First Berlin – PAION AG Research Update (10/04/2018)

First Berlin Equity Research has published a research update on PAION AG (ISIN: DE000A0B65S3). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 4.40 to EUR 4.30.

Abstract
Highlights of 2017 were the completion of the programme of phase III trials with remimazolam in the U.S. and the conclusion of a license agreement with Mundipharma for the development and commercialisation of remimazolam in Japan. U.S. partner Cosmo's guidance on the timing of filing for regulatory approval of remimazolam in procedural sedation in the U.S. is now Q4/18-Q1/19 (previously: H2/18). Meanwhile Mundipharma expects filing in general anesthesia in 2018 (previously: mid-2018). Our previous forecast assumed filing milestones in both the U.S. and Japan and first revenues in Japan in 2018. In line with guidance, we now assume only the Japanese filing milestone in 2018 and have pushed back first Japanese revenues and the US filing milestone into 2019. We expect the end 2017 cash position of €24.8m together with tax credits from the British tax authorities and milestones from regulatory approval in the U.S. and Japan to cover planned activity until H2/19. This includes filing in the U.S. and Japan as well as the EU phase III study of remimazolam in the indication general anesthesia. However, filing for approval in the EU in this indication is expected to require an additional €15m which will be only partially covered by potential further milestone payments. We have inserted a further €5m capital raise into our model in 2019. These adjustments cause us to lower our price target to €4.30 (previously: €4.40). We maintain our Buy recommendation.