TiGenix Q3 Results, Clinical Update: Profitable By 2015?

Full Dutch and Belgium ChondroCelect reimbursement has enabled an estimated 58 sales in Q3; c 131 year-to-date. Our 180 sales target for 2012 might be exceeded, but the forecast remains unaltered. The 2013 target of 450+ remains ambitious as neither France nor Spain has agreed reimbursement. TiGenix's (TIG.BR) new advanced manufacturing facility in Holland is now licensed and will be on stream in 2013. The Cx601 Phase III perianal fistula study is enrolling patients. Cx611 will have safety data in Q412.

Product and trial progress: Cx611 safety data in Q4
The Cx611 Phase IIa dose-escalating study in 53 rheumatoid arthritis patients started in Q111. This is the most clinically-advanced use of stem cells to control an autoimmune disease. The endpoints are safety, tolerability (due Q412) and dose finding with any efficacy indications (due April 2013). Patients must have been treated with at least one non-biological, disease-modifying anti-rheumatic drug (DMARD) and have failed treatment with at least two biological therapies. The study could lead to a Phase IIb with a disease score endpoint. This would probably take two to three years to run. The Cx601 Phase III in Crohn’s perianal fistula tracts started in July. The Cx621 10-patient safety study on inguinal (groin) lymph-node injection was safe and well tolerated. Intralymphatic injection could enable lower doses of 5m cells and more effective autoimmune therapy.

Q3 financial update and 2012 outlook
Year-to-date revenues are now €3.2m, with €1.1m in Q3. In H1, there were 73 ChondroCelect implant sales. Q3 revenues of €1.1m indicate about 58 implants over the slower summer months; 131 year-to-date. H1 revenues included a one-off Dutch €0.7m payment for 2011. With long autologous manufacturing times, Edison is wary of overestimating Q4 sales, so the target of 180 remains; it might hit 190 if Q3 momentum continues. The 2013 target is an aggressive 450+ units. This needs France or Spain to give full reimbursement by Q113, with existing markets buying 230-250 implants.

Valuation: Break-even on ChondroCelect, value on Cx601
TiGenix could be profitable in 2015 if more than 1,675 ChondroCelect implants are sold. The indicative value on rDCF (at 12.5%) remains at €2.33 per share. An alternative 1,000 implant scenario indicates €1.70 per share. TiGenix is funded into Q313. It may need a further €4.5m in H213 depending on loans, leasing of underused manufacturing capacity and, probably crucial, any US Cx601 deal.

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