Equity Research

Long Term

13 December 2017 Nuformix

Cocrystals, Providing A Better Risk/Reward Profile

REC : Speculative Buy
Target price: 5p (+74%)
Mid Share Price (p):
EPIC Code:
NOS (m) & Free Float:
Mkt Cap (£m):
Net Debt : EBITDA (x):
2 Year Beta:
Average Daily Volume (m):
Next News Flow:
Nuformix (NFX.L) is a Cambridge based, pharmaceutical development company
which specialises in cocrystal technology to unlock new and improved therapeutic
uses for already known and safe drugs. Each Nuformix product is protected
worldwide by a broad and robust granted ‘substance of matter’ patent, with current
2.88 (12th Dec-17 close) focus in the attractive fields of Oncology Supportive Care (OSC) and Fibrosis. NFX
NFX.L has a balanced product pipeline which combines assets for early out-licensing with
461 33.0% those offering significant mid-term commercial potential.
13.3
Cocrystal Technology Solves Several Drug Development Problems The clever part
N/A
of NFX’s drug development programme is that of utilising cocrystal technology as a new
N/A
approach to overcome current performance limitations of safe, known drugs. Known
2.6 0.6%
safety equates to lower development costs, shorter timescales and overall reduced risks,
Dec-17
thus NFX’s risk/reward profile compares very favourably to its peers.

Classification & Overview
Objective: Growth
Profiling Code: C-3-7, Horizon: > 12months
Nuformix plc is a drug development company
specialising in cocrystal technology. This technology
offers some important advantages in the respects of
widening the potential uses for already know and
FDA approved drugs and protecting the resulting IP.
NFX has two main development programmes on-
going presently; one in the field of Oncology
Supportive Care (OSC) and one in Fibrosis treatment.
The company currently generates no external
revenues but is fully funded for the coming 18
months.
Share Price History (Since flotation)
Billion Dollar Treatment Fields NFX has two main drug development programmes;
one in the cUS$ 20bn treatment field of Oncology Supportive Care (OSC) and the other in
the potentially even larger emerging Fibrosis treatment area. New drugs in both areas are
highly sought after by big pharma.
Key Events Using cocrystal technology, NFX addresses a variety of key drug limitations
(e.g oral bioavailability). The next step in the OSC programme is demonstrating
bioequivalence to a currently patented marketed product via a pilot bioequivalence
study, likely to complete during Q4-18. Nuformix patents circumvent those protecting the
marketed product, thus enabling global market approval and greater patient access, with
the out-licensing process already at an advanced stage for certain geographies.
Valuation and Recommendation Nuformix is currently fully funded for its two key
development programmes NXP001 and NXP002 for the coming 18 months. Further, in the
short term, we expect news on an important out-licensing agreement which could further
boost near and medium term income and further validate the above programmes. On
valuation, NFX is exclusively an out-licensing business, so its value should be determined on
potential out-licensing income and subsequent royalty streams. Near term, we ascribe a
share price target of 5p per share, being mindful of the fact that news on an out-licensing
deal may act as a strong catalyst for the share price.

Source: London Stock Exchange

Consensus Forecasts & Key Metrics
Nuformix Activities Year to Dec: 2017E 2018E 2019E
Financials (£m)
Revenue 0.0 TBC TBC
EBITDA -1.0
EBITDA margin (%) - - -
EPS (p) - - -
DPS (p) - - -
Research Analyst Valuation
P/E - - -
Ben Maitland CFA UK EV/EBITDA - - -
+44 207 382 8420 DIV Yield (%) - - -
Ben.Maitland@beaufortsecurities.com Source: Company Historic Data, Consensus Data, Beaufort Estimates

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: For full disclosures, please see the back page. Beaufort Securities Ltd
Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.
 Nuformix

Nuformix, Executive Summary

Nuformix was established in Cambridge in 2008 and was the subject of a reverse take-over (RTO) by Levrett plc in October
2017, for a total consideration of £12m. This was settled partly through the issuance of 57.5m new Placing shares at 4.0p
each which raised some £2.3m. Post this issuance, listing on the main market of the LSE and Levrett changing its name to
Nuformix plc, the total number of shares outstanding in Nuformix plc today amounts to 460.75m, which at the current
share price of 2.88p per share, gives a market capitalisation for NFX of £13.3m.

NFX’s Financial Position

NFX is a drug development company utilising cocrystal technology and as with most companies in this space, it currently
does not generate any product revenues although it has already generated revenues from out-licensing early stage assets.
The current cash position of the company is that of net cash of around £1.3m, which should fully fund its drug development
programmes for the coming 18 months. That said, we look for near term news on an out-licensing deal which could enhance
both near term and medium term income, and provide industry validation for NFX’s business programmes.

Two Key ( non traditional) Drug Development Programmes

NFX is currently using cocrystal technology in two drug development programmes. Key to understanding the potential for
NFX’s programmes and the favourable risk/reward profile, is the knowledge that NFX is not a drug reformulation company
and is not a ‘traditional’ drug development company with all the inherent risks associated with phase 1– phase 3 drug trials.

Cocrystal Technology, What Is It?

The Cocrystal technology can be explained as the crystallisation of a pure drug with a pharmaceutically acceptable
inactive ingredient to give a drug cocrystal. Importantly, a drug cocrystal satisfies three key criteria which make it
commercially attractive when compared with traditional options.

Three key criteria

are satisfied.

Possible Near Term Share Price Catalyst

We expect news on an out-licensing deal quite shortly, which could further validate NFX’s cocrystal technology and the
progress made with this to date. In addition, we look for a boost to near and medium term income, which could allow NFX
to progress further with the development of its other products.

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: For full disclosures, please see the back page. Beaufort Securities Ltd
Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.
 Nuformix

Oncology Supportive Care and Fibrosis Treatment Programmes

Nuformix’s two lead development programmes, NXP001 and NXP002 are focused on two treatment areas,
Oncology Supportive Care (OSC) and on Fibrosis treatment. These two treatment areas have two common features;

1) Both cost society many billions of dollars annually

2) Both fields are growing in size and in the cost to society

The chart below shows some statistics on comparative mortality rates amidst common diseases from 1970 to 2010.
Importantly, mortality rates are dropping in all disease categories except liver diseases (such as liver fibrosis) and this
is a key market opportunity for NFX’s cocrystal development programme NXP002 in the Fibrosis treatment field, of
which liver fibrosis is just one example. The first programme, NXP001 enters the field of Oncology Supportive Care
and is another growth area given the widening scope of this US$ 20bn treatment market.

Mortality rates in Liver

disease continue to
rise

Oncology Supportive Care, A $20bn market place, But Also A Double-Edged Lifestyle Sword
Looking at Oncology and Oncology Supportive Care; cancer rates in humans are soaring globally due to changing
demographics and lifestyles, but cancer treatments are also increasingly successful in extending human life. That
said, the side effects of cancer treatment can force treatment delays and dose reductions in up to 75% of cancer
patients and some 35% of treatments end up being permanently ceased due to the vicious treatment side effects
which patients suffer.

Under Nuformix’s NXP001 programme , the company has developed a drug cocrystal which is bioequivalent to a
patented marketed treatment in OSC. Importantly, NFX’s cocrystal technology approach also provides intellectual
property (IP) protection for this new drug under new ‘substance of matter’ patent laws which circumvent the
existing product’s IP protection. Reduced product complexity also means the Nuformix product is likely to be
significantly cheaper.

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: For full disclosures, please see the back page. Beaufort Securities Ltd
Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.
 Nuformix

Cocrystal Technology, Key Considerations

Changes to key physical properties of known drugs via cocrystal technology can overcome various limitations for certain
known drugs, as shown below.

Strengths Weaknesses
• Nuformix PLC (NFX) has a highly experienced and • NFX is a niche player in the very large fields of Oncology
motivated management team, with CEO Dr. Daniel Supportive Care (ONS) and in Fibrosis, which presents it
Gooding, CSO Dr. Joanne Holland and the NEDs of Dr. with both challenges and opportunities.
David Tapolczay (Chairman) and Prof. John Lidgey.
• Similar to its peers in the biopharma space, NFX has no
• Cocrystal technology is a relatively new field of revenues currently. Therefore it must rely upon raising
pharmaceutical development which has the potential to funds in the capital markets and /or raising funds through up
unlock new and innovative disease treatments from -front / licensing payments from larger pharmaceutical
already known FDA approved drugs, thus circumventing companies to continue with its development programmes
the lengthy and expensive trials required for new drug beyond the next 18 months.
approval.
• NFX’s stock is thinly traded, and thus its liquidity is low,
• NFX is well funded with around £1.3m net cash on its which is a risk to investors.
balance sheet.

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: For full disclosures, please see the back page. Beaufort Securities Ltd
Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.
 Nuformix

Notes:

Our Offices
London: 63 St Mary Axe, London EC3A 8AA Tel: +44 (0)20 7382 8300

Bristol: Castlemead, Lower Castle Street, Bristol BS1 3AG Tel: +44 (0)117 910 5500

Colwyn Bay: 15 Wynnstay Road, Colwyn Bay LL29 8N Tel: +44 (0)1492 523 000

Key Contacts
Head of Retail Broking Head of Research Head of Online Trading
Costas Costantinou Charles Long Matthew Giles

+44 (0)20 7382 8310 +44 (0)20 7382 8392 +44 (0)20 7382 8314
costas.constantinou@beaufortsecurities.com charles.long@beaufortsecurities.com matthew.giles@beaufortsecurities.com

Profiling Code Key

Letter Codes
A Large market capital company e.g. FTSE 100

B Medium market capital company e.g. FTSE 250

C Small market capital company e.g. AIM

Number Codes
1st Recommendation (Scale 1 - to - 5)

1 Buy

2 Long Term Buy (core)

3 Speculative Buy

4 Hold

5 Sell

2nd Beaufort Risk level 1 - low risk

( Scale 1 -to - 10 ) 10 - high risk

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: For full disclosures, please see the back page. Beaufort Securities Ltd
Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.
 Nuformix

Recommendation Breakdown
During the three months to end-November 2017, the number of stocks on which Beaufort Securities published recommendations was 237, and the
recommendations were as follows: Buy - 37; Speculative Buy - 187; Hold - 11; Sell - 2. Full definitions of the recommendations used by Beaufort
Securities in its publications and their respective meanings can be found on our website here.

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