15.07.2013 - Equity Research Einzelstudie // kaufen

Research Report Initial Coverage - SYGNIS Pharma AG - Buy

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Unternehmen: SYGNIS AG
Branche: Biotechnologie-Pharma
Rating: kaufen
Kurs bei Erstellung in €: 03.07.2013 - 2,60
Kursziel in €: 4,55
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 5

Concentration on strong-growth markets after restructuring; BUY

Following the completed restructuring in the context of the reverse acquisition, SYGNIS Pharma AG’s focus lies in the area of DNA amplification and DNA sequencing. The current product portfolio encompasses four fully developed technologies – QualiPhi, novel QualiPhi mutants, PrimPol and DoubleSwitch – all of which are close to market launch. At the same time, the previous projects in the field of drug development were discontinued, which significantly lowered the company’s risk profile. Overall, the focus is on projects which compared to drug development benefit from substantially shorter development timelines and further have lower financing requirements.

The range of applications of DNA analysis is relatively broad and enjoys growing acceptance, not least due to the rising technological progress and related cost effects. Different studies project high growth rates for NGS technologies in the coming years, which are expected to average 22.7% per year to 2016. Its broad product range puts SYGNIS Pharma AG in a good position to participate in this strong market growth, especially as the technologies developed by the company have the potential to become new world standards in the area of DNA amplification and sequencing.

A good example is QualiPhi, which is a further development of the Phi 29 polymerase and has significantly improved properties. It allows for DNA amplification using lower starting material, and further in a less time-consuming and hence substantially more efficient process. These advantages are clearly reflected by the out-licensing agreement signed with Qiagen in July 2012. (Qiagen is one of the largest providers of sample and assay technologies worldwide in the area of molecular diagnostics.) SYGNIS expects first revenues from this distribution partnership in the current financial year (2013).

The out-licensing agreement with Qiagen for QualiPhi in the DNA amplification space serves as blueprint for other SYGNIS products. Since their development has already been completed, the entire product portfolio could be out-licensed in the current financial year. Based on this assumption, we expect first market sales for QualiPhi to still be generated in the current financial year. For 2014 we assume a significant revenue increase, which should allow the company to achieve operational break-even. In subsequent years SYGNIS Pharma AG should present additional product developments in the life sciences sector, which could lead to an acceleration of top-line growth.

This should also lead to a gradual improvement of the company’s financial position. A particular point of focus is the company’s liquidity, with management expecting available financial resources to be sufficient to fund operations through to mid-2013. Other than approaching new investors and receiving additional loans (including from existing shareholders), SYGNIS Pharma AG can take advantage of an existing standby equity distribution agreement (SEDA).

Based on a discounted cash flow (DCF) model, we estimate a fair value for the company (end of financial year 2014) of €4.55 per share. The current share price of €2.60 per share therefore represents an 75.0% discount vs. our fair value. We therefore initiate on SYGNIS Pharma AG with a BUY rating.


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