AVITA Medical Limited

Strong U.S. Product Sales During March Quarter: AVITA Medical Limited (ASX: AVH) is a medicine company with global foothold providing a new approach for regeneration of skins.

Third Quarter 2019 Update: The company highlighted strong U.S. product sales of A$2.2 million for Q3FY19 in its recent quarterly update, where the sales grew almost by double than in the second quarter. The company completed equity placements for a total of A$15.5 million in proceeds.

Sales of RECELL® system which commenced in January 2019 witnessed strong performance during the first 3 months of promotion.AVH entered into a collaboration with COSMOTEC in February 2019, to market and distribute the RECELL System to treat burns and other wounds in Japan.  


U.S. Commercial Sales of RECELL System (Source: Company Reports)
 
The company in its quarterly cash flow update reported cash outflow from operating activities of ~$6.481 millionduring the quarter ended 31 March 2019. The net cash outflow from investing activities stood at $0.501 million with financing cash inflow of $15.536 million. The cash and cash equivalents at the end of the quarter stood at ~$38.902 million as compared to ~$30.042 million in the previous quarter. Cash receipts from customers for Q3 FY2019 were A$2,513, up by 193% compared to the prior quarter driven by the U.S. national market launch of the RECELL System.

Future Cash Requirement: The future cash requirement will be dependent upon the success of AVITA Medical’s efforts to commercialize the RECELL System, particularly in the U.S., and the timing and magnitude of clinical and other research & development programs which the company undertakes to expand its product pipeline. The cash requirements, going forward, is likely to be funded by current cash resources and potentially the issuance of shares and debt financing.

The stock performance was significantly volatile with returns of 175.86% and 17.65% over the past three months and one-month period respectively. Considering the highlighted strong sales, higher quarterly cash receipts along with the volatile performance of the stock in recent past, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.405 (up 1.25% on 14 May 2019).

OncoSil Medical Limited

Waiting for CE Marking Decision: OncoSil Medical Limited (ASX: OSL) is a medical device company with a focus on the Oncology Research and Development. It focusses on treatments for patients with cancer. The company is engaged into the development of lead product candidate, the OncoSil™ localized radiation therapy.
 

Earlier, the company revealed that US FDA has confirmed that the PanCO (ex-US) clinical study safety data meets IDE requirement, enabling the company to proceed to a full US pivotal study without further US patient data. The company’s US OncoPaC-1 clinical study has now closed for recruitment with implantation of nine patients successfully. 

The company reported cash outflow from operations of ~$2.827 million during the quarter ended 31 March 2019. The cash and cash equivalents at the end of the quarter stood at ~$10.21 million as compared to ~$13.037 million in the previous quarter.


Results 1HFY19 (Source: Company Reports)

During the half year, the company provided a highly encouraging overview of clinical results from an Interim Analysis conducted on the PanCO study, with a strong clinical performance recorded across multiple metrics.

1H FY19 Performance: On the financial performance front, the revenues from ordinary activities went up by 6.3% to $1.93 million in 1H FY19. Loss for the half-year attributable to the owners of OncoSil Medical Ltd stood at $5.149 million which is 13.6% higher than the prior corresponding period, primarily due to increased R&D expenses and consulting, finance & legal expenses.

The company focussed on the application for CE Marking of the OncoSil™ device in the European Union, development its EU launch and early commercialization strategy, and clinical progress in the USA market with the OncoPaC-1 clinical study during the first half of FY19.

Outlook: The company is looking forward to building on its success to date throughout the year ahead, as it works towards commercializing its device and improving patient outcomes in the area of pancreatic cancer. Moreover, OSL intends to make a difference through its important mission of transforming the prognosis with pancreatic cancer. Further, as a precaution, the company will be operating under a revised business plan while it awaits the outcome of the CE Marking decision.

The company is targeting a reduction in its annualised cash cost base through reductions to operating expenditure, R&D expenditures and a pause on any new clinical trial and study activities until certainty around the CE Marking is achieved.

Stock Recommendation: Over the past one month, the stock has yielded a return of 29.63%. With key operational developments during the first half of the year while there have been issues with CE Mark proceedings, we recommend a “Hold” rating on the stock at the current market price of $0.070 per share.

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