E 2016E 2017E Revenue. MSEK Growth 0% 27% 42% 4% 7% EBITDA EBITDA margin -5% 13% 16% 17% 18%

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1 COMPANY ANALYSIS 4 February 2016 Summary (MOB.ST) Room for expansion The issuance of a five-year bond loan of SEK 300 million gives a strong financial position without further dilution. This opens up for taking on new acquisitions to expand its US OTC business. The challenge, we believe, will be in finding assets at attractive multiples. As guided previously by management, competition has intensified somewhat in the past year. It will be important to deliver on acquisitions of new products, as we expect sales growth from existing OTC products to decline considerably in 2016 and show a 5% growth rate compared to an expected growth rate of 42% in List: Market Cap: Industry: CEO: Chairman: OMXS 30 Small cap 782 MSEK Healthcare Peter Wolpert Mats Pettersson The main value driver of the share price in 2016 will be the delivery of new product deals and the Rx projects to advance further in clinical development. We are lowering our fair value (DCF valuation) to SEK 69 (74) Feb 05-May 03-Aug 01-Nov 30-Jan Redeye Rating (0 10 points) Management Ownership Profit outlook Profitability Financial strength 8.0 points 7.0 points 5.5 points 2.5 points 6.0 points Key Financials E 2016E 2017E Revenue. MSEK Growth 0% 27% 42% 4% 7% EBITDA EBITDA margin -5% 13% 16% 17% 18% EBIT EBIT margin -9% 9% 12% 13% 15% Pre-tax earnings Net earnings Net margin -7% 6% 8% 5% 6% Dividend/Share EPS P/E EV/S EV/EBITDA Share information Share price (SEK) 55.0 Number of shares (m) 14.2 Market Cap (MSEK) 782 Net debt (MSEK) -52 Free float (%) 63 % Daily turnover ( 000) 40 Analysts: Klas Palin klas.palin@redeye.se Björn Olander bjorn.olander@redeye.se 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 tr. Box Stockholm. Tel E-post: info@redeye.se

2 Redeye Rating: Background and definitions The aim of a Redeye Rating is to help investors identify high-quality companies with attractive valuation. Company Qualities The aim of Company Qualities is to provide a well-structured and clear profile of a company s qualities (or operating risk) its chances of surviving and its potential for achieving long-term stable profit growth. We categorize a company s qualities on a ten-point scale based on five valuation keys; 1 Management. 2 Ownership. 3 Profit Outlook. 4 Profitability and 5 Financial Strength. Each valuation key is assessed based a number of quantitative and qualitative key factors that are weighted differently according to how important they are deemed to be. Each key factor is allocated a number of points based on its rating. The assessment of each valuation key is based on the total number of points for these individual factors. The rating scale ranges from 0 to +10 points. The overall rating for each valuation key is indicated by the size of the bar shown in the chart. The relative size of the bars therefore reflects the rating distribution between the different valuation keys. Management Our Management rating represents an assessment of the ability of the board of directors and management to manage the company in the best interests of the shareholders. A good board and management can make a mediocre business concept profitable. while a poor board and management can even lead a strong company into crisis. The factors used to assess a company s management are: 1 Execution. 2 Capital allocation. 3 Communication. 4 Experience. 5 Leadership and 6 Integrity. Ownership Our Ownership rating represents an assessment of the ownership exercised for longer-term value creation. Owner commitment and expertise are key to a company s stability and the board s ability to take action. Companies with a dispersed ownership structure without a clear controlling shareholder have historically performed worse than the market index over time. The factors used to assess Ownership are: 1 Ownership structure. 2 Owner commitment. 3 Institutional ownership. 4 Abuse of power. 5 Reputation. and 6 Financial sustainability. Profit Outlook Our Profit Outlook rating represents an assessment of a company s potential to achieve long-term stable profit growth. Over the long-term. the share price roughly mirrors the company s earnings trend. A company that does not grow may be a good short-term investment. but is usually unwise in the long term. The factors used to assess Profit Outlook are: 1 Business model. 2 Sale potential. 3 Market growth. 4 Market position. and 5 Competitiveness. Profitability Our Profitability rating represents an assessment of how effective a company has historically utilised its capital to generate profit. Companies cannot survive if they are not profitable. The assessment of how profitable a company has been is based on a number of key ratios and criteria over a period of up to the past five years: 1 Return on total assets (ROA). 2 Return on equity (ROE). 3 Net profit margin. 4 Free cash flow. and 5 Operating profit margin or EBIT. Financial Strength Our Financial Strength rating represents an assessment of a company s ability to pay in the short and long term. The core of a company s financial strength is its balance sheet and cash flow. Even the greatest potential is of no benefit unless the balance sheet can cope with funding growth. The assessment of a company s financial strength is based on a number of key ratios and criteria: 1 Times-interest-coverage ratio. 2 Debt-to-equity ratio. 3 Quick ratio. 4 Current ratio. 5 Sales turnover. 6 Capital needs. 7 Cyclicality. and 8 Forthcoming binary events. 2

3 Strengthened financial position Non-dilutive financing of SEK 300 million in place The issuance of a five-year bond loan of SEK 300 million significantly improves s (MP) ability to acquire new products and product licenses to plug in to the US OTC platform in a non-dilutive manner. This is positive news in our view, since growth through acquisitions - the company's stated strategy - will be particularly important to deliver on in the coming years, as we expect top-line growth from existing products to be more moderate in the next few years compared to last year. The challenge, we believe, will lie in finding assets at attractive multiples. The acquisition of new products is also a necessity if the financial target - an EBITDA margin of 25% - is to be achieved, which MP recently announced will not happen this year as previously guided by management. However, postponing delivering on the financial target came as no major surprise to us, and was rather in line with our expectations. The bond loan will have a floating rate coupon of Stibor (Stockholm Interbank Offered Rate) 3 months (-0.30%) %. The total framework for the bond amounts to SEK 600 million, providing scope for doubling the loan size if needed. In our forecasts for MP, we model a Stibor 3m rate of -0.30% in 1H 2016, and a Stibor rate of 0.0% in 2H In 2017 we expect Stibor to turn positive and a rate of 0.5% and in 2018 a Stibor rate of 1.0%. MP intends to list the bond on Nasdaq Stockholm ( Statistically significant reduction of pain in the active arm compared to the control group Promising phase II data Recently released Bupi (lozenge formulation of bupivacaine) top-line data, from an open label phase II trial, showed a statistically significant (p=0.0326) reduction in pain compared to the control arm. The primary endpoint was a measure of the mean oral pain intensity measured by the visual analogue scale (VAS). Patients treated with Bupi showed a 23% reduction in pain (in mouth or pharynx), and recorded a VAS score of 37.5 versus a VAS score of 48.9 for patients in the control arm. The pain intensity reduction was even more pronounced in the month (excl. pharynx) with a 46% lower VAS score (17.7 vs. 33.0, p=0.0027). As expected, no serious adverse events were reported among patients treated with the local anesthetic Bupi. In the trial 32 patients were evaluated out of a total of 40 enrolled. They were patients with oral mucositis from the treatment of head and neck cancer. All patients in the trial were allowed to use standard treatment of their pain and in addition they were given Bupi in the active arm or a local acting lidocaine gel in the control arm. We hike our expectations about the project Top-line data looks promising so far, and we have therefore hiked our expectations and increased the likelihood of the project to reach to market to 30% from 25% previously. However the data set is still limited and we don t know anything about usage of standard of care during the study 3

4 between the two treatment arms. We need a better understanding of this usage if we are to further lower the risk adjustment of the project. Analysis of the trial continues and we expect more data to be made public later this quarter. Progressing towards phase III with MOB-015 It has become increasingly evident to us in the last few months that MP will move forward with MOB-015 into phase III by itself and, at least for now, abandon a partnering strategy. The reason for this decision, we believe, is that financial terms from potential partners have not met MP s expectations. Instead, MP sees investment in the phase III programme as an attractive opportunity to build further value before a potential partnering deal. MP met with regulatory authorities in Europe and the US in 4Q 2015 Late last year MP met with regulatory authorities in Europe and US, which provided guidance of what kind of clinical trials they consider to be necessary for MOB-015 to be able to obtain an approval in these markets. This guidance has not yet been fully disclosed, and we therefore don t yet know about much of the final design of the phase III programme and how extensive these studies have to be to support a regulatory filing. Hence, estimateing the costs and time to a market approval involves a lot of guesswork. We expect all phase III development costs to be capitalized Our expectation is that the phase III programme will start in mid-2016 and dosing of the first patient will happen in 2H The clinical programme will likely run for about two years, with top-line data in 2H A positive outcome would pave the way for a regulatory filing in the US in 2019 and a possible launch in 2020 (60% probability). Given the much larger size of the US onychomycosis market, we expect the clinical programme to initially focus on US clinics and patients. We assume costs for the US phase III programme to reach about SEK 150 million. All of the development costs related to the phase III programme are expected to be capitalised up to an FDA approval in 2020, and not burden profits but cash flow during this period. To somewhat limit the investment in the phase III programme MP has struck a cost-sharing manufacturing deal with Colep (Colep s Healthcare Division), which also includes an exclusive agreement regarding the future commercial supply of MOB-015 in selected territories. Under this agreement Colep is committed to sharing funding to scale up the manufacturing process and stability programmes and build up a supply of MOB-015 for the phase III programme. Colep will also be responsible for the documentation needed for a filing in the US and EU, although MP will own all this data and documentation. The agreement obviously lowers MP s investment ahead of the phase III programme. We expect Coleps investment into the programme (Redeye s estimate, approx. USD 2-4 million) to be offset against future sales of MOB

5 Topical nail fungus prescriptions filled per month have tripled in the past twelve months New topical nail fungus therapies displaying rapid growth There is estimated to be approximately 35 million people in the US with nail fungus. About five to six million seek treatment for this condition each year, and roughly 2.5 million are treated with prescription therapies. A gold standard treatment is oral terbinafine (Lamisil, Novartis), which is highly effective, but uptake has been hampered due to its systemic side effects. Locally administrated products have the potential to overcome these kinds of issues, but low efficacy has historically been the main reason why topical products like Penlac (ciclopirox, Valeant Pharmaceuticals) have not enjoyed any considerable commercial success. However, new more effective topical therapies reached the US market in 2014; Jublia (efinaconazole, Valeant Pharmaceuticals) and Kerydin (tavaborole, Anacor/Sandoz). The launch of these new products has driven up demand of topical therapies. Anacor estimates the number of topical nail fungus prescriptions filled per month have almost tripled, from roughly 70,000 in mid-2014 to roughly 200,000 at the end of September Below we have compiled how revenues for Jublia and Kerydin have progressed since the launch. Reported quarterly net revenues Jublia and Kerydin USD million Q Q Q Q Q Q Kerydin Jublia Source: Valeant Pharmaceuticals, Anacor Pharmaceuticals Strong sales growth out of new topical products As shown above, sales of these products have enjoyed strong growth and we estimate trailing twelve month net revenues of USD 415 million at the end of 3Q So far, the market leader Jublia has been a very successful launch, partly been driven by extensive investments in direct-to-consumer (DTC) advertising. As an example, Jublia ads ran during the Super Bowl last year, often seen as the most expensive event for advertising. To compete more actively with Jublia, Pharmaderm (part of Sandoz) also increased its DTC investments in late August last year and since then we have seen strengthened growth in new prescriptions of Kerydin (see next page). 5

6 Monthly number of prescriptions of Kerydin Source: Wolters Kluwer When interpreting the above prescription number, one should be aware that these numbers do not include sales through specialty pharmacies, which we believe represent approx % of total prescriptions. An interesting reflection is also that the increased promotional activities surrounding the new topical products seem to have had a positive effect on the prescription of the older topical product Penlac and Penlac generics (ciclopirox). Strengthened growth in Penlac and Penlac generics since launch of new topical treatments Monthly prescriptions of ciclopirox (8%) Source: Wolters Kluwer We believe topical nail fungus therapies will continue to show strong growth and that the market has the potential to double in size up to 2020, when we expect MOB-015 to be on the market. 6

7 Poor therapeutic efficacy has historically hampered uptake of topical treatments MOB-015 competitive profile The introduction of the two new topical therapies for nail fungus has been an important step forward for patients. Previously, only limited options were available to patients who wanted to avoid or were unable to take oral terbinafine. As mentioned above, Penlac a nail lacquer, has had poor therapeutic outcomes and shown mycological cure rates (with nail debridement) ranging from 29 to 36%. Complete cure rates (mycological cure and normal toenail appearance) range from 5.5 to 8.5%. The table below lists outcome data for a couple of approved nail fungus therapies. Approved RX products, Onychomycosis Active substance Mycological cure Treatment length Product Company Terbinafine Tavaborole Efinaconazole Terbinafine (oral) Itraconazole (oral) Ciclopirox 54% 48w MOB % 48w Kerydin Anacor/Sandoz 53-55% 48w Jublia Valeant Pharma. >70% 12-16w Lamisil Novartis 38-49% 12-16w Sporanox Johnson & Johnson 29-36% 48w Penlac Valeant Source: Redeye Research, In the phase II trial MOB-015 reached a mycological cure rate of 54%, which is in line with current market leader Jublia. This data looks very promising indeed, particularly considering that patients in the trial had a nail fungus that was more difficult to treat than in competitors trials. The mean affected toenail in the MOB-015 phase II trial was 60%, which can be compared to 36% in the Jublia trial and 40% in the Penlac trial. Better efficacy data is expected in patients with less affected toenails In the forthcoming phase III trial, MP intends to enrol patients with slightly less affected toenails, mild to moderate onychomycosis, which will be more in-line with patients enrolled in the Jublia study. Going for patients with less affected toenails will likely translate into better efficacy data. This hypothesis is supported by data from a previous clinical trial with Nalox (same foundation as MOB-015), which showed a greater mycological cure rate in mild to moderate patients (25-50% affected toenails). The table shows MP s view of a possible target product profile for MOB-015 in patients with mild to moderate affected nails. 7

8 Source: We estimate MOB-015 peak sales to reach USD 250 million If the target profile above is reached in the coming phase III trials, we believe MOB-015 has a strong case to challenge currently approved topical nail fungus products with the best efficacy profile. The challenge instead, we believe, lies in being more than five years behind Jublia and Kerydin to the market, which will by then be well-established brands. This is the main reason for why we model a market share of at least 20% for MOB-015, translating into peak sales potential of about USD 250 million. Partnering deal post FDA approval Even though MP aims to become a leading player within nail fungus, we are at present, with current products and distribution channels, sceptical about the rationale to eventually sell MOB-015 with the company s own sales force. We see a much better rationale in partnering MOB-015 with an existing player in this field, which is why we model a partner agreement post an FDA approval. Our reasons are as follows: - Looking at the launch of Jublia and Kerydin, substantial investments in direct-to-consumer (DTC) advertising will be needed - MP currently has no other Rx products in the field, and no existing relationship with prescribers - No other dermatological Rx products to co-promote We expect MP to partner MOB-015 in 2020 When we model a deal we assume this will take place in 2020 post an FDA approval. We estimate MP will obtain a 30% royalty from a partner and an upfront payment of USD 30 million. This is somewhat lower than the best reference deal, the deal between Anacor and Sandoz, which was struck in The reason for this is that we want to be slightly cautious in our assumptions until we have more solid clinical data in hand. 8

9 Profits beat our expectations in 3Q 2015 Growth levels off as expected 3Q revenues reached SEK 66.6 (50.3) million, representing +32% y/y growth, but slightly below our estimate of SEK 68.6 million. EBITDA came in at SEK 13.8 (7.3) million, well above our forecast of SEK 7.7 million. However, profits were boosted by a SEK 2.7 million revaluation of employee stock option costs and by SEK 1.0 million from other operating income (positive currency effect on receivables). Stripping these out, EBITDA was SEK 10.1 million, but still above our expectations. Estimates vs outcome Q (SEK million) Q3'15e Outcome Diff Q3'14 Revenues % 50.3 Emtrix/Kerasal Nail/Nalox % 27.4 Kerasal % 6.8 JointFlex % 9.2 Other % 6.8 Milestone payments Nm 0.0 Cost of goods sold % Gross profit % 36.2 Selling expenses % Administrative costs % -4.7 Research and development % -5.4 Other operating income/expenses Nm 1.7 EBITDA % 7.3 EBIT % 5.3 Sales growth (y/y) 36% 32% 35% Sales growth (y/y) excl. milestones 36% 32% 35% Gross margin excl. milestones 71.6% 73.0% 72.0% EBITDA margin 11% 21% 14% EBIT margin 7% 16% 11% Source:, Redeye Research US nail fungus OTC market continues to weaken as competition from Rx products increases While profits surprised positively, as did sales of the branded OTC nail fungus products (Emtrix, Kerasal Nail and Nalox), sales surprised negatively, coming in at SEK 30.1 million, well below the SEK 35.6 million that we were looking for. US sales in particular seem to have weakened considerably in 3Q, turning around the strong performance in 2Q This was somewhat anticipated, due to the inventory build-up in previous quarters. Perhaps more surprising was the weakness in the underlying US nail fungus OTC market, -8% in first nine months and down by about 10% in 3Q according to management. We believe that this downward trend in recent quarters, is due to stiffening competition from topical Rx products like Jublia and Kerydin. On a rolling 12-month basis, sales are now at SEK (104.4) million. 9

10 In the coming quarters we expect more or less flattish sales growth. SEK million Kerasal Nail/Nalox product sales forecast, rolling 12 months Q4'12 Q2'13 Q4'13 Q2'14 Q4'14 Q2'15 Q4'15e Q2'16e Q4'16e Source:, Redeye Research R&D investments in commercial products at a low in the last two years Across the board, costs were below our estimates in 3Q Research and development (R&D) expenses in particular came down and were lower than we had projected. Looking back at investments in research and development, investments in commercial products have been trending lower for the last two years. R&D expenses - commercial products 0.0 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3' SEK million Source:, Redeye Research Profitability in the commercial operations delivers EBITDA margins in-line with the financial target Profitability (EBITDA) in the commercial operations, adjusted for R&D expense and business development related to Rx products, reached SEK 18.1 (11.7) million in 3Q. This equals an EBITDA margin of 27.1 (23.2)%. Excluding revaluation of stock options and receivables, adjusted EBITDA was SEK 14.4 million, representing an EBITDA margin of 21.6%. EBITDA from commercial operations has considerably improved in recent years, on a trailing 12-month basis, and rose to SEK 69.1 million in 3Q This represents an EBITDA margin of 25.0%, in-line with the financial target of an EBITDA margin of 25.0%. 10

11 Adjusted EBITDA margin (adjusted 12m) Q Q MSEK % 25% 20% 15% 10% 5% 0 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 0% EBITDA-adjust 12-month EBITDA-adjust 12-month Source:, Redeye Research Cash flow from operating activities continues to improve and amounted to SEK 11.5 (6.9) million in 3Q Financial forecasts Ahead of the 4Q numbers we have lowered our top-line estimates. We expect the pressure in the US OTC nail fungus market to continue and that lower inventory levels will also put pressure on sales in To some extent we have also lowered our cost estimates, softening the impact on profits. (SEK million) 2015e 2016e 2017e Revenues New Old (%) -3% -11% -12% Gross profit New Old (%) -2% -11% -12% Selling & admin. New Old (%) -1% 0% -2% R&D New Old (%) -20% -27% -20% EBITDA New Old (%) 9% -25% -24% EBIT New Old (%) 12% -30% -28% Source: Redeye Research 11

12 Quarterly estimates for 2015 and 2016 are presented below. Quarterly estimates (SEK million) Q1 Q2 Q3 Q4e Q1e Q2e Q3e Q4e Emtrix, Kerasal Nail, Nalox Kerasal JointFlex Other products Milestones Revenue COGS Gross Profit Selling expenses Administrative expenses Research and development exp Other income/expenses EBITDA EBIT Net financial items EBT Tax Net Profit EPS Neg Neg Growth, excl. milestones 54.5% 59.3% 32.0% 18.7% 11.5% 3.8% 4.9% 8.3% Gross margin 77.6% 77.6% 73.1% 72.5% 77.0% 77.0% 72.0% 72.0% EBITDA margin 23.7% 12.0% 20.8% 3.3% 23.1% 22.4% 20.9% 15.7% EBIT margin 20.4% 9.0% 16.4% Neg 19.4% 19.3% 16.7% 10.6% Source: Redeye Research, The growth rate seems to have peaked in 2Q last year as we have expected, and growth will probably come down further in the coming quarters. The reason for this is a flattening positive currency effect going forward, increased competition from Rx nail fungus products in the US and an inventtory build-up in 2015 which we expect to have a reversed effect this year. Although we expect growth to come down, we still believe MP will be able to deliver growth in 2016, driven in particular by a solid performance in ROW (Asia). We expect sales growth for North America could be more or less flat in 2016 and reach SEK million, even though acquisition of Balmex (April 2015) will be fully taken into account in We expect Balmex to contribute SEK million to the top line compared to 2015 estimates. We don t expect sales to grow in Europe in As previously projected the EBITDA margin will not reach 25% in Ee expect the EBITDA margin to be just slightly higher than the 15.5% we forecast for 2015 (see next page). 12

13 Full year estimates (SEK million) e 2016e 2017e Emtrix, Kerasal Nail, Nalox Kerasal JointFlex Other products Milestones Revenue COGS Gross Profit Selling expenses Administrative expenses Research and development exp Other income/expenses EBITDA EBIT Net financial items EBT Tax Net Profit EPS Growth, excl milestones 83.9% 30.2% 42.2% 4.7% 7.0% Gross margin 74.8% 75.5% 75.6% 75.1% 75.0% EBITDA margin -5.1% 12.6% 15.5% 16.8% 18.5% EBIT margin -9.0% 8.6% 11.5% 12.8% 14.8% Source: Redeye Research, We model costs of SEK 148 million for the MOB- 015 phase III programme In our forecast above we have not included any acquisitions, although it is highly likely we will see some during the forecast period. All research and development costs related to the MOB-015 phase III programme have been capitalised up to In 2016 we estimate investment in the phase III programme to reach SEK 46 million, in 2017 SEK 34 million, in 2018 SEK 58 million and in 2019 SEK 10 million. We forecast a risk-adjusted milestone payment of SEK 168 million in 2020 from a partnering deal in the US. Valuation We value using a combination of multiples based on peer group companies, and DCF. High dependency on the branded OTC nail fungus products and the brief history as a profitable company imply greater risk compared to the more mature consumer health companies, and for this reason we use a WACC of 11.6%. However, if performs in line with our forecasts, we would expect to reduce the WACC over time. Our fair value is SEK 69 Based on our base case assumptions presented above we derive a DCF value of SEK

14 Scenario analysis There are many factors that will affect the outcome in different ways in the coming years. In our scenario analysis we have attempted to quantify the most important ones and how different potential scenarios would impact the valuation of the company. Base case scenario assumptions: We assume an average revenue growth rate of approx. 6% through 2020 in the OTC business, which is based on current branded commercial products. From 2021 and onwards, we assume a growth rate in line with the expected inflation rate (2%) We risk-adjust pipeline products and assume a 60% probability of MOB-015 reaching the market in 2020 and a 30% probability of Bupi reaching the market in 2020 We assume MP will deliver EBIT margins of 30% from 2021 Bull case scenario assumptions: We do not risk-adjust pipeline products (MOB-015) in our estimates and expect a launch in 2020 We assume an average revenue growth rate of 12% through 2020 in the OTC business, based on current branded commercial products. From 2021 and onwards we assume a growth rate in line with the expected inflation rate We assume delivers EBIT margins of 35% from 2021, strengthened by high-margin RX products which are expected to have reached the market The assumptions above give a fair value of SEK 100 Bear case scenario assumptions: We assume none of current pipeline projects reach the market We assume revenue growth flattens out in 2018 and then expands in line with expected inflation rate We assumes EBIT margins peak at 15% in 2018 The assumptions above give a fair value of SEK 34 14

15 Income statement E 2016E 2017E (SEK million) Net sales Total operating costs EBITDA Depreciation Amortization Impairment charges EBIT Share in profits Net financial items Exchange rate dif Pre-tax profit Tax Net earnings Balance (SEK million) E 2016E 2017E Assets Current assets Cash in banks Receivables Inventories Other current assets Current assets Fixed assets Tangible assets Associated comp Investments Goodwill Cap. exp. for dev O intangible rights O non-current assets Total fixed assets Deferred tax assets Total (assets) Liabilities Current liabilities Short-term debt Accounts payable O current liabilities Current liabilities Long-term debt O long-term liabilities Convertibles Total Liabilities Deferred tax liab Provisions Shareholders' equity Minority interest (BS) Minority & equity Total liab & SE Free cash flow E 2016E 2017E (SEK million) Net sales Total operating costs Depreciations total EBIT Taxes on EBIT NOPLAT Depreciation Gross cash flow Change in WC Gross CAPEX Capital structure E 2016E 2017E Equity ratio 74% 84% 86% 49% 50% Debt/equity ratio 15% 5% 1% 88% 83% Net debt Capital employed Capital turnover rate Growth E 2016E 2017E Sales growth 0% 27% 42% 4% 7% EPS growth (adj) -138% -192% 90% -39% 39% DCF valuation Cash flow. MSEK WACC (%) 11.6 % NPV FCF ( ) -5 NPV FCF ( ) 367 NPV FCF (2025-) 575 Non-operating assets 62 Interest-bearing debt -17 Fair value estimate MSEK 984 Assumptions (%) Average sales growth 9.2 % Fair value e. per share. SEK 69.2 EBIT margin 22.0 % Share price. SEK 55.0 Profitability E 2016E 2017E ROE -6% 5% 7% 4% 6% ROCE -6% 6% 10% 8% 7% ROIC -6% 6% 9% 9% 10% EBITDA margin -5% 13% 16% 17% 18% EBIT margin -9% 9% 12% 13% 15% Net margin -7% 6% 8% 5% 6% Data per share E 2016E 2017E EPS EPS adj Dividend Net debt Total shares Valuation E 2016E 2017E EV P/E P/E diluted P/Sales EV/Sales EV/EBITDA EV/EBIT P/BV Share performance Growth/year 13/15e 1 month % Net sales 34.4 % 3 month -4.4 % Operating profit adj 12 month 35.5 % EPS. just Since start of the year % Equity 31.3 % Shareholder structure % Capital Votes Östersjöstiftelsen 16.0 % 16.0 % SHB fonder 8.1 % 8.1 % Avanza Pension Försäkring 7.0 % 7.0 % Grandeur Peak 5.9 % 5.9 % Carnegie Luxembourg 4.5 % 4.5 % Wolco Invest AB 4.2 % 4.2 % Fondita 4.0 % 4.0 % JP Morgan 2.0 % 2.0 % Societe Generale 1.9 % 1.9 % Nordnet Pensionsförsäkringar 1.8 % 1.8 % Share information Reuters code MOB.ST List Small cap Share price 55.0 Total shares. million 14.2 Market Cap. MSEK Management & board CEO CFO IR Chairman Peter Wolpert Anna Ljung Mats Pettersson Financial information FY 2015 Results February Q1 report May Q2 report August Q3 report November Analysts Klas Palin klas.palin@redeye.se Björn Olander bjorn.olander@redeye.se Redeye AB Mäster Samuelsgatan tr Stockholm 15

16 Revenue & Growth (%) EBIT (adjusted) & Margin (%) E 2016E 2017E 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% E 2016E 2017E 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Net sales Net sales growth EBIT adj EBIT margin Earnings per share Equity & debt-equity ratio (%) E 2016E 2017E E 2016E 2017E 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% -20.0% EPS, unadjusted EPS, adjusted Equity ratio Debt-equity ratio Conflict of interests Klas Palin owns shares in the company: No Björn Olander 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. Company description is a Swedish pharmaceutical company that commercialises proprietary. acquired and licensed products in the global market. Initially the company specialised in the treatment of skin diseases but is now widening its scope to include additional areas. markets OTC brands in the U.S. and sells through distributors in more than 40 countries. 16

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. 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