Pharmaxis Limited

PXS Details

H1FY22 Financial and Operational Update: Pharmaxis Limited (ASX: PXS) is a clinical-stage drug development company focused on inflammatory and fibrotic diseases.

• Significant Improvement in Sales: H1FY22 top-line clocked at $5.8 million, up by $2.7 million relative to $3.1 million sales in H1FY21. Bronchitol sales for the period clocked $4.9 million, relative to $2.2 million in H1FY21, and Aridol sales stood unchanged at $0.9 million.
• PXS Distribution Network: PXS supplied two large GEN orders, executive distributor, for Russia in Q1FY22, with the following order expected later in CY22. The second shipment of Bronchitol to Chiesi was made for the US in Q2FY22.
• Current Financial Standing: As of 31 December 2021, PXS managed a cash balance of $20.9 million. The company raised $9.8 million via a share purchase plan (SPP). Total borrowings stood at $5.9 million.

Financial Snapshot; Analysis by Kalkine Group

Key Risks and Challenges

Considering the clinical-stage drug development business, the synthesized products risk legal proceedings and unfavourable clinical results. The business is subject to extensive regulatory compliances.

Outlook

Effective 1 July 2021, PXS sold Australian distribution rights for Bronchitol and Aridol in Australia, New Zealand, and other Asian territories to Bioimpact Pty. Ltd at an appointment fee of $2 million. PXS is expected to manufacture and supply Bronchitol and Aridol to Bioimpact Pty. Ltd. from its factory in Sydney. PXS partnership on Bronchitol for the US with Chiesi Group shall deliver added top-line support.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock’s historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of PXS gave a positive return of ~6.250% in the past year. The stock is currently trading lower than the 52-weeks average price level band of $0.071 - $0.150. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in percentage terms). Considering the potential risks in clinical trials and regulatory constraints, the company might trade at some discount to its peers’ EV/Sales multiple average. For valuation, few peers like Starpharma Holdings Ltd (ASX: SPL), Arovella Therapeutics Ltd (ASX: ALA), Medical Developments International Ltd (ASX: MVP) and others have been considered. Given the decent top-line build-up, sale of distribution rights, partnership with Chiesi Group, current trading levels, upside indicated by valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $0.085, down by ~4.495%, as of 11 March 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

PXS Weekly Technical Chart, Data Source: REFINITIV

Tempus Resources Limited

TMR Details

Recent Business Updates and Financial Highlights: Tempus Resources Limited (ASX: TMR) is a growth-oriented gold exploration company actively exploring projects in Canada and Ecuador.

• Private Placement: On 8 March 2022, TMR announced a Canadian non-brokered private placement of C$1 million from the sale of shares for C$0.07/share and flow-through shares of the company for C$0.085/FT share.
• Revised Technical Report: On 2 March 2022, TMR filed a revised technical report for its Blackdone-Elizabeth Project. The revisions were made to comply with specific requirements of National Instrument 43-101 standards of disclosure for mineral projects.
• Quick Financial Highlight: In H1FY22, the company reported a net loss of $964,641 with no operational revenues. The current assets as of 31 December 2021 expanded to $2.81 million relative to $1.36 million as of 31 December 2020.

Cash Flow Movements; Analysis by Kalkine Group

Key Risks and Challenges

Considering the company’s exploration phase, the risk of exploration stands high with high reliance on studies. The company has yet not generated any revenue; hence a profitability concern is displayed.

Outlook

Concerning Blackdone Gold Mine, TMR has drilled 5,000 meters in 2020 and competed in an alternation study, which indicated the potential of discoveries. The company has planned further drilling in 2022.

Stock Recommendation: The stock of TMR gave a negative return of ~45.454% in the past year. The stock is currently trading lower than the 52-weeks average price level band of $0.080 - $0.295. Given the exploration prospects, 2020 drilling status, current trading levels, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $0.090, as of 11 March 2022.

Technical Commentary: On the daily chart, TMR prices are trading above the downward sloping trend line support level and taking support of the trendline. Moreover, the momentum oscillator RSI (14-period) trading at ~42.48 level and formed the positive divergence, which might indicate the possibility of a rebound in the stock. However, the prices are trading below the trend-following indicator 50-period SMA, which may act as a resistance zone.  An important support level for the stock, is placed at AUD 0.080 while the key resistance level is placed at AUD 0.11.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

TMR Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should depend on the investors’ appetite for upside potential, risks, holding duration, and previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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