Mayne Pharma Group Limited

 

MYX Details

Specialty Brands Posted Robust Growth: Mayne Pharma Group Limited (ASX: MYX) is a specialty pharmaceutical company focused on applying its drug delivery expertise to commercialise branded and generic pharmaceuticals. The company also provides contract development and manufacturing services to more than 100 clients worldwide. MYX has two product development and manufacturing facilities based in Salisbury, South Australia and Greenville, North Carolina US with expertise in formulating complex oral dose forms including potent compounds, controlled substances, modified release products and inherently unstable compounds. Mayne Pharma has grown its revenue from A$83 million in FY13 to A$530 million in FY18 and adjusted EBITDA from A$18 million to A$165 million, primarily driven by strategic acquisitions, the launch of new products, and initiatives to boost the revenue growth and lower the cost.
 
Recent Update: The company recently noticed that Investors Mutual Limited has raised its voting power in the company to 8.47% from the earlier 7.08%.

Trading Update and Outlook: The company recently provided an unaudited trading update for the 10 months ended 30 April 2019. In 1HFY19, generic business faced a challenging start driven by competitive pressure and the segment posted a de-growth of 3%, which intensified further in the period of Jan-Apr 2019. On an FY19 YTD basis, generic products posted a de-growth of 15%. However, all other segments experienced decent growth with Speciality Brands recording an outstanding pcp growth of 122% in FY19 YTD. Contract Services and MPI grew by 17% and 11%, respectively in FY19 YTD. However, going forward, the Management expects a stronger 4QFY19, largely due to a rebound in Generic Products, and ongoing growth in other segments.
 
 

Trading Updates (Source: Company Reports)

Going forward, the Management expects stronger results, backed by recently launched specialty brands - TOLSURA and LEXETTE. The company is also expected to witness growth in the generic and proprietary dermatology and women’s health portfolios.An improvement in retail generic performance and delivery on the pipeline of committed Metrics Contract Services business is also expected. Initiatives at the Greenville site to improve the operational efficiencies is expected to result in the improved financial in FY20 and beyond. Additionally, pending approvals for its generic products at the FDA are expected to be commercialised, going forward, with generic NUVARING® to be launched in CY20.

Stock Recommendation: The stock of Mayne Pharma Group Limited has delivered the return of -38.46% in the span of previous six months, while in the time frame of past three months, the returns stood at -26.15%. Currently, the stock is trading close to a 52-week lower level of $0.475 with PE multiple of 16.330x. MYX’s women’s health portfolio covers approximately 50% of obstetrician/ gynaecologist. FY20 is expected to further addition to this portfolio. The company is in the process of optimising cost efficiencies which by transferring the product to new contract manufacturers, which is expected to release a cost saving of US$15 million. Considering the FY19 YTD results, expected approvals from FDA, addition of new products to the portfolio, cost initiatives and growth prospects, we recommend a “Speculative Buy” on the stock at the current market price of $0.525 per share (up 9.375% on 27 June 2019).


MYX Daily Chart (Source: Thomson Reuters)
 

Bionomics Limited

BNO Details

Decent Cash Position as at 31 December 2018: Bionomics Limited (ASX: BNO) is engaged in the discovery and development of novel drug candidates focused on the treatment of serious central nervous system disorders and cancer by leveraging proprietary platform technologies.

The company recently announced the results of the BNC210 clinical trial for the treatment of agitation and development of BNC210 for treatment of post-traumatic stress disorder. As per results of the trial, BNC210 did not report any difference in treatment of agitation as compared to placebo and does not require any further development. The study confirmed the safety of BNC210 for the elderly patient population. The company is now planning to pursue the study of BNC210 for the treatment of PTSD with an estimated cost of $300,000.

Key Highlights of 1H19: During the half year ended 31 December 2018, the company’s revenue including other income amounted to $5.29 million as compared to revenue of $7.16 million for the period ended 31 December 2017. Operating loss after tax for the period amounted to $11.18 million as compared to $8.84 million in the prior corresponding period.

At the end of the period, the company had cash amounting to $27.35 million as compared to $24.93 at 30 June 2018. The cash position was strengthened owing to receipt of R&D tax incentive refund of $6.56 million, licensing revenue of $0.65 million and private placement to BVF Partners L.P amounting to $9.8 million.


1HFY19 Income Statement (Source: Company Reports)

Other major achievements during the period included completion of Phase 2 clinical trial of BNC210 for PTSD, progression in Phase 2 clinical trial to assess safety and efficacy of BNC210 in treating agitation in elderly patients and continued progress in the partnership with Merck & Co for treatment of cognitive dysfunction in Alzheimer’s disease and other conditions.

Outlook: The company will assess its strategic options for partnering and portfolio prioritisation while conserving cash. The company is also pursuing drug discovery programs in core areas of cognition and pain.

Stock Recommendation:The stock of the company generated negative returns of 71.54% and 77.58% over a period of 1 month and 3 months, respectively. During the half year ended 31 December 2018, the company witnessed a strong cash position owing to receipts in the form of licensing revenue and R&D incentive refund. The company’s 6-year long partnership with MSD has also reported continued success. In addition, the company is progressing well towards development of its BNC210 through clinical trials to assess its therapeutic potential. Hence, considering the above factors and current trading level, we recommend a “Hold” rating on the stock at a current market price of $0.034, down 8.108% on 27 June 2019.


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.