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Bloomberg   ALCJ FP
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Things get going
Upside 489%
Price (€) 1.9
Market Cap (€M) 69.4
Money Making

Rather conservative assumptions
Our assumptions are based on the launches of the seven current NTEs the group is developing, only one of which (Methotrexate) has already successfully completed clinical studies. For the remaining specialities, clinical studies will be carried out in FY23-24. Thereafter, regulatory approvals can be obtained with commercial launches expected in FY25-26; We have based our estimates on the following assumptions: first, products will be sold through partnership agreements. This means Crossject will benefit from upfront fees and royalties, the former financing part of the clinical studies. Altogether, this boils down to considering that Crossject’s turnover is a fraction (40%) of the final user’s purchasing price, the difference representing the distributor/wholesaler’s margin to account for logistics and marketing costs. We have also considered a risk factor: 50% for all NTEs, except for Midazolam, Epinephrine and Hydrocortisone (70%, i.e. a 30% risk of failure). This seems to be reasonable and quite conservative, given the fact that the registration/filing process is much lighter and, in all odds, much quicker than for a new compound (which typically takes 10 years from early development stages to the market). In the case of NTEs, the time needed is closer to three years, depending on which product/geography is involved and should never exceed five years in our view. The efficacy of molecules has already been proven (as is the lack of safety). The application for NTEs should only require bioequivalence studies (and not the full scope of clinical surveys), reducing costs (€3-4m vs €200m for a new chemical entity, i.e. a new drug) and, just as important, the time needed before products reach the market. In brief, the filing (FDA and EMA) will then only focus on the product’s reliability (technical file) and the bioequivalence results.
Our forecasts are not that aggressive
As a result, our estimates are based on the group’s assumptions in terms of number of units sold (i.e. Zeneo devices) and their ramp-up from commercial launch to maturity, for each sub-market (i.e. each NTE), with a probability that is the risk factor assessing both potential issues in the approval process and the risk not being able to find a suitable partner. Although it is not easy to determine so early on the market share Crossject could gain in each sub-market, the group has reasonable targets (10-20% except for Hydrocortisone where it claims to be able to control 30% of this small market). To be on the conservative side, we have also considered that these market share targets will not be reached before 2030 that is some five years after market launch depending on the NTE.
As an example, we have assumed Adrenaline will be launched in 2025, but we have also considered a 70% probability, and that Crossject will sell 2.5m doses a year by 2029 for an in-market price of €40 in Europe and US$200 in the US. This results in a theoretical €92m turnover by 2028 (at end-user price), or €64m given the 70% probability we assign to this NTE (even if, from an accounting standpoint, Crossject will get only a share of it (45%) and the “full” turnover (volumes at in-market price) will be booked on its partner’s books.
Lastly, the company will be quite heavily dependent on the US$, first because volumes will be significant in the US and, second, since prices are also much higher there (sometimes as much as 5-6 times the price in the EU). The impact will be both translation-wise (pure US$/€ parity) and transaction-wise (costs are mainly in €).

Change 23E/22 Change 24E/23E
  12/22A 12/23E 12/24E 12/25E €M of % total €M of % total
Total 0.00 0.00 46.0 92.9 0 NA 46 100%
Royalty income
Product sales 0.00 0.00 46.0 92.9 0 NA 46 100%
0.00% 78.0% 100%  
Changes to Story : 25/07/2023, Changes to Forecasts : 25/07/2023.