SomnoMed Limited

Full Year core revenue of $59 Mn close to guidance of $60 Mn: SomnoMed Limited (ASX: SOM) is involved in the commercialisation of the SomnoDent MAS and other oral devices for sleep related disorders in Australia and overseas. The company recently announced that one of its substantial holders, National Nominees Ltd ACF Australian Ethical Investment Limited increased its voting power from 8.65% to 10.48%.

June ’19 Quarter Key Highlights: SOM’s total core revenues for the quarter stood at $15.8 Mn, resulting into the 2018/2019 fiscal year core revenues of $59 Mn (unaudited) and slightly under the guidance of $60 Mn. The total group revenues for the full 2018/19 fiscal year, including the now closed Renew Sleep Solutions revenues stood at $63 Mn.

As per the cash flow statement, the net cash inflow from the operating activities for the period was reported at ~$0.80 Mn. The net cash outflow from investing activities for the period was reported at $0.90 Mn. The net cash inflow from financing activities for the period was reported at $0.83 Mn. The cash and cash equivalent at the end of the period was reported at $8.0 Mn.


June ’19 Quarter Operating Cash Flow Statement (Source: Company Reports)

What to expect: The prospects for the SomnoMed Group are very positive and the return of strong revenue growth in both the US and Canada has brought energy and excitement back into the company. SomnoMed offers a patient friendly and highly compliant, comfortable alternative to CPAP, which aims to treat a growing proportion of patients who suffer from Obstructive Sleep Apnea with a COAT™ device. The recent achievement of treating over 500,000 patients world-wide with a SomnoDent® device highlights the Company’s strong global position within the 28 countries in which it trades.

Stock Recommendation: Its debt to equity ratio for H1FY19 stood at 0.07x, below the industry median of 0.29x, which implies the company is less leveraged than its peer group, and it utilizes most of its funds to fuel its operations. Currently, the stock is trading above the average of 52 weeks high and 52 weeks low price of $2.350 and $1.400, respectively. Hence, considering the aforesaid facts and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $1.990 per share.
 

Paradigm Biopharmaceuticals Limited

PAR’s Cash Balance At The End Of June Quarter Was Reported At $78.84 Mn: Paradigm Biopharmaceuticals Limited (ASX: PAR) is involved in researching and developing therapeutic products for human use. It is a drug repurposing company which seeks to find new uses for old drugs, thereby reducing the cost and time to bring therapeutics to market. In an update, the company highlighted about the commercialisation of ZilosulÒ (iPPS) as a potential first line therapeutic treatment of osteoarthritis and other diseases affecting the musculoskeletal system.For this, it has filed a submission to the US FDA for Expanded Access Program IND (Investigational New Drug) under which ten people from the USA may be treated with ZilosulÒ iPPS and it is anticipated to include some retired NFL players who have early-onset Osteoarthritis and have also failed standard of care. Besides this, the commercial discussions are ongoing in term of potential partnership deals or commercial transactions.

June ’19 Quarter Key Highlights: The net cash outflow from the operating activities for the period was reported at $2.45 Mn. The net cash outflow from the investing activities for the period was reported at $0.016 million. The net cash inflow from the financing activities for the period was reported at $73.24 Mn.


June ’19 Quarter Operating Cash Flow Statement (Source: Company Reports)

What to expect: The company is expected to file Expanded Access Program (EAP) for 10 patients with US FDA in the Q3 CY2019. It is also expected to file initial submission with the TGA for Provisional Approval Application of ZilosulÒ (iPPS) for treatment of osteoarthritis, in Q3 CY2019. Further, Pre-IND meeting with US FDA Orphan Indication (MPS) Phase 2/3 clinical trial is expected by Q4 CY 2019.
 
Stock Recommendation: Its current ratio for H1FY19 stood at 9.20x, better than the industry median of 4.55x, which implies the company is in a better position to address its short-term obligations. Additionally, decent liquidity levels might help it in making deployments towards business activities. The stock of the company is presently trading slightly below the average of 52 weeks high and 52 weeks low price of $2.149 and $0.693, respectively, indicating a decent opportunity for accumulation. Hence, considering the aforesaid facts and current trading levels, we recommend “Speculative Buy” rating on the stock at the current market price of $1.390 per share (down 1.418% on 16 August 2019).

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