Ablynx: Preview results

Ablynx will publish its FY11 results Wednesday 22 February after market’s close. A conference call will be organized on Thursday 23 February at 4pm CET.

Our View:
In 4Q11 Ablynx saw 2 cash inflows for Merck-Serono. The first was € 12m as part of the € 20m upfront that Merck-Serono promised to pay at the closing of the third alliance (announced in November 2011). Ablynx will only start to recognize revenues in its P&L as of January 2012. The second payment relates to the € 1m milestone that Ablynx was granted following the selection of a preclinical candidate (ALX-0761). In combination with the fee-for-service FTE payments, other upfrontrecognitions and grants, we assume Ablynx saw 4Q11 revenues of ~€ 5 m, representing FY11 revenues of ~€ 21.5m.

Operating expenses are expected to have reached € 67m (+17% y/y), of which € 57m in R&D costs and € 10m in G&A. With a net financial result of around € 1.6m, we expect the net loss for FY11 to have achieved approximately € 44m (up by almost 80% vs. FY10).

We are banking on a YE11 cash position of € 83m (the company already mentioned earlier this year it is above € 80m), representing a FY11 cash burn of around € 33m. Importantly, if Merck-Serono’s € 20m upfront would have been fully paid in 2011, the cash burn would have been € 25m, quite similar to the 2010 operational cash burn.

Looking into 2012:
Early January Ablynx already provided financial guidance for 2012: FY12 cash burn limited to € 20-25m and operating spending flat versus 2011. In 2012, management expects milestone-income from existing partnerships and new target-based collaborations to be signed. In 1Q12, the company has already recorded € 13m in upfront and milestone payments from Merck-Serono and Boehringer-Ingelheim.

Conclusion:
In 4Q11 and early 2012, Ablynx has issued several press releases on its product pipeline and evolution with its partners. Therefore, we expect no surprises from the FY11 update.