style="letter-spacing:-0.2pt;">Funds for new clinical trials and more sales to KOL

Angle 27 May 2016 Update

Angle

Funds for new clinical trials and more sales to KOL

Private placing

Pharma & biotech

 

27 May 2016

Price

65.5p

Market cap

£39m

Net cash (£m) at 31 October 2015

5.8

Shares in issue

(74.79m post issue, from 31 May)

59.0m

Free float

89.%

Code

AGL

Primary exchange

AIM

Secondary exchange

OTC QX

Share price performance

%

1m

3m

12m

Abs

(4.4)

15.4

(33.5)

Rel (local)

(4.4)

12.0

(27.1)

52-week high/low

96.0p

55.0p

Business description

Angle is a pure-play specialist diagnostics company. The proprietary Parsortix cell separation platform can be used for detecting and harvesting very rare cells from a blood sample, including circulating tumour cells (CTCs). The resulting liquid biopsy enables the analysis of these cells for precision cancer care.

Next events

Results from KOL studies in other cancer indications

H216

Start of enrolment for ovarian cancer clinical trial

H116

FY16 results

July 2016

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Lala Gregorek

+44 (0)20 3681 2527

Angle is a research client of Edison Investment Research Limited

Angle has raised £9.6m (net) via a private placing. This supports Angle’s focus on commercialising Parsortix, with the funds being applied to a range of clinical studies to demonstrate utility of the Parsortix system. Additionally, Angle announced that Cancer Research UK Manchester Institute is adopting Parsortix for routine research use, which will provide recurring sales. FY16 results in July will provide a trading update and more details on the R&D expansion strategy, likely to be scaled up with the benefit of the fund raising.

Year end

Revenue (£m)

PBT* (£m)

EPS* (p)

DPS (p)

P/E (x)

Yield (%)

04/14

0.0

(2.0)

(2.4)

0.0

N/A

N/A

04/15

0.0

(3.6)

(7.5)

0.0

N/A

N/A

04/16e

0.3

(5.2)

(8.5)

0.0

N/A

N/A

04/17e

2.2

(3.2)

(5.1)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

New funds add safety margin to reach profitability

Angle has raised a net £9.6m by issuing 15.8m new shares at 64.5p. The fact the shares were priced with no discount shows a strong demand, in our view. The new shares trade from 31 May and the post-raise cash position will be c 13.1m. In addition to existing investors who backed the issue, the placing also brought in three new major shareholders, which indicates growing interest from institutional investors. Our existing forecast had assumed reaching net profitability in 2019 and a funding need of £1.3m. The new funds provide not only a comfortable financing margin, but also give scope to scale up the operations. Management states that the funds will be used to advance planned indications (additional ovarian cancer study in the US), and to initiate clinical studies in new indications that recently received positive KOL evaluations: prostate cancer and metastatic breast cancer. Angle will also ramp up efforts in research use sales before the data from clinical trials start driving clinical sales (we expect in 2019).

Update on trading hints decent progress with sales

Angle’s near term commercial opportunity lies in research use sales with the first orders announced in December 2015. On 25 May, management indicated that the sales pipeline is progressing to plan. When FY16 results are released in July, we expect to see some £340k in first commercial revenues from Parsortix. Angle also announced that the Clinical and Experimental Pharmacology group at Cancer Research UK (CRUK) Manchester Institute will adopt Parsortix in routine use in clinical trials and research. Currently it is being used in 10 clinical trials with an additional four planned. Notably, CRUK is running around 620 clinical trials, so there is significant potential for Parsortix to be used in more studies. This is the first KOL that will adopt Parsortix for routine use and will generate recurring revenues for Angle.

Valuation: Strong balance sheet boosts prospects

We will review our forecasts and valuation after the FY16 results in July. We see the private placement as a first step towards initiating clinical trials with new indications, giving scope for future valuation uplift (albeit diluted by the new shares for now).

Exhibit 1: Financial summary

£'000s

2013

2014

2015

2016e

2017e

Year end April

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

969

0

0

341

2,186

Cost of Sales

0

0

0

(102)

(648)

Gross Profit

969

0

0

238

1,537

Research and development

(300)

(900)

(1,600)

(3,080)

(2,458)

EBITDA

 

 

(674)

(1,994)

(3,452)

(5,093)

(3,059)

Operating Profit (before amort. and except.)

(693)

(2,051)

(3,563)

(5,256)

(3,254)

Intangible Amortisation

(308)

(99)

(204)

(358)

(378)

Share-based payments

(71)

(61)

(111)

(348)

(480)

Other

0

0

0

0

0

Operating Profit

(1,072)

(2,211)

(3,878)

(5,963)

(4,112)

Net Interest

42

13

9

33

15

Profit Before Tax (norm)

 

 

(652)

(2,038)

(3,554)

(5,223)

(3,239)

Profit Before Tax (FRS 3)

 

 

(1,031)

(2,198)

(3,869)

(5,929)

(4,097)

Tax

0

0

0

200

200

Discontinued operations

960

(18)

Net Income (norm)

(652)

(1,078)

(3,572)

(5,023)

(3,039)

Net Income (FRS 3)

(1,031)

(1,238)

(3,887)

(5,729)

(3,897)

Average Number of Shares Outstanding (m)

40.6

45.1

47.6

59.1

59.3

EPS - normalised (p)

 

 

(1.61)

(2.39)

(7.50)

(8.50)

(5.12)

EPS - normalised and fully diluted (p)

 

(1.61)

(2.39)

(7.50)

(8.50)

(5.12)

EPS - (IFRS) (p)

 

 

(2.54)

(2.74)

(8.16)

(9.69)

(6.57)

Dividend per share (p)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

n/a

n/a

n/a

70.0

70.3

EBITDA Margin (%)

n/a

n/a

n/a

n/a

n/a

Operating Margin (before GW and except.) (%)

n/a

n/a

n/a

n/a

n/a

BALANCE SHEET

Fixed Assets

 

 

3,579

1,882

1,572

1,270

940

Intangible Assets

1,080

1,142

1,149

899

610

Tangible Assets

138

139

423

372

330

Investments

2,361

601

0

0

0

Current Assets

 

 

3,812

4,278

9,648

4,574

1,806

Stocks

62

52

197

196

250

Debtors

454

328

1,008

486

599

Cash

1,828

3,898

8,443

3,892

957

Other

1,468

0

0

0

0

Current Liabilities

 

 

(604)

(645)

(1,131)

(934)

(1,252)

Creditors

(604)

(645)

(1,131)

(934)

(1,252)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

0

0

0

0

0

Long term borrowings

0

0

0

0

0

Other long term liabilities

0

0

0

0

0

Net Assets

 

 

6,787

5,515

10,089

4,911

1,494

CASH FLOW

Operating Cash Flow

 

 

(1,351)

(1,899)

(3,413)

(4,533)

(2,908)

Net Interest

110

(4)

5

33

15

Tax

0

0

0

150

200

Capex

(139)

(83)

(325)

(112)

(153)

Acquisitions/disposals

154

4,326

126

0

0

Financing

2,065

(270)

8,152

0

0

Dividends

0

0

0

0

0

Net Cash Flow

839

2,070

4,545

(4,462)

(2,846)

Opening net debt/(cash)

 

 

(989)

(1,828)

(3,898)

(8,443)

(3,892)

HP finance leases initiated

0

0

0

0

0

Other

0

0

0

(89)

(89)

Closing net debt/(cash)

 

 

(1,828)

(3,898)

(8,443)

(3,892)

(957)

Source: Angle accounts, Edison Investment Research. Historic reported revenues relate to the legacy business, which has now been divested. FY14 has been restated to exclude discontinued operations. Note: financials will be updated in due course to reflect the private placement and the investment in the clinical studies and developing research use sales.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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