy policy.


GPSL has a formal client relationship with Epigenomics AG.

GPSL publishes and distributes 'Investment' Research and 'Corporate Sponsored' Research. Our Corporate Sponsored Research and investor meetings (e.g. NDRs, 1 to 1 meetings) are free to access and attend and is not classified as an inducement in a post-MiFID2 world, this is because the issuer is paying GPSL. GPSL does not offer any execution or market making services. This is a marketing communication as defined by the Financial Conduct Authority ('FCA'). The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).

In accordance with the General Data Protection Regulation ('GDPR') - if you would like to be removed / unsubscribed from our CRM (also please note that you are free to contact GPSL at any time in the future to have your e-mail subscription amended), please e-mail:
researchproduction@goetzpartners.com

About GPSL: goetzpartners securities Limited is a member of the goetzpartners group, and a leading pan European investment bank and research company. We bring together a wide range of expertise, insights and innovations to advance the interests of our clients around the world. The fast-changing environment brings challenges for businesses and investors. Research innovation, digital transformation and disruptive business ideas reshuffle the corporate world at a relentless pace. Our sector knowledge and our global footprint bring together corporate intelligence and a deep understanding of the industry with a wide network of top decision makers. These collective insights help our clients to stay at the leading edge of change.

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.

This e-mail (including any attachments) from goetzpartners securities Limited ('GPSL') is confidential and may contain information which is proprietary, privileged or otherwise legally protected against unauthorised use or disclosure. If you receive this e-mail in error or are not the intended recipient of this e-mail, please delete and destroy all copies in your possession, notify the sender that you have received this e-mail, and note that any review or dissemination of, or the taking of any action in reliance on this e-mail is expressly prohibited. GPSL shall not be liable for the improper or incomplete transmission of the information contained in this e-mail nor for any delay in its receipt or damage to your system. GPSL does not guarantee that the integrity of this e-mail has been maintained nor that this e-mail is free of viruses, interceptions or interference and makes no warranties in relation to these matters. This is not an offer or a solicitation to buy or sell securities or investment products, or an official confirmation. GPSL record electronic and phone communications in accordance with FCA and MiFID2 regulations, they will be monitored for regulatory and training purposes. GPSL is authorised and regulated by the Financial Conduct Authority of the United Kingdom (Firm Reference Number: 225563).

Click on the following link for the GPSL MiFID2 Investor Guidance Notice

GPSL Equity Research publications are available on the following aggregators and via news distribution circuits (For Institutional Use Only): AlphaSense, Bloomberg (GOET), Capital IQ, EQS, FACTSET, Research Tree, RNS Reach and Thomson Reuters.

If you cannot click on the above hyperlink please copy the below link and paste it into your browser for the full pdf version of the equity research report:

https://gp.bluematrix.com/sellside/EmailDocViewer?encrypt=9fe51056-9ce3-4f13-a325-e859463c21eb&mime=pdf&co=gp&id=paul.dunne@goetzpartners.com&source=libraryView

 

Free to access research and investor meetings in a post-MiFID2 world.

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.

 



Dissemination of a CORPORATE NEWS, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


End of Announcement - EQS News Service

show this

Read More: http://www.dgap.de/dgap/News/?eqsNewsID=1713849

Published: .

Search for other references to "epigenomics" on SPi News


Share

Previous StoryNext Story

SPi News is published by Sector Publishing Intelligence Ltd.
© Sector Publishing Intelligence Ltd 2018. [Admin Only]
 
Sector Publishing Intelligence Ltd.
Agriculture House, Acland Road, DORCHESTER, Dorset DT1 1EF United Kingdom
Registered in England and Wales number 0751938.
 
Privacy Policy | Terms and Conditions | Contact Us