Crossject released its FY17 results. Revenues came in at €4.14m vs €1.43m, operating result €-8,621k (vs €-7,291k), and net result €-7,611k (vs €-6,663k). Net cash at the end of FY17 amounted to €2.8m (vs €2.6m the year before).

As usual, we recall that numbers are of little relevance since the story of Crossject is based on the future launch of Zeneo combined with the NTEs the group is targeting. Still, the result is quite significantly below our estimates, due to the fact FY17 was a restructuring year, where the PARC line (tubes “Prêts A Remplir” ready-to-fill tubes) was put in place and is now up and running, as well as the line producing gas generators. Around 20,000 tubes have thus been supplied to Cenexi in H2 17 and another 20,000 should be delivered before the end of the month.

The planning of market approval filings in Europe and the US were also confirmed (FY19 for Zeneo® Sumatriptan, Zeneo® Midazolam, Zeneo® Adrenaline, Zeneo® Hydrocortisone, Zeneo® Naloxone, FY20 for Zeneo® Methotrexate and Zeneo® Terbutaline). It is worth noting that a survey (“Intuitive”) carried out with 134 patients showed that 93% successfully handled the product, 97% said that Zeneo is easy to use and a massive 99% would ask their doctor to prescribe Zeneo instead of another injection device, comforting our view on the product as such.

Revenues have mainly increased with the start of the industrialisation process, while the sharp rise in external charges illustrate the build-up of inventory (€7.4m vs €4.5m) as well as external consulting services or the interim workforce. Staff costs have also significantly risen (c.+€0.7m) with the number of employees climbing from 39 to 58 (production, quality control…). Lastly, the increase in depreciation (+€0.5m) is due to the rise in capitalised R&D expenses (depreciated over five years) that have regularly been rising, leading to a total €-7.6m net result (vs €-6.6m) after a €1.1m tax income.

As far as the cash flow is concerned (the main metric both in absolute terms and since the company is still not selling its products), the net cash outflow was exactly covered by the capital increase and the equity line (€7.4m) and further advances (€3.4m) leading to an almost unchanged cash position (€2.6m). On the funding side, the company has issued €5.3m in convertible bonds at the beginning of FY18 (see our comment dated 14 February).

As for FY18, we see no big issues since €8m of financing is already secured (€5.3m from the convertible bond issued, €1.4m from PIAVE and €1.3m in tax credit), despite the fact the company will have to finance (in FY18 and FY19) the studies aimed at obtaining the regulatory approvals of its eight NTEs currently in the pipe (see above).

Moreover, upfront fees and/or the conversion of options could provide extra-financing, which may also benefit from additional incentives. With the industrialisation process now well on track, the group will be able to focus on its main tasks: getting regulatory approvals while negotiating distribution/royalty agreements with US/European partners, with a view to reach the market as soon as approvals are granted.

The numbers are not relevant as such. Much more interesting for investors is the fact that Crossject products are slowly getting closer to the market. After years of development, this is the key trigger the market has been expecting.

There is still some way to go, but the outcome now seems within reach, meaning that patient investors should ultimately “get their reward”. We will update our numbers, not based on the FY17 results but on a review of our assumptions as well as integrating the most recent NTE in the pipe (“Terbutaline”).

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