Crossject

The tender with BARDA was successful.

Coming back on the news first, it was announced on Saturday that Crossject was successful in the call for tender launched by BARDA for Zeneo Midazolam.

As a reminder provided by management, BARDA (the Biomedical Advanced Research and Development Authority) provides an approach to the development of the necessary vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies. This US organisation has placed a US$60m order (to be delivered as soon as the FDA approval is obtained) with Crossject on Zeneo Midazolam, used in the treatment of epilepsy and against nerve agents, and will also financially support the late-stage development and regulatory activities to obtain FDA approval of Zeneo Midazolam 10mg and a new paediatric dose. BARDA also has the option to procure additional Zeneo Midazolam auto injectors from Crossject. In short, the news is excellent for the French group, and this is for several reasons: first, obviously, Crossject will be able to book its first turnover (the timing of the new order was not disclosed, but we understand it will have to be delivered in the short term once the FDA approval is obtained). Secondly, BARDA will support Crossject in the FDA filing process. Thirdly, this first success will be an accelerator in the FDA regulatory approval process and, incidentally, for the same procedures in Europe and elsewhere. Lastly, BARDA also has also placed an option for another order worth “up to US$59m”.

Concerning turnover, it is worth noting that we had anticipated the first sales in FY22 (€52m) which looks a bit optimistic but this is really not the issue in our view: the main achievement is here, with the first approval of Crossject’s device, which should enable the company to move forward. On top of a potential approval of Zeneo Midazolam by the FDA, we remind that a number of other specialities (Naloxone, Epinephrine, Terbutaline, Methotrexate…eight in total) are under development and should bring additional sales potential for the group. Again here, the first approval of the device will certainly help and accelerate the process for other specialities, paving the way for massive growth opportunities for Crossject.

The financial details of the order are not given (i.e. the price per unit ordered) and thus it is impossible to figure out what the margin could be for Crossject, but we guess that it should be significant in the context of the US market which is the market where the prices are by far the highest in the world. Again, what matters here is really that the first approval could be obtained with the perspective of the FDA approval in the short term, rather than the margin on this first order. We are, of course, convinced that the market will welcome this great news, which should definitely increase the group’s credibility and bodes well for the future development of the firm.

We will update our model after talking to management. However, we are comfortable with our price target, which takes it for granted that the Zeneo device will be approved in the US and Europe. The latest news confirms that the odds are increasing that the product will ultimately be a success, thus our target price leaves considerable upside.