Nanosonics Limited

Launch of Trophon 2 in Q1 of FY19: Nanosonics Limited (ASX: NAN) is an innovator in infection prevention. It has a unique disinfection device, automated trophon® EPR, which has helped in setting a new standard of care in ultrasound probe disinfection practices globally.


2009-2018 Results (Source: Company Reports)

The company’s revenue came in at $60.7 million in FY18 as compared to $67.5 million in FY17, because of transitionary reduction in capital revenue related to earlier than anticipated regulatory approval of trophon2 along with subsequent reducing of trophon EPR inventory by the distributors gradually.The revenue also took a hit due to deferring purchase by the customers for the pending launch of trophon2 in Q1 of FY19.

The PBT stood at $5.6 million in FY18 compared to $13.9 million in the previous year. This reduction in profit before tax reflects growing investments in the strategic growth agenda of the company coupled with transitionary impact of a reduction in capital sales associated with earlier than anticipated trophon2 approval. Cash and cash equivalents was up $6.4 million to $69.4 million supporting ongoing growth and expansion, compared to $63.0 million in FY17.  The gross margin improved 0.3% to stand at 74.6% in FY18 compared to 74.3% in FY17.

What to Expect from NAN Moving Forward: The company continues to execute on the long-term strategic growth agenda. As per the company, the FY19 operating expenses are expected to be approximately $53 million reflecting FY18 Q4 run rate coupled with further investments in their growth strategy. Going forward, the company expects to continue growth in installed base in North America and, beyond FY19, the company expects the ongoing development of the new infection prevention solutions for which it targets one or more new products by the end of FY2020. However, this is subject to regulatory approvals and depends on the continuation of growth in trophon installed base in all core markets.

The stock is however currently trading at $3.340 with a market capitalization $971.63 million. It is trading at a higher PE multiple of 168.750x. The stock has generated a YTD return of 16.55% with a 14.08% return over the last one month.

With strategic growth agenda and regulatory approval of trophon2, we have a positive outlook on the company and hence we maintain our “Hold” rating on the stock at the current market price of $3.340 (up 3.086% on January 31, 2019).
 
 

Telix Pharmaceuticals Limited

Significant quarterly activities update: Telix Pharmaceuticals Limited (ASX: TLX) is in the health care sector. The company is into the commercialization and development of molecularly targeted radiation products, used for cancer treatments.

On 31 January 2019, the company released its Appendix 4C for the December 2018 quarter. Significant activities of the company include scale-up of manufacturing of the 68Ga-PSMA illumetTM cold kit for US product launch. The company did a distribution agreement with Cardinal Health for the pharmacy preparation and distribution of the 68Ga-PSMA cold kit, which was developed by ANMI SA and commercialized for the US market by Telix USA. The company started ZIRCON Phase III study in Europe and Australia for TLX250- CDx (renal cancer). The company decided to progress TLX591 to Phase III as the result of data analysis of huJ591 data following the completion of the acquisition of Atlab.

The company collaborated with Nihon Medi-Physics Co, a leading manufacturer, and supplier of radiopharmaceuticals in Japan, for the feasibility of 225Ac-labeled (actinium) antibodies for the treatment of clear-cell renal cell cancer (ccRCC) and it also completed the first and second stage consultations with the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) for a Phase I/II study of 89Zr-girentuximab (TLX250-CDx) in Japan. 


Cash Flow from Operations (Source: Company Reports)

On the financial front, the company has reported cash of $25.668 million at the end of December 2018. Cash outflows from operating activities were $8.503 million, with total direct R&D activities of $5.123 million. Cash outflows from investing activities stood at $3.672 million. However, the stock of Telix is currently trading at $0.717 with a market capitalization of $164.87 million. It has generated a YTD of 16.15%.

Stock Recommendation: On the daily chart of TLX, Moving Average Convergence Divergence or MACD has been applied and default values were considered. It was observed that the MACD line has just crossed the signal line and is trending downwards. However, the crossover has just taken place and, hence, it is quite early to comment on the stock price movement. Hence, we maintain our “Hold” recommendation on the stock at the current market price of A$0.717 per share, considering decent quarterly activity update. 
 

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