Original-Research: MagForce AG (von GBC AG): BUY

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Original-Research: MagForce AG - von GBC AG

Einstufung von GBC AG zu MagForce AG

Unternehmen: MagForce AG

ISIN: DE000A0HGQF5

Anlass der Studie: Research Report (Anno)

Empfehlung: BUY

Kursziel: 15.00 EUR

Kursziel auf Sicht von: End FY 2018

Letzte Ratingänderung:

Analyst: Cosmin Filker, Marcel Goldmann

Commercialisation and approval fully financed, important financing

milestone achieved, increase in treatment figures expected, approval in the

USA planned

In the past financial year 2016, MagForce AG has advanced its approval and

commercialisation strategy. As part of this strategy, the basis for the

treatment of glioblastoma patients in Europe was expanded through the

inclusion of the Vivantes hospital in Berlin Friedrichshain. A total of six

NanoActivator devices are now installed in hospitals in Germany with four

being used for commercial treatment.

In a parallel process, the company advanced the approval of its own

technology for the treatment of prostate cancer in the USA in 2016. At the

recommendation of the American approval authority, the FDA, all the

biocompatibility studies already conducted in Germany were conducted again.

The trials demonstrated once again that the nanoparticles are non-toxic and

that they remain in the region of application.

In addition, MagForce AG laid the foundation for developing its financial

base in 2016. This is of great importance in particular given the still low

commercialisation income and the resulting liquidity outflow. After the

start of discussions, a number of capital measures were successfully

concluded after the balance sheet date of 31/12/2016. This includes the

issue of a EUR5.00 million convertible bond, the assumption of various

loans as well as the successful placement of a capital increase of EUR5.00

million. However, the focus was particularly on the recently reported

financing agreement with the European Investment Bank (EIB) in the context

of which MagForce AG can borrow up to EUR35.0 million. According to

information provided by the company, this credit volume, which can be drawn

in several tranches, is enough to finance the approval and

commercialisation strategy in full. At the same time, this significantly

reduces the financing risk and markedly increases operational flexibility.

After securing the future financing, the company's focus is on the planned

European roll-out of the technology. This is to primarily involve new

treatment centres in Germany's neighbouring countries. In this regard, it

is planned to install a NanoActivator(R) in treatment centres in five

further European countries. In addition, after the successful repetition of

the toxicology trials, the approval for the treatment of prostate cancer in

the USA will be advanced. We expect marketing approval to be received in

the second half of 2018. A further upside potential that we have, however,

currently not yet included in our forecasts, arises from the planned

expansion of the treatment for prostate cancer to Europe. Obtaining cost

reimbursements from the health insurance providers will also be a focus in

the upcoming reporting periods. In this regard, the plan is to conduct

reimbursement studies.

Based on our specific forecasts prepared up to financial year 2024, we have

determined a fair value of EUR15.00 (previously: EUR13.90) per share. The

increase in the target price is, in the first instance, due to a reduction

in the weighted costs of capital as a consequence of the recently concluded

financing agreement with the European Investment Bank (EIB). The EUR35

million to be drawn in the next few years leads to an increase in the

typically lower interest debt component of WACC, as a result of which the

weighted costs of capital are reduced to 11.0% (to date: 11.5%). Based on

the current share price of EUR8.00, there is a considerable potential for a

higher valuation and we therefore assign the BUY rating.

Die vollständige Analyse können Sie hier downloaden:

http://www.more-ir.de/d/15581.pdf

Kontakt für Rückfragen

Jörg Grunwald

Vorstand

GBC AG

Halderstraße 27

86150 Augsburg

0821 / 241133 0

research@gbc-ag.de

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http://www.gbc-ag.de/de/Offenlegung.htm

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