Six Biotechnology Stocks

 
Mesoblast Limited


MSB Details

Grant of key patent: Mesoblast Limited (ASX: MSB) this year reported about receiving the grant of a key patent by the United States Patent and trademark office for its intellectual property portfolio covering the use of its Mesenchymal Precursor Cells (MPCs) in the treatment of rheumatic diseases, including rheumatoid arthritis (RA). Moreover, MSB has reported that the single intravenous infusion of its proprietary allogeneic Mesenchymal Precursor Cell (MPC) product candidate, MPC-300-IV, has resulted a dose-related improvement in clinical symptoms, physical function, and disease activity relative to placebo through the 12-week primary endpoint in its Phase 2 trial in biologic refractory rheumatoid arthritis. MPC-300-IV, is well-positioned to advance through a strategic partnership into Phase 3 development for biologic refractory rheumatoid arthritis.
 

FY 16 Financial Performance (Source: Company Reports)
 
Additionally, MSB in FY 16 has reported 115% increase in the revenue to US$42.5 million and the loss before income tax grew by 6% of US$90.8 million on prior period. The group has cash reserves of US$80.9 million as at FY16. MSB has been removed from S&P/ASX 200 index effective September 16, 2016. Meanwhile, MSB stock fell 54.98 % in the last six months (as of September 16, 2016) due to Teva’s withdrawal of funds. On the other hand, MSB has a solid track record. We maintain a “Hold” recommendation on the stock at the current price of $1.175
 

MSB Daily Chart (Source: Thomson Reuters)
 
Bionomics Ltd


BNO Details

Solid top line growth while controlling bottom line loss: Bionomics Ltd (ASX: BNO) had earlier reported about major inflection point expected for Bionomics with regard to the readout of the BNC210 Phase II study in generalized anxiety disorder (results expected in Q3 2016). The data is expected to be instrumental in delivering a global partnership for the drug. The group has announced for the presentation of the data (two posters) at the European College of Neuropsychopharmacology (ECNP) Congress in Vienna on September 20, 2016. BNC210 is a negative allosteric modulator of the alpha 7 nicotinic acetylcholine receptor (alpha7 nAChR) in development for the treatment of anxiety and stress-related disorders. BNO otherwise has reported 19.28% growth in the revenue to $ 8,143,288 in FY 16 while the group’s loss after tax has reduced 2.01% to $ 16,608,757. The revenue consists of payments under BNO’s agreement with MSD coupled with contract service revenue of BNO’s wholly-owned subsidiaries Neurofit and Prestwick. The top line also comprises rental and interest income as a result of ordinary activities and other income including the government’s R&D Tax Incentive in Australia and similar incentives for the subsidiaries.
 

FY 16 Financial Performance (Source: Company Reports)
 
Meanwhile, BNO has not announced any dividend for FY 16 and has been removed from S&P/ASX 300 index after the market closes on September 16, 2016. Meanwhile, BNO stock fell 10.2% in the last five days (as of September 16, 2016). We give a “Speculative Buy” recommendation on the stock at the current price of $0.265
 

BNO Daily Chart (Source: Thomson Reuters)
 
Monash IVF Group Ltd


MVF Details

Delivered both organic as well as inorganic growth:  Monash IVF Group Ltd (ASX: MVF) reported a 25.3% growth in the group revenues to $156.6 million in FY 16 in which 10.7% is from organic growth and 14.6% is derived from acquisitions. Net profit after tax (NPAT) growth of 34.6% to $28.8m has been reported. The FY16 NPAT has exceeded the upper range of MVF’s guidance of delivering the NPAT growth of 25% to 30% on its FY15 NPAT performance, by 4.6%.
 

FY 16 Financial Performance (Source: Company Reports)
 
The group’s Sydney Ultrasound for Women (SUFW) network acquisition in June 2015, contributed $17.7 million in revenue growth and $4.0m EBITDA in FY16. Meanwhile, the group has re-financed the syndicated debt facility with a new $110m term debt facility and $5m working capital facility. Additionally, the group kept $40m accordion facility for the strategic growth opportunities. The stock has rallied over 32.38% in the last six months (as of September 16, 2016), we give a “Hold” recommendation on this dividend yield stock at the current price of $2.31
 

MVF Daily Chart (Source: Thomson Reuters)
 
Mayne Pharma Group Ltd


MYX Details

Expanding product base: Mayne Pharma Group Ltd (ASX: MYX) in FY 16 reported an 89% increase in the revenue to $267.3m and 379% growth in the reported profit after tax to $37.4m. The Doryx franchise, which was acquired in February 2015, achieved the earnings guidance set at that time. In addition, MYX successfully launched the dofetilide capsules, first generic to Pfizer’s Tikosyn and got FDA approval of next generation Doryx MPC tablets.
 

FY 16 Financial Performance (Source: Company Reports)
 
Moreover, MYX is expecting a significant growth for FY17 due to the recent US generic product acquisition coupled with new product launches and continued growth of Metrics Contract Services. On the other hand, MYX stock already rose over 44.13% in the last six months (as of September 16, 2016) placing the stock at relatively higher levels which is trading at an unreasonable P/E. Accordingly, we give an “Expensive” recommendation on the stock at the current price of $1.985
 

MYX Daily Chart (Source: Thomson Reuters)
 
Sirtex Medical Ltd


SRX Details

Decent performance for FY16 despite high expectations: Sirtex Medical Limited (ASX: SRX) has reported a 32.8% growth in net profit after tax (NPAT) of $53.6 million for FY 16 against the previous corresponding period. The profit growth is due to the strong double digit dose sales growth, measured operating expenditure growth necessary to expand the business globally, and the transactional benefit of a lower Australian Dollar versus the US Dollar and Euro over the period. Additionally, the global dose sales of SIR-Spheres microspheres increased 16.4% to 11,931 units as compared to 10,252 units sold in the prior corresponding period. SRX would continue to expand the core SIR-Spheres microspheres business globally through continued the strong investment into sales and marketing, clinical and medical functions required to build awareness and drive adoption.
 

FY 16 Financial Performance (Source: Company Reports)
 
Moreover, SRX anticipates the double digit dose sales growth to continue in FY17. Meanwhile, SRX stock rose over 16.8% in the last three months (as of September 16, 2016) and we give a “Hold” recommendation on the stock at the current price of $31.24
 

SRX Daily Chart (Source: Thomson Reuters)
 
Prima BioMed Limited


PRR Details

Loss increased extensively in FY 16: Prima BioMed Limited (ASX: PRR) earlier announced that its immuno-oncology product candidate IMP321, the first biologic that is manufactured in China, was dosed in Phase IIb clinical trial in Europe. PRR’s Australian melanoma trial now has six clinical centers approved and all of them have been activated.
 

FY 16 Financial Performance (Source: Company Reports)
 
In addition, PRR got the patent number 2142210 entitled “Cytotoxic anti-LAG-3 monoclonal antibody” by the European Patent Office. IMP731, which is under partnership with GSK (NC) has received the European patent protection on method of use for the treatment of transplant rejection and autoimmune disease. On the other hand, PRR reported a loss after tax of A$62,015,184 in FY16 owing to non-cash financing costs while the stock fell over 9.5% in the last six months (as of September 16, 2016). The group did not declare any dividends in FY 16. We give an “Expensive” recommendation on the stock at the current price of $0.038
 

PRR Daily Chart (Source: Thomson Reuters)

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