The group took the market by surprise, issuing a press release on the progress made in its US strategy and a (very summarized) set of results for FY23. We mostly see negative points in this release and the hope of Zeneo reaching the US market through an EUA in FY24 have vanished… we will downgrade our numbers after the release of the FY23 detailed results, in particular by postponing the launch of the group’s NTEs.
Crossject issued a press release to detail its US strategy as well as to publish its (partial) annual accounts for FY23 (full report due on 24 April).
First and foremost, this release came as a surprise since, as already mentioned, the annual report is due on 24 April.
Second, the release is rather bad news for investors. Actually:
- The group now expects the EUA for Zepizure in the US no sooner than in Q125 (the last target communicated was FY23/Q124 and today’s news can only disappoint investors).
- The group has also indicated that it is able to finance its business plan until… September 2024. Note that it issued €7m in bonds in February (see our Latest dated 28 Feb 2024) and the release clearly underscores that there will be other financing in the short-erm, implying further dilution in our view.
- This will prevent the group from requesting the total or partial drawdown of the Second Tranche of the latest bond issuance (up to €5m) in the short-term (which could have been the case as of July otherwise) since the conditions will not be met soon (at best next year).
- To a lesser extent, the P&L still shows a fairly hefty loss (€-12.3m vs -13.3m a year ago at the operating level) and this despite the amount invoiced to the BARDA (€6.7m vs €1.8m). While this had been expected – i.e. more costs on the development side partly compensated by the BARDA – it remains that the P&L does not look much better than last year and implies that the group is still burning a significant amount of cash.
- We fail to understand why the full set of accounts has not been released (or why we have this very partial report), which hardly makes investors’ lives easier.
The group also expects to file in H125 for an NDA (New Drug Application) of Zepizure and is “working on activities related to its registration and pre-commercialization in the United States, since Crossject intends to retain U.S. commercial rights to Zepizure”. The group will “only” have to demonstrate the bioequivalence of Zepizure (as compared to other injectables). Fair enough. But this means that these products will certainly not be able to reach the market before FY26 at best. Now the key issue in the short-term remains financing and the market will probably be happy to wait to know more on this point before the momentum on the stock can improve and the short-term market reaction is very likely to be negative.
We will adjust our model after the release of the FY23 detailed results (24 April). The big difference will be the timing of product launches as well as the dilution (on which we will have to make a number of assumptions). These two elements can clearly only lead to a lower valuation, as we had already underscored after the announcement of the bond issue last February.
