H1 18: insignificant; some more time needed to reach the market

Crossject released its H1 18 results. Revenues reached €2,840k (vs €1,635k), operating result €-5,337k (vs €-4,256k), and the net result €-4,744k (vs €-3,360k). Net cash at the end of H1 18 was €796k vs €6,096k a year ago and €2,500k at the end of FY17, to which should be added €5.6m cashed in July (subsidies, tax credit and the last convertible bond issued).

As always, the results are not very important as such since no product has reached the market yet, except for the cash-burn which has reached €5.2m (in fact €2m if the tax credit and subsidies had been cashed in before July), which seems reasonable. Altogether €5.6m was cashed in in July while the company still has to cash in some €2.5m in incentives and €1-1.5m in tax credits before 2019.

On the operating front, the bad news comes from the mould of a Zeneo component which was damaged during summer. It is being fixed with the manufacturer, but is not yet up and running (still being tested). As a result, the registration filings of Crossject’s NTEs will be postponed by about a year (i.e. 2020 vs 2019 for most products and 2021 vs 2020 for Methotrexate).

Also, a potential competitor of Zeneo Midazolam (Seizalam – Epipen – of Meridian Medical Technologies which could/should get exclusivity for this indication) has been granted approval in the US (orphan status for epilepsy), which should have an impact on the current negotiations concerning this NTE in this region.

Of course, the market reaction is likely to be a bit tough since this is not the first time the group has had to announce delays in its plans, while upfront fees on Midazolam could come later.

As a result, the “qualitative” pieces of news surrounding the release of H1 18 results (rather than numbers as such) are rather disappointing since they clearly mean additional delays, more time for competition to step in (as is the case for Midazolam at least in one indication) and increases the perceived risk of the whole investment case.

We will adjust our numbers on the back of the release, which will mainly be impacted by the delay (1 year) in the registration process.

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