Charting a course into clearer waters
Zeltia, (ZEL) has made significant progress in weathering the storms of recent years. FY13 results demonstrate improved profitability and cash flows, which have further reduced the debt burden. Ex-US ex-Japan Yondelis sales have resumed their growth trajectory (net revenues up 10% to €73m) following the resolution of Doxil supply issues in May. Looking forward, clinical data in H214 for Zeltia’s two key products could be transformative. Janssen’s 2015 FDA filing of Yondelis rests on positive Phase III sarcoma results, while Taiho could file in Japan by year-end on the back of its pivotal Phase II study. Full data from the Phase II PM01183 study in ovarian cancer could form the basis of a lucrative licensing deal.
Yondelis: Expecting key data by year-end
Janssen’s 586-pt US Phase III study in L-sarcoma completed recruitment in December and is expected to render results in H214. Positive data would support an FDA filing in 2015 and trigger payment of $20m of milestones to Zeltia ($10m development; $10m on approval). Pivotal data from the Taiho soft tissue sarcoma (STS) study should support Japanese filing in H214 (milestone due on approval).
PM01183: A promising second-generation compound
Top-line Phase II platinum resistant/refractory ovarian cancer (OC) data from the open-label comparator study showed median progression-free survival for the total population of 4.8 mths for PM01183 vs 1.7 mths for topotecan (p=0.0004). 30.3% of pts had an objective response (OR) to PM01183 vs none on topotecan; clinical benefit (OR + stable disease) was 82% for PM01183 vs 50% for topotecan. Overall survival data will be available this year (potentially at a major cancer congress) and could secure a partnership. Three pivotal Phase III OC trials should start H214-H115.
Financials: Biopharma back on course
The European Doxil shortage (Q311-Q213) weighed on FY12 results. Revenue growth in FY13 (3% to €142m) was driven by the 9% improvement in biopharma sales to €79m. EBITDA increased 16.6% to €23.8m; EBITDA margin benefited from the greater contribution of the higher-margin biopharma segment and ongoing cost controls. Net profit rose 72% to €11.3m, which coupled with positive operating cash flow of €16.1m contributed to a c 20% decline in total debt (net debt: €64.6m).
Valuation: Catalysts to drive upside
Zeltia’s share price has doubled in the past 12-months; however, potential upside remains from near-term clinical/regulatory catalysts, and the prospect of licensing.
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