First Berlin Equity Research has published a research update on Cyxone AB (ISIN: SE0007815428). Analyst Christian Orquera reiterated his BUY rating and decreased the price target from SEK 16.00 to SEK 4.20.

Headline results from Rabeximod’s randomised, double-blinded and placebo-controlled phase II trial of 92 COVID-19 patients were disappointing. The study missed the primary efficacy endpoint of demonstrating statistically significant superiority at day 28 with any of two doses of Rabeximod (15mg and 30mg) plus standard of care against standard of care treatment. Standard of care worked very well on the patients and almost all of them were alive and free of respiratory failure at day 28 in all three treatment arms (Rabeximod 30mg: 100% of patients; Rabeximod 15mg: 97%; Standard of care: 97%). Rabeximod was safe and well tolerated which is good news for the upcoming phase IIb study in rheumatoid arthritis (RA). Further analysis of secondary endpoints showed that Rabeximod produced a faster recovery trend against standard of care but without statistical significance. Due to these inconclusive results, and the recent emergence of new vaccination/therapeutic options, the company will not pursue any further development of Rabeximod in COVID-19. Company’s limited financial resources led management to decide to focus on its core RA indication, putting the second R&D drug candidate, T20K for multiple sclerosis (MS), on hold until capital market conditions improve. The company is now intensifying preparation efforts for the RA trial, projected to start in H2 2022 (previously: early 2022). Following the setback in Rabeximod’s COVID-19 phase II study, we have discarded all projected cashflows corresponding to this indication from our forecasts and valuation model. We have also pushed back our assumption for a potential market launch of T20K by one year and incorporated the dilution caused by the recent SEK 66.9M capital increase into our model. This capital increase took place at a depressed share price level of SEK 1.75, down from the Q4 2021 trading level range of SEK 4.00 to SEK 6.00. Based on an updated sum-of-the-parts valuation model, we have lowered our price target to SEK 4.20 (previously: SEK 16.00). Due to the existing upside potential >500% from the current share price levels, we confirm our Buy rating.