TiGenix: Potential Profitability By 2015 If Product Succeeds

Total 2012 revenues could be about €3.9m, with the operating loss falling by 15% to €19.2m. The Dutch healthcare system now fully reimburses ChondroCelect, enabling TiGenix (TIG.BR) to invest in marketing in Holland, where four leading hospitals now use the product. The interims showed a one-off gain of €0.7m for the ‘risk-share’ element of 2011 Dutch sales. A big EU country (Spain or France) needs to give reimbursement soon to hit 2013 sales targets. The Cx601 perianal fistula study started in July. The Cx621 intralymphatic safety study showed that direct injection is safe.


Product and Trial progress
Edison expects ChondroCelect implant sales of 180 in FY12 and the 73 sales in H1 indicate that this is on track. TiGenix has evidence that ChondroCelect produces higher-quality cartilage with five-year clinical superiority over microfracture. The Edison 2013 target is an aggressive 450+ units. This needs France and Spain to give full reimbursement by Q4 2012. Clinically, the crucial Cx601 Phase III started in July. Cx601 is injected directly into Crohn’s perianal fistula tracts to aid healing. The Cx621, 10-patient safety study on inguinal (groin) lymph-node injection showed no side effects and the procedure was well tolerated. Intralymphatic injection could enable lower doses of 5m cells and more effective autoimmune therapy.

Interim financials
Edison’s forecast now contains the one-off Dutch €0.7m payment for 2011. With a further €0.25m for Q112, this boosted interim receivables to €3m. ChrondroCelect sales continue to grow, but the 2013 450+ sales expectation may still be tough. R&D costs have risen due to the Cx601 ADMIRE-CD trial, as reported. These include annual goodwill amortisation of €3.6m and €1.3m of unallocated manufacturing costs.

Valuation: Break-even on ChondroCelect, value on Cx601
TiGenix could be profitable in 2015 if more than 1,675 ChondroCelect implants are sold. Direct Cx601 EU sales from 2016 (55% probability), plus sales by the anticipated US partner from 2017 (45% probability) gives an indicative value on rDCF (at 12.5%) of €2.33 per share. An alternative 1,000 implant sales scenario indicates €1.70 per share. TiGenix is funded into Q3 2013 to enable Cx611 data in rheumatoid arthritis to be achieved. This assumes 2013 ChondroCelect sales as expected, plus a further soft loan and leasing of unused Dutch manufacturing space by Q113. It may need a further €4.5m in H213 but the sale of a discontinued business could yield a further €1-2m. A US Cx601 partner may be agreed by H113 giving a significant upfront fee.

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