Company Overview: Bionomics Limited (ASX: BNO) is a small-cap but well known clinical-stage biopharmaceutical company with presence in Australia, France, and the United States. It was founded in 1998 and is based in the Barton, Australia. It has 29 active drug programs in the pipeline. The majority of the drugs are to treat conditions related to Solid Tumors, Colorectal Cancer, Depression/Stress/Anxiety, Epilepsy, Multiple Sclerosis, Ovarian Cancer, Chronic pain, Neuropathic Pain, Pancreatic Cancer and Parkinsons Disease, etc. The key product candidates of the company include BNC210, BNC375, BNC101 and BNC105, and the core technologies centre around ionX and MultiCore. The lead drug candidate is BNC210, which was lately under Phase 2 for the treatment of agitation and for the post-traumatic stress disorder.


BNO Details

BNC210 targets multi-billion-dollar markets with unmet need – a main growth driver: The company is developing BNC-210, a negative allosteric modulator of the alpha7 nicotinic acetylcholine receptor, and related compounds, for the potential once-daily oral treatment of anxiety disorder including Generalized Anxiety Disorder (GAD), panic disorder, post-traumatic stress disorder (PTSD), depression and agitation. In May 2018, a phase II trial was initiated in elderly patients with agitation; at that time, data was expected in the first quarter of 2019. Further, the group has entered an important period with the results of two ongoing Phase 2 trials now expected in the near term. As we know that there are no approved treatments for agitation, but the group found an unmet medical need with approximately 5 million cases in the U.S. alone. The research, which involved the input of some 30 clinical key opinion leaders and up to seven health insurers, puts the US market opportunity for PTSD at US$4.7 billion per annum and agitation at US$1.6 billion per annum. We expect that the company has a bright scope to scale up its BNC210 profile for agitation resulting in topline growth in the upcoming period. The group’s June quarter updates also reflected cash flows based on investments in the clinical trials.


BNC210 targets multi-billion-dollar markets with unmet need (Source: Company Reports)

Phase II PTSD Study Treatment – To Support Top-line growth: Following completion of recruitment, the group enrolled 193 patients in RESTORE trial at 25 clinical sites in the US and Australia. During the trial period, the patients were evaluated by using the Clinician-Administered PTSD Scale for DSM-5 (CAPS-5) as the primary endpoint. CAPS-5 is the approvable endpoint for PTSD, so results from the study should be highly predictive. The major objective of this study is to determine whether BNC210 causes a decrease in PTSD symptoms as measured by CAPS-5. The secondary objective of this study is examining the effects of BNC210 on Anxiety (HAM-A), Depression (MADRS), and Functioning and Quality of Life, Safety, and Tolerability. Once it gets success then the company will be in an advantageous position to generate more sales in the years to come.


Recruitment for Phase 2 Trial in PTSD in Australia and the USA (Source: Company Reports)

Robust Business Strategy could support overall growth:  The group refined its strategic move to invest in developing its drug candidates to a stage that both interests big pharma and generates good potential returns for shareholders. As a part of its strategy, the group focuses on the development of its ion channel drug candidates, i.e., allosteric modulators. The company plans to accomplish its CNS candidate for late-stage development and commercialization, and to monetize its clinical-stage, non-ion channel, oncology programmes. With this strategic move, the company will grow substantially in the long-run.

Highly Experienced Management Team: The company has a highly experienced management team that is being currently headed by the Chairman Dr. Errol De Souza who was co-founder and Chief Scientific Officer of Neurocrine Biosciences. He has rich exposure in the development of therapeutics for the treatment of central nervous system (CNS) disorders. He has served on multiple editorial boards, National Institutes of Health (NIH) Committees and is currently a Director of number of public and private companies. Besides this, Dr. Deborah Rathjen joined the Board in 2000 with more than 20 years of rich experience in the company building and financing, mergers and acquisitions, therapeutic product research and development, and business development and licensing. Hence, we expect that the senior management will provide the guidance to the company for growth path ahead.

Financial Performance: The group posted decent first half-year performance wherein revenue from ordinary activities was up by about 1 per cent against 1HFY17, while loss after tax amounted to about $8.85 million against $9.69 million of the prior corresponding period (pcp). It posted consolidated revenue growth at a significant CAGR (close to 50%) over FY13 to FY17. However, profit marked a negative CAGR impacted by the rise in R&D and other operating expenses during the same period. Revenue consisted of collaboration income, royalties, sales income, rental income and interest income received because of ordinary activities. Net operating and investing cash outflows for the period amounted to $12.30 million, up by 412 per cent as on corresponding period in the prior year. Moreover, the company enjoys virtual debt-free status along with decent cash & cash equivalent reserve of $23.930 Mn (as at June 30, 2018). The current ratio and quick ratio stood at 6.17x and 6.11x, respectively in 1HFY18, representing adequate liquidity to fulfill any shortcoming liability in near future.


1HFY18 Financial Highlights (Source: Company Reports)

Positive Outlook: We are optimistic on the company as the group has a robust balance sheet, strong product pipeline of core and non-core assets, secured strategic partnerships and licensing agreements, and capital market support and exposure. Based on this, we continue to maintain our positive outlook on the company supported by aforesaid facts and other ongoing developments such as expanding the clinical study of BNC210 for the treatment of agitation, and monetization through BNC101 and BNC105, etc. Besides this, the group has built a globally competitive business with integrated drug discovery and development expertise to support strategic partnerships and clinical development of its drug candidate. Moreover, the group has continued to work closely with JV Partner MSD, enabling MSD to reach clinical trial milestones. Further, the group also continues to progress well on several early stage ion channel programs targeting pain, depression, cognition, PTSD, and epilepsy. The group targets for identification of a potential therapeutic candidate in the second half of CY2018.


Outlook (Source: Company Reports)

Stock Performance: BNO continues to be in a strong position to progress its developments of BNC210 in PSTD. As the company matures, its strategy will focus on its core strength and area of significant competitive advantage in ion channel biology and drug discovery. In pursuing its path, there is a reorganization that its clinical stage oncology assets i.e., BNC105 and BNC101 are no longer “on strategy”. The company will, therefore, seek to monetize both assets in parallel with its current committed support of investigator-initiated clinical trials funded by granting bodies and Pharma companies. Meanwhile, Private Portfolio Managers Pty Ltd (PPM) and its subsidiary Portfolio Nominees Pty Ltd. ceased to be the substantial holder of the Group since 8 June 2018. However, the share price has risen 32.88 per cent in the past six months but down by 7.62 per cent in the past one month as at August 06, 2018. Moreover, BNO is also making efforts to improve its ROE. Hence, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.480, considering its healthy business model which is currently driven by the lead asset i.e., BNC210 and other developments which are underway.
 

BNO Daily Chart (Source: Thomson Reuters)

 
Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.