Edison Investment Research Limited
London, UK, 14 May 2021
Apontis Pharma (APPH): Initiation - A phoenix rises
Apontis Pharma is a speciality pharma business aiming to leverage its commercial heritage in Germany and deliver on its rapid growth ambitions. The company has carved out a sizeable niche for its 'single pill' products, which are combinations of commonly co-prescribed generic drugs that have been reformulated into in one branded pill (2020 sales of €19.0m). Alongside the 'single pill strategy', Apontis also has co-marketing agreements for several branded drugs (2020 sales of €16.6m). It is the increasing mix of the higher-margin single pills that we believe should benefit current operating leverage and provide the foundations for an enticing margin story. Apontis shares were placed at €19.0/share, raising gross proceeds to the company of €38m, translating to an enterprise value (EV) of c €145m.
Consensus is not yet available for Apontis, but based on management's FY21 revenue guidance of €48.5m, the shares are priced at c 3.0x EV/sales, within the range for established peers, but at a c 8% discount to the average for the group. Broader recognition of its double-digit sales growth potential, coupled with the potential for a strong margin story underpin the momentum.
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