Nanosonics Limited

Opportunity based on USA Study that showed significant Non-Compliance with Current Guidelines: One of the most shorted stocks on ASX, Nanosonics Limited (ASX: NAN) saw a price surge of 2.098 per cent on June 06, 2018 after the release of outcomes of a detailed national survey in the US which was published in the American Journal of Infection Control (AJIC). The outcomes highlighted significant non-compliance with current guidelines for reprocessing of surface ultrasound probes. This is an important survey for the company with some alarming results wherein the one of the survey authors identified several variations in current practice in the US that involves reprocessing of ultrasound probes such as the application of high-level disinfection to all surface ultrasound transducers which are used in invasive procedures. Moreover, the management agreed with the outcomes of the survey that highlighted the requirement for education and awareness on cross-contamination risks associated with semi-critical surface ultrasound probes. This survey will help to promote the trophon device (ultrasound probe disinfector) in right direction which is designed for both intracavity as well as surface probes and is validated for the use of over 1,000 different probes across all major ultrasound companies. Using trophon for all semi-critical probes represents a large opportunity for Nanosonics and the outcomes of this study help to bring the necessary attention to this important topic. There is a significant revenue opportunity per machine from consumables used in every high-level disinfection cycle, annual service contracts plus upgrades wherein each trophon generates an average of $3,000 per annum in consumable revenue under Direct Sale model and approximately 50% of this under Full Service Distribution model. The Group was lately granted a receipt of the Medical Device Licence from Health Canada and clearance from US FDA for the trophon2 system, which will be available in the market in Q1FY19. Currently, the stock is trading at very high PE level (134.27x) among its peer group. Hence, we put a “Hold’ recommendation on the stock at the current market price of $ 2.920, as this study represents a large opportunity for the Group to improve upon its semi-critical probes.


Trophon Devices Along with Accessories (Source: Company Reports)
 

Botanix Pharmaceuticals Ltd

Received Successful Atopic Dermatitis Study Results: Botanix Pharmaceuticals Ltd (ASX: BOT) informed to the market that it has successfully completed its randomized, double-blind, vehicle (placebo) controlled Phase 1b atopic dermatitis (AD) patient study which is designed to evaluate the safety, tolerability, and pharmacology of BTX 1204. According to the study, the top-line data indicates that BTX 1204 compound found well-tolerated and caused no significant adverse effects for 32 patients who successfully completed the Phase 1b study. Moreover, BTX 1204’s efficacy profile is in line with existing topical products whose treatment success rates are typically between 25-35%. This combined with the excellent safety profile demonstrated to date, underlines the potential for BTX 1204 to be a very safe and exciting new treatment for the millions of patients who suffer from this disease. Based on the results, the group plans to review the corporate opportunities for the further development of BTX 1204, either pursuant to a partnering or licensing arrangement with other dermatology companies, or through conducting a Phase 2 study for BTX 1204. In addition to this, the management expects that these results will provide further evidence of the anti-inflammatory effects of synthetic cannabidiol and will support to strengthen its product portfolio going forward.


Clinical programs with near term milestones (Source: Company Reports)

With the completion of first acne patient studies with BTX 1503 in January 2018, the group is preparing phase 2 study for 360 patients and this will be commenced around mid of 2018 and it is expected to be completed in mid of 2019. In the past one year, the stock price climbed up by 328.57 per cent and up by 50.0 per cent in the past three months as at June 05, 2018. Despite the successful trial on the synthetic form of cannabis, the stock crashed by 19.444 per cent on June 06, 2018. The market’s adverse reaction at the moment looks abrupt while investors are trying to familiarise themselves with the update that is more on a scientifically favourable ground. At the moment, we maintain our “Expensive” recommendation on the stock at the current market price of $ 0.145 and will look for further developments.

 
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