index pharmaceuticals - amazon web services

Important information: All information regarding limitation of liability and potential conflicts of interest can be found at the end of the report Redeye, Mäster Samuelsgatan 42, 10tr, Box 7141, 103 87 Stockholm. Tel. +46 8-545 013 30, E-post: [email protected]

Update

Equity Research January 27

KEY STATS

Ticker INDEX.ST Market First North

Share Price (SEK) 1.6 Market Cap (MSEK) 880 Net Debt 21E (MSEK) -310 Free Float 71 %

Avg. daily volume (‘000) 647

BEAR BASE BULL 1

4.5

9

KEY FINANCIALS (SEKm)

2018 2019 2020E 2021E 2022E 2023E Net sales 0 0 0 0 0 0 EBITDA -81 -87 -75 -210 -211 -164 EBIT -82 -88 -76 -213 -215 -167

EPS (adj.)

2018 2019 2020E 2021E 2022E 2023E

ANALYSTS

Filip Einarsson [email protected] Ludvig Svensson [email protected]

42

1

0

1

2

3

4

22-jan 21-apr 20-jul 18-okt 16-jan

OMXS 30

InDex Pharmaceuticals

Piece by piece falls into place Redeye expects positive momentum in InDex shares as the markets focus shifts towards

the phase III-study rather than the dilution related to the pending transaction. InDex is

raising SEK 533m at SEK 1,2 per share. However, valuation now appears low and we see a

tremendous upside if cobitolimod shows competitive data in the first induction study.

Phase III-design and financing now in place

The phase III-study is scheduled to start in Q2, and the terms for the ongoing financing

have been revealed. InDex will raise SEK 533m through a fully guaranteed rights issue at

SEK 1,2 per share.

Subscribers in the rights issue include existing owners such as Linc and The Fourth

Swedish National Pension Fund; new institutions such as HBM Healthcare Investments

and Handelsbanken Funds also participate.

In the first induction study, 2x250 or 2x500 mg of cobitolimod or placebo will be

administered to patients with moderate-to-severe left-sided ulcerative colitis. After a

blinded interim analysis, the best performing dose will then be selected and used for the

study moving forward.

Market research and key opinion leaders validate the commercial potential

Backed by superior safety data, an attractive product profile, and several KOLs from the

field of gastroenterology in InDex’s advisory boards, we argue that the company has the

proper prerequisites to navigate through its sequential phase III program. Our market

research supports a total addressable market of USD 7,6bn for cobitolimod.

Valuation discrepancy makes a compelling case

After accounting for the rights issue, our DCF analysis indicates a rNPV in a Base scenario

for InDex of SEK 4.5, marking 176 percent upside from current levels.

The past months disappointing development in the share now offers investors an attractive

risk/reward scenario as we see it. At an EV of some SEK 300m following the rights issue,

compared to SEK 560m 3 months ago, InDex trades with a considerable discount

compared both to its previous valuation and to peer phase III-companies at roughly SEK 1-

2bn. While short-term sellers might pressure the stock in the near-term, we argue this

valuation discrepancy is likely to narrow as topline results approach.

InDex Pharmaceuticals Sector: Biotech

REDEYE RATING

INDEX.ST VERSUS OMXS30

FAIR VALUE RANGE

Financials

People

Business

REDEYE Equity Research InDex Pharmaceuticals 26 January 2021

2

Investment Case Blockbuster candidate in phase III with a novel MoA

Results from first induction study; potential game-changer

Skepticism from the market provides a good entry point for risk willing investors

Fully financed for the first induction study

Thirty percent of UC patients receiving biologics are primary non-responders, another 50 percent lose response over

time, creating a significant underlying demand for treatments with a new Mechanism-of-Action (MoA). Key-opinion-

leaders (KOLs), physicians, and patients all request treatments with new MoA to complement current treatment

options for UC patients, creating an exciting market opportunity for cobitolimod. Currently, no other TLR9-agonists

are targeting UC in clinical studies besides cobitolimod. InDex’s novel candidate has shown a superior safety profile

compared to the current pipeline and marketed drugs. It has demonstrated competitive efficacy in four earlier

studies, providing a compelling case of the molecule’s efficacy in patients with moderate-to-severe UC. Cobitolimod

is scheduled to initiate phase III-studies in Q2 this year.

InDex has eminent experts and KOLs in the field of gastroenterology in its European and North American advisory

boards, which provides further confidence in the project. The company has, through external consultants,

conducted market research targeting both payers and physicians. The market research results confirm a strong

need for new safe and efficient treatments and pricing at the levels of current biologics (USD 30-45’ in the US and

EUR 10’ in EU), which collectively indicates a compelling market opportunity for cobitolimod.

The company is in an exciting position moving forward; it will start its first phase III-study without a partner, which is

a considerable effort for a small company. However, given the first induction study is successful, InDex would be in

a favorable position; we see two possible scenarios for InDex’s blockbuster candidate.

1. Taking cobitolimod through the remainder of phase III and market launch on its own. This option would allow for a

market launch either via distribution agreements or by building a salesforce to commercialize cobitolimod

2. Backed by the data from the first induction study, the company can negotiate with a partner for a licensing agreement

for cobitolimod, which at this stage would imply an advantageous deal proposition.

In addition, InDex has stated the potential opportunity to apply for market approval based on the induction studies

data, which provides an exciting possibility and significant trigger in the data readout.

After announcing the rights issue to finance the first phase III-study the not fully disclosed terms frightened

investors. The share has since steadily declined. However, with the terms of the rights issue in place and proceeds

guaranteed to initiate the phase III-study, we argue that an investment in InDex shares at current levels provides

investors with an attractive risk/reward. Our DCF-analysis supports a current valuation of SEK 4,5 per share, based

upon our estimated sales of cobitolimod.

Key Risks • The value in InDex is centered around its main asset, cobitolimod. Hence, InDex is a somewhat binary

case. If it would experience hinders in its clinical development with cobitolimod, it could severely negatively

impact the value.

• InDex faces many of the common general risks associated with drug development. Besides clinical

development risk, it also includes IP-risks, financing risks, regulatory risks, etc. Investors should be aware

of these before investing in the biotech sector.


3

We want to emphasize that we expect that the market cap and EV of InDex will be volatile and somewhat

speculative until the end of the subscription period. However, we argue that it is still a robust metric to view the

market's expectations on InDex during different periods and compared to peer phase III-assets. At the time of the

rights issue announcement, InDex’s EV was SEK 560m, calculated on the closing price on November 24th.

To give a more dynamic view of the enterprise value of InDex following the rights issue, we have included a

sensitivity analysis.

InDex Pharmaceuticals: Sensitivity analysis post the rights issue

Source: Redeye research

By assuming a 10 percent discount for the new shares from the rights issue, compared to the current market price

of InDex shares, EV would amount to some SEK 300m. I.e., the current valuation is lower than before announcing

the rights issue and study design.

Vis-à-vis, the case is more attractive now, compared to three months ago. InDex now has financing for the first

phase III study, allowing investors to invest in a stronger fundamental case at a lower EV than before the rights

issue announcement. We argue that short-term speculation and investors have become overly pessimistic, which

has created high sales pressure on the share, creating this lucrative opportunity for risk-willing investors.

We foresee a comeback scenario, similar to other biotech cases seen during 2020, which has provided significant

returns after being pressed down from dilutive rights issues. To illustrate, one can look at the recent development

seen in Isofol Medical and Egetis Therapeutics, which both rose sharply shortly after closing their rights issues.

Isofol shares have surged some 300 percent seven months after the last subscription day of its rights issue. Egetis

shares have increased some 60 percent in two months following its rights issue.

Source: Redeye Research, Bloomberg

Discount/Premium Share price Market cap EV

20% 2,0 868 520

15% 1,9 832 484

10% 1,8 796 448

5% 1,7 760 412

0% 1,6 724 376

-5% 1,5 687 339

-10% 1,5 651 303

-15% 1,4 615 267

-20% 1,3 579 231

0

5

10

15

20

25

30

35

Isofol Medical

Fully guaranteed financing announced

Financing terms announced

0

5

10

15

20

25

Egetis Therapeutics

Fully guaranteed SEK 200mrights issue


4

Comparing InDex with peer phase-III companies, at an EV of some SEK 300m, InDex trades with a considerable

discount. While short-term sellers might pressure the stock in the near-term, we argue this valuation discrepancy is

likely to narrow as top-line results approach.

InDex Pharmaceuticals: Phase III peer valuation SEKm

Source: Redeye research

Share performance InDex Pharmaceuticals: Share development since phase IIb-results

Source: Redeye Research, Bloomberg

Our view is that the sentiment surrounding the share has since the CONDUCT data set's presentation been mainly

dependent on the phase III-study initiation and financing terms, which has been a subject of uncertainty until

recently. However, the terms of funding, initiation, and design for the phase III-study are now in place. We argue the

share's sentiment to become increasingly positive while we approach study initiation.

Company Indication EV Market cap

Ascelia Pharma Oncology 1 229 1 362

Egetis Therapeutics Orphan drugs 1 077 1 214

Isofol Medical Oncology 2 214 2 301

Xbrane Biopharma wAMD 1 716 1 820

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

10000000

0

0,5

1

1,5

2

2,5

3

3,5

4

Sh

are

s

SE

K

Volume Share Price

Results from CONDUCT published in The Lancet Gastroenterology and Hepatology

Full CONDUCT data set presented InDex publishes MoA

data for cobitolimod in Journal of Crohns and Colitis

FDA & EMA endorses advancement of cobitolimod into phase III

InDex announce plan to raise some SEK 500m

Terms for the rights issue announcedsome SEK 500m


5

A new case following the financing solution While we have a somewhat balanced view of this transaction, Redeye considers InDex Pharmaceuticals a relatively

new case following the rights issue. The transaction has attracted new institutional ownership and secured some

SEK 490m after deducting transaction-related costs. InDex can now rapidly move towards the phase III-study

initiation with its blockbuster candidate in the second quarter of this year. We want to highlight that this route has

opened up an exciting way forward by opening up the possibility of keeping cobitolimod in-house, potentially

creating significant shareholder value in the long term.

Ever since the phase IIb-results, InDex’s path towards the phase III-study initiation has been somewhat vague. At the

end of November 2020, the company announced a fully guaranteed rights issue. In the announcement, the terms

were not disclosed, as InDex had to hold an extraordinary general meeting to gain authority from its owners to issue

the new shares. Since the announcement, the stock has steadily declined.

Besides the offering's size, our interpretation of the market's reaction is that it was expecting a partnership for

cobitolimod based on the CONDUCT-data set before the initiation of the phase III-study. However, we argue it is yet

too early to dismiss a potential partnership. Provided cobitolimod shows strong data in the first induction study,

InDex could negotiate with a partner from an advantageous position.

SEK 533m rights issue For each share held at the record date, five subscription rights will be received, allowing a subscription of five shares

at SEK 1,2 per share until the 5th of February 2021.

This transaction is by no means an ordinary rights issue given the size in relation to the market cap of the company.

Therefore, we argue such a comparison not to give entirely fair conclusions. However, the transaction will lead to a

dilution for current shareholders corresponding to 83 percent, which implies that previous owners have strong

incentives to participate in the offering. We want to emphasize that if the guarantors get a considerable allocation,

there might be short-term selling pressure on the stock.

Our underlying view is that we look fondly upon the required capital allocated to InDex, as the start of the phase III-

study is the essential thing moving forward.

Change in ownership structure

Following the rights issue, a significant change in ownership structure for the company will occur. The two current

largest shareholders SEB Venture Capital and Stiftelsen Industrifonden, have undertaken to sell their subscription

rights to Linc, The Fourth Swedish National Pension Fund, and two new institutional owners, Handelsbanken Funds

and HBM Healthcare Investments. Hence, 56 percent of the offering is subscribed while the remaining 44 percent is

covered by a guarantee consortium convened by, and including, Barclays Bank Ireland PLC and Carnegie

Investment Bank.

HBM Healthcare Investments is a reputable Swiss investment company focusing on the healthcare sector, mainly

investing in late-stage biotech and medtech companies. There are a few more Swedish late-stage biotech

companies in its portfolio, such as Cantargia, Hansa Biopharma, Oncopeptides, Vicore Pharma Holding, and

BioInvent International.

Handelsbanken Funds is a well-regarded Swedish fund manager with a wide variety of funds, ranging from broad

index funds to specialist funds such as healthcare.

Redeye’s overall opinion regarding the changes in ownership structure is positive. There has been a concern

regarding the financial position of InDex for quite some time. Therefore, the increased institutional ownership

following this rights issue further bolsters InDex’s financial position moving forward, which we consider a key-

aspect following this transaction. There is a realistic alternative that InDex chooses to fund even the second

induction study by further equity issuance. Hence, the requirement for strong institutional ownership that can

provide funding if required might come in handy moving forward.


6

Further, we want to emphasize that we regard it as positive that specialist investors such as HBM Healthcare

Investments and Handelsbanken Funds participate in the offering. It is also bolstering to see that current owners

such as Linc and The Fourth Swedish National Pension Fund further have conviction in the case.

Valuation assessment Patient-based approach

As the company intends to initiate the phase III-study through equity financing, we have made changes to our

valuation assessment. We deem a project-based valuation to give the most accurate picture of the company

moving forward. Hence, our assessment is based on a patient population derived from ulcerative colitis incidence

and prevalence. We feel current circumstances have strengthened the incentives for InDex to, if strong data is

presented, go towards the market alone. Therefore, we no longer base our valuation on a licensing deal.

Source: Redeye Research, Datamonitor, Global Data

Source: Redeye Research

By assuming a price at the level of current biologics treatment, USD 30’ in the USD and EUR 10’(approximately 12’

USD) in EU5 and Japan, the addressable patient estimation indicates a patient based total addressable market

(TAM) of USD 7,6bn in 2025 for cobitolimods specific patient group. (Moderate-to-severe left-sided UC that has

failed conventional therapy).

While not included in our current assessment, we want to mention that the TAM for cobitolimod is likely to be

broadened in the future. Its safety profile could open up for treating less severe cases of left-sided UC and possible

off-label treatment. An oral formulation is also under development, possibly allowing cobitolimod to treat patients

with pancolitis and Crohn’s disease.

Market share

Comparing cobitolimod with the currently marketed drugs and the late-stage pipeline, its superior safety profile,

which, as stated in this update, is a sought-after trait for UC-treatment, will make a competitive advantage. Hence, if

approved, we expect cobitolimod to gain a competitive market uptake.

We make no changes to our estimates of InDex’s market share. Hence, our Base case assumptions amount to 15

percent market share in the US and 15 percent in EU-5 and Japan.

Region Patients Moderate

to severe

Left-sided

UC

Failed

conventional

therapy

Adressable

patients

US 1 100 000 56% 55% 55% 185 675

EU-5 800 000 54% 55% 55% 130 196

Japan 260 000 45% 55% 55% 35 235

Total 2 160 000 1 160 680 638 374 351 106 351 106

Region Addressable

patients

TAM

USDm

Yearly cost

USD

Distribution

US 185 675 5 570 30 000 74%

EU-5 130 196 1 562 12 000 21%

Japan 35 235 423 12 000 6%

Total 351 106 7 555


7

Fair Value Range – scenario-based approach We approach valuation through a set of three scenarios to provide a more dynamic view of the case.

Of the three, the Base Case is the one we judge most likely. Our Bull and Bear Cases reflect more optimistic and

pessimistic scenarios (valued at +452 percent and -39 percent versus the share’s current levels, respectively).

Base Case – SEK 4,5 per share Our base scenario assumes that InDex’s phase III-study and NDA application's success rate will be in line with the

history of phase III candidates in ulcerative colitis.

• LoA 55 percent

• Cobitolimod positioned as a third-line therapy competing with biologics, and in some cases, even before

biologics

• Market share for Induction and Maintenance-treatment 15 percent in the US and 15 in EU-5 and Japan

• Peak sales USD 1,3bn

• Market launch in 2025

Bull Case – SEK 9 per share

Our blue sky scenario assumes that InDex’s phase III study and NDA application’s success rate will be above the

history of phase III candidates in ulcerative colitis.

• LoA 65 percent

• Cobitolimod positioned as third-line therapy, and to a larger extent, positioned before biologics

• Market share for Induction and Maintenance-treatment 20 percent in the US and 20 in EU-5 and Japan

• Peak sales USD 1,5bn

• Market launch in 2025

Bear Case – SEK 1 per share

In our pessimistic scenario, we assume that InDex will fail to meet the primary endpoint in the first induction study

and has to find a new way forward, either with cobitolimod or another one of the preclinical DIMS-candidates.

• Cobitolimod fails to meet its primary endpoint in the first induction study

• InDex has to find a new way forward, either with cobitolimod or another of the preclinical DIMS-candidates

• Further capital will be required without a clear path forward for the company


8

Catalysts Subscription data from the rights issue

A high subscription rate from investors would encourage and boost the sentiment surrounding the share.

Strength: Moderate

Time Horizon: <1 month

Phase III study start

InDex plans to start its phase III-study during the second quarter of 2021.

Strength: Moderate

Time Horizon: 1-4 months

Top-line data from the first induction study

The top-line data readout from the first induction study is the most critical catalyst for the share. If strong data is

presented, we expect the share to increase in value vastly.

Strength: Major

Time Horizon: 18-24 months

Share purchases from insiders

The insider ownership in InDex is relatively scarce. Share purchases from insiders would be encouraging in this

situation.

Strength: Moderate

Time Horizon: -


9

Towards the market The CONDUCT-study met its primary endpoint of clinical remission at week six as defined by modified Mayo score,

with the highest dose 2x 250mg. However, some doubt regarding the data set emerged from the market, as it was

the only dose that showed statistically significant and competitive efficacy. While we consider this a valid point of

concern, lead professor Dr. Raja Atreya gives an interesting answer. He explains; It is required to break the

inflammation with the first dose and “hit hard” as the induction dose decides if you get the inflammation under

control or not. This further raises our interest in the addition of 2x500mg in the phase III-study.

We consider the presented phase III program to be a result of careful consideration, as it allows for both cost and

time efficiency. As we expected, InDex will conduct a sequential study since a stepwise capital intake was required

for the company to raise funds needed. We also look fondly upon allowing the inclusion of a higher dose that may

show a higher efficacy for cobitolimod.

The phase III-study mimics the design from the CONDUCT-study.

• Professor Raja Atreya will be the coordinating investigator of the phase III-study, as in CONDUCT. Medical

advisors are going to be Professor Sandborn and Professor Reinisch

• If exceptionally strong data is presented in the induction studies, InDex may have the option to apply for

market approval based on that data set.

• A pause between the first and second induction study is expected

Index Pharmaceuticals: Phase III design and inclusion criteria’s

Source: InDex Pharmaceuticals


10

First induction study, expected start Q2-21

The approximately 400 patients in the first induction study are split into three arms. Cobitolimod 2x250mg,

2x500mg and a placebo arm. After approximately 50 patients in each arm, an independent committee will perform a

blinded interim analysis, which will allow InDex to select the best dose of cobitolimod for the study moving forward.

I.e., it will be used in the remainder of the first induction study and the second induction study. Patients responding

to cobitolimod in the induction studies will then be included in the maintenance study. The first induction study is

expected to take 18-24 months; top-line results could hence be expected in the first half of 2023.

Second induction study, expected start H2-23

The second induction study is expected to be faster than the first one, as the sites are already set up, and the

procedures will be the same as in the first one. We expect its duration to be slightly shorter than the first induction

study.

Japan will not be included in the first induction study, as there is no approval from Japanese regulators yet.

However, InDex intends to execute a scientific advice meeting during 2021 and hopefully include Japan in the

second induction study.

Maintenance study

Patients enrolled in the maintenance study will be treated with cobitolimod every three weeks for 52 weeks, then the

endpoint in the maintenance study will be read out, which is; at the end of the 52 weeks, how many patients are in

remission.

InDex Pharmaceuticals: Earlier study-results for cobitolimod



11

Market research take-aways To further examine the commercial potential of cobitolimod, InDex appointed APEX-Healthcare consulting to

conduct market research regarding the product profile's price and attractiveness. Forty senior-level

gastroenterologists and thirteen national and regional payers from the US, Germany, France, and the UK were

interviewed. Sixty percent of the gastroenterologists had previously participated in clinical trials and had good

knowledge about the pipeline products.

In December, at the InDex R&D day, the conclusions from the market research were presented.

InDex Pharmaceuticals: Profile review

Source: Apex Healthcare Consulting & InDex Pharmaceuticals

Overall promising results

The overall results from the market research support cobitolimod as a competitive product; its strengths seem to

be found in its efficacy and safety. The “Neutral” and “Negative” reviews from physicians were related to a wish for

larger sample sizes and a need for slightly larger product efficacy.

A topic of concern surrounding InDex is that most of the pipeline products are oral formulations, while cobitolimod

is administrated as an enema. To shed some light on this, the route of administration was also evaluated together

with physicians.

The research conclusion stated that rectal administration is not unappealing to most gastroenterologists, and the

infrequent dosing schedule of cobitolimod is a key-driver for the acceptability of rectal administration.


12

InDex Pharmaceuticals: Gastroenterologists preference shares

Source: Apex Healthcare Consulting & InDex Pharmaceuticals

Compelling prerequisites for cobitolimod

The gastroenterologists were asked if they would take 100 of their left-sided moderate to severe UC patients, to

what proportion of those would they prescribe cobitolimod to manage a flare, and to what proportion of those

would they prescribe cobitolimod as maintenance therapy. The participants' answers provide an exciting context to

the market attractivity of cobitolimod, as the preference share is very similar in both the EU and the US, roughly 60

percent.

However, physicians tend to overestimate, and APEX-representative suggests a more accurate picture would be 40

– 50 percent of the preference share, i.e., 25 – 30 percent. Then roughly 90 percent of these would be treated with

cobitolimod as maintenance therapy. Considering the market dynamic and current pipeline, we consider this too

optimistic and more of a blue sky scenario. But we do argue it provides a strong indication of cobitolimods product

profile's attractiveness.


13

Patent summary InDex has an active patent strategy; it has three patent families protecting the use of cobitolimod. It aims to build a

patent thicket around the asset to deter generic competition and extend the IP-life.

Two approved patent families cover the use of cobitolimod as a treatment for patients in an inflammatory state

with a history of steroid treatment, such as ulcerative colitis. It provides use protection in the US, Europe, Japan,

Canada, Hongkong, and Australia until at least 2026, with a possibility of a five-year extension after market approval.

A third patent family is protecting the use of cobitolimod to treat active ulcerative colitis with patients not

responding to or intolerant against anti-inflammatory treatment, with or without a history of steroid use. This patent

family is approved in the US, Europe, and Japan. Further patents are also filed in Canada, Hongkong and as a

divisional patent application in Europe, extending the asset's protection until 2032, with a possible extension of five

years after market approval.


Further patent applications are filed or considered based on the development of formulation and clinical progress

for cobitolimod to further strengthen the intellectual property beyond the current patents. If approved, the recently

filed patents can potentially give protection until 2041.

Cobitolimod is also subject to data and market exclusivity as a new chemical substance, which will apply for ten

years in Europe, eight in Japan, and five in the US.

Granted cobitolimod patents in IBD


14

Summary Redeye Rating The rating consists of three valuation keys, each constituting an overall assessment of several factors that are rated

on a scale of 0 to 1 points. The maximum score for a valuation key is 5 points.

Rating changes in the report

People: 4

Management and board of directors in InDex has earlier experience from late-stage drug development and in-depth

industry knowledge. We consider InDex well equipped to go through the late-stage clinical trials.

Business: 2

The market offers substantial growth potential and profitability, as current treatment options for patients is not

sufficient. The treatment paradigm changes in favor of cobitolimod's drug profile, and InDex is well-positioned to

take advantage of the situation.

Financials: 1

While currently being in the development phase, InDex is not expected to generate any particular revenues in the

near-term future. However, the company is financed to reach data readout in its blockbuster candidate's first

induction study.


15

Redeye Rating and Background Definitions Company Quality

Company Quality is based on a set of quality checks across three categories; PEOPLE, BUSINESS, FINANCE. These

are the building blocks that enable a company to deliver sustained operational outperformance and attractive long-

term earnings growth.

Each category is grouped into multiple sub-categories assessed by five checks. These are based on widely

accepted and tested investment criteria and used by demonstrably successful investors and investment firms. Each

sub-category may also include a complementary check that provides additional information to assist with

investment decision-making.

If a check is successful, it is assigned a score of one point; the total successful checks are added to give a score for

each sub-category. The overall score for a category is the average of all sub-category scores, based on a scale that

ranges from 0 to 5 rounded up to the nearest whole number. The overall score for each category is then used to

generate the size of the bar in the Company Quality graphic.

People

At the end of the day, people drive profits. Not numbers. Understanding the motivations of people behind a business

is a significant part of understanding the long-term drive of the company. It all comes down to doing business with

people you trust, or at least avoiding dealing with people of questionable character.

The People rating is based on quantitative scores in seven categories:

• Passion, Execution, Capital Allocation, Communication, Compensation, Ownership, and Board.

Business

If you don’t understand the competitive environment and don’t have a clear sense of how the business will engage

customers, create value and consistently deliver that value at a profit, you won’t succeed as an investor. Knowing

the business model inside out will provide you some level of certainty and reduce the risk when you buy a stock.

The Business rating is based on quantitative scores grouped into five sub-categories:

• Business Scalability, Market Structure, Value Proposition, Economic Moat, and Operational Risks.

Financials

Investing is part art, part science. Financial ratios make up most of the science. Ratios are used to evaluate the

financial soundness of a business. Also, these ratios are key factors that will impact a company’s financial

performance and valuation. However, you only need a few to determine whether a company is financially strong or

weak.

The Financial rating is based on quantitative scores that are grouped into five separate categories:

• Earnings Power, Profit Margin, Growth Rate, Financial Health, and Earnings Quality.


16

Redeye Equity Research team

Management Björn Fahlén

[email protected]

Håkan Östling

[email protected]

Technology Team Jonas Amnesten

[email protected]

Henrik Alveskog

[email protected]

Fredrik Nilsson

[email protected]

Tomas Otterbeck

[email protected]

Oskar Vilhelmsson

[email protected]

Viktor Westman

[email protected]

Forbes Goldman

[email protected]

Mark Siöstedt

[email protected]

Danesh Zare

[email protected]

Mattias Ehrenborg

[email protected]

Editorial Mark Siöstedt

[email protected]

Joel Karlsson

[email protected]

Life Science Team Gergana Almquist

[email protected]

Oscar Bergman

[email protected]

Anders Hedlund

[email protected]

Ludvig Svensson

[email protected]

Niklas Elmhammer

[email protected]

Mats Hyttinge

[email protected]

Filip Einarsson

[email protected]

Fredrik Thor

[email protected]


17

Disclaimer Important information Redeye AB ("Redeye" or "the Company") is a specialist financial advisory boutique that focuses on small and mid-cap growth companies in the Nordic region. We focus on the technology and life science sectors. We provide services within Corporate Broking, Corporate Finance, equity research and investor relations. Our strengths are our award-winning research department, experienced advisers, a unique investor network, and the powerful distribution channel redeye.se. Redeye was founded in 1999 and since 2007 has been subject to the supervision of the Swedish Financial Supervisory Authority. Redeye is licensed to; receive and transmit orders in financial instruments, provide investment advice to clients regarding financial instruments, prepare and disseminate financial analyses/recommendations for trading in financial instruments, execute orders in financial instruments on behalf of clients, place financial instruments without position taking, provide corporate advice and services within mergers and acquisition, provide services in conjunction with the provision of guarantees regarding financial instruments and to operate as a Certified Advisory business (ancillary authorization). Limitation of liability This document was prepared for information purposes for general distribution and is not intended to be advisory. The information contained in this analysis is based on sources deemed reliable by Redeye. However, Redeye cannot guarantee the accuracy of the information. The forward-looking information in the analysis is based on subjective assessments about the future, which constitutes a factor of uncertainty. Redeye cannot guarantee that forecasts and forward-looking statements will materialize. Investors shall conduct all investment decisions independently. This analysis is intended to be one of a number of tools that can be used in making an investment decision. All investors are therefore encouraged to supplement this information with additional relevant data and to consult a financial advisor prior to an investment decision. Accordingly, Redeye accepts no liability for any loss or damage resulting from the use of this analysis. Potential conflict of interest Redeye’s research department is regulated by operational and administrative rules established to avoid conflicts of interest and to ensure the objectivity and independence of its analysts. The following applies:

• For companies that are the subject of Redeye’s research analysis, the applicable rules include those established by the Swedish Financial Supervisory Authority pertaining to investment recommendations and the handling of conflicts of interest. Furthermore, Redeye employees are not allowed to trade in financial instruments of the company in question, from the date Redeye publishes its analysis plus one trading day after this date.

• An analyst may not engage in corporate finance transactions without the express approval of management and may not receive any remuneration directly linked to such transactions.

• Redeye may carry out an analysis upon commission or in exchange for payment from the company that is the subject of the analysis, or from an underwriting institution in conjunction with a merger and acquisition (M&A) deal, new share issue or a public listing. Readers of these reports should assume that Redeye may have received or will receive remuneration from the company/companies cited in the report for the performance of financial advisory services. Such remuneration is of a predetermined amount and is not dependent on the content of the analysis.

Redeye’s research coverage Redeye’s research analyses consist of case-based analyses, which imply that the frequency of the analytical reports may vary over time. Unless otherwise expressly stated in the report, the analysis is updated when considered necessary by the research department, for example in the event of significant changes in market conditions or events related to the issuer/the financial instrument. Recommendation structure Redeye does not issue any investment recommendations for fundamental analysis. However, Redeye has developed a proprietary analysis and rating model, Redeye Rating, in which each company is analyzed and evaluated. This analysis aims to provide an independent assessment of the company in question, its opportunities, risks, etc. The purpose is to provide an objective and professional set of data for owners and investors to use in their decision-making. Redeye Rating (2021-01-26)

Duplication and distribution This document may not be duplicated, reproduced or copied for purposes other than personal use. The document may not be distributed to physical or legal entities that are citizens of or domiciled in any country in which such distribution is prohibited according to applicable laws or other regulations. Copyright Redeye AB.

Rating People Business Financials

5p 19 15 3 3p - 4p 109 90 38 0p - 2p 5 28 92 Company N 133 133 133

CONFLICT OF INTERESTS

Filip Einarsson owns shares in the company : No Ludvig Svensson owns shares in the company : No Redeye performs/have performed services for the Company and receives/have

received compensation from the Company in connection with this.

index pharmaceuticals - amazon web services

Documents