Original-Research

Verona Pharma plc (von GBC AG): BUY

Original-Research: Verona Pharma plc - von GBC AG

Einstufung von GBC AG zu Verona Pharma plc

Unternehmen: Verona Pharma plc

ISIN: GB00B06GSH43

Anlass der Studie: Research Report (Anno)

Empfehlung: BUY

Kursziel: 0,15 EUR

Kursziel auf Sicht von: End FY 2016

Letzte Ratingänderung:

Analyst: Cosmin Filker; Felix Gode, CFA

In the extraordinary general meeting on 22/07/2016, Verona Pharma plc plans

to receive approval for the so far largest capital increase in the

company's history. Firm subscription commitments for the planned gross

issuing proceeds of GBP 44.70m have already been given by existing

shareholders and other well-known biotech investors. Furthermore, Verona

plans a listing at the NASDAQ (US IPO) and in this context Verona also aims

for an additional capital increase in the coming quarters. The largest

portion of the raised capital should be used for the further clinical

development of RPL554.

The company focuses on the development of pharmaceuticals to treat

respiratory diseases (COPD, cystic fibrosis, and asthma) and currently

Verona Pharma plc's lead product RPL554 is in the clinical development

phase. The clinical approval for the treatment of COPD (chronic obstructive

pulmonary disease), which has signifi-cant unmet medical needs and large

market volume, is most advanced.

The focus in the last fiscal year 2015 was on the acceleration of the

development and the expansion of clinical trials for RPL554. In three

clinical trials new data was gathered and different areas of application

were examined. In May 2016, Verona published promising results of the first

clinical phase IIa trial (COPD in combination with standard treatment).

Both the primary objective (bronchodilator effect) as well as the secondary

objective (reduction of trapped air in the lung) were met with high

significance.

We expect, based on the marketing time plan, the first sales from the

fiscal year 2020 on. Our estimations focus on the marketing of RPL554 to

hospitals and specialists, primarily in the area of COPD. Resulting from

the big population of patients, Verona should quickly reach sales of about

EUR 200m (fiscal year 2023). The estimations are very conservative, because

we initially expect a self-marketing approach and therefore only a small

market share. Also, the company has an extremely scalable business model.

Hence, we expect a high and sustainable EBIT-margin of 78,3 %. The

currently announced capital increase should ensure enough liquidity for the

coming years.

Based on our DCF-valuation model, we determine a fair value (post money)

for the company of GBP 308.36m or EUR 0.15 (GBP 0.12) per share. Therefore,

we significantly increased our previous fair value of GBP 114.30m (research

study from the 22/02/2016). The increase results from the considerable

reduction of risk if the capital increase is successful. Hence, the

financing of the clinical development of the product RPL554 is virtually

secured. The valuation is post money and assumes a successful capital

increase. The target price is subjected to a valuation discount of 77.2 %.

The valuation discount stems from a risk meta-analysis of pharmaceuticals

in phase IIa, which shows that 77,2% of all products in that phase do not

reach market approval. This means that if more progress in the clinical

trials is made, the discount is reduced and the target price increases.

Based on the current share price of GBP 0.03 we give a BUY rating.

Die vollständige Analyse können Sie hier downloaden:

http://www.more-ir.de/d/13991.pdf

Kontakt für Rückfragen

Jörg Grunwald

Vorstand

GBC AG

Halderstraße 27

86150 Augsburg

0821 / 241133 0

[e-mail]

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Offenlegung möglicher Interessenskonflikte nach §34b Abs. 1 WpHG und FinAnV Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,6a,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:

http://www.gbc-ag.de/de/Offenlegung.htm

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-------------------übermittelt durch die EQS Group AG.-------------------

Für den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw.

Ersteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung

oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.

Rating: BUY
Analyst: GBC
Kursziel: 0,15 Euro