MedAdvisor Limited

MDR Details

Signing of One-Year Deal: MedAdvisor Limited (ASX: MDR) is a medical technology company engaged in the development and deployment of the MedAdvisor medication and adherence platform. The market capitalisation of the company stood at ~$127.62 million as on 3^rd December 2020. Recently, the company reported that its subsidiary, Adheris LLC, has signed a one-year deal with a major US biopharmaceutical company worth US$1.89 million. The agreement has standard termination and commercial confidentiality provisions. Under the agreement, the company will conduct a health program that will leverage the data and analytics platform to target patient awareness and adherence across the Adheris network.

Acquisition of Adheris Health: The company has recently completed the acquisition of US-based Adheris Health from Syneos Health on 17^th November 2020 for the upfront consideration of US$5.0 million of convertible notes. The company is focused on leveraging a strong pipeline of deals to ramp up its growth in the US market via Adheris Health network. In order to fund the acquisition, the company has completed the institutional component of the accelerated non-renounceable entitlement offer and institutional placement and raised $35 million. Further, the company is seeking to raise an additional $18 million under the Retail Entitlement Offer, which closed on 1^st December 2020.

Decent Growth in Operating Revenue: For the three-months ended 30^th September 2020 (Q1 FY21), the company recorded total operating revenue of $2.4 million, up from $2.1 million in Q1 FY20. MDR recorded cash receipts of $3.5 million for Q1FY21, up 53% on pcp, driven by continued momentum in health programs, with solid growth in the pharmacy SaaS business. During FY20, MDR posted operating revenue of $9.6 million, reflecting YoY growth of 16.5%.

Operating Revenue (Source: Company Reports)

Outlook: The strategic priorities of the company revolves around uplifting its technology for creating awesome solutions, execution on global expansion and investment in the global sales organisation. The company is scheduled to conduct the 2020 Annual General Meeting on 21^st December 2020.

Stock Recommendation: The company closed the quarter with a healthy balance sheet supported by the decent cash balance of $11.1 million. In the last one and three months, the stock has corrected 3.62% and 14.33%, respectively. The stock is currently trading towards its 52-week low level of $0.276, offering decent opportunities for accumulation. On a technical analysis front, the stock has a support level of ~$0.359 and a resistance level of ~$0.425. Hence, considering the recent 1-year deal with US biopharmaceutical company, growth in operating revenue, current trading levels and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.385 per share, up by 2.666% on 3^rd December 2020.

MDR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

OncoSil Medical Ltd

OSL Details

Approval Received for OncoSil^TM in Switzerland:  OncoSil Medical Ltd (ASX: OSL) is a medical technology company focused on interventional oncology. The market capitalisation of the company stood at ~$121.72 million as on 3^rd December 2020. On 2 December 2020, the company announced the termination of its Chief Executive Officer, Mr. Daniel Kenny. In the month of November 2020, the company has received regulatory approval for its OncoSil^TM device in Switzerland, which indicates that OSL can now sell and market OncoSil^TM device in Switzerland. The company added that Switzerland is an attractive market for OncoSil and is highly receptive to innovative technologies. Previously, the company attained a milestone with the first Commercial Sale of OncoSil™ in New Zealand, demonstrating OSL’s transition towards being a revenue-generating medical device company.

Financial Highlights: During September 2020 quarter, the company continues to achieve progress on its commercialisation activities. The company made strong headway in all necessary launch activities and continues to target first sales by the end of 2020 in Europe. The net cash outflow from operating activities stood at $0.5 million. For FY20, the company recorded a loss amounting to $4.26 million down from the loss of $8.61 million in FY19.

Cash Flows (Source: Company Reports)

Outlook: Looking ahead, the company continues to explore all attractive opportunities, which include potential licensing agreements as well as strategic partnerships with external parties. The company is also planning to make entry into US markets.

Valuation Methodology: Price to Book Value Multiple Based Relative Valuation (Illustrative)

Price to Book Value Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: As on 30^th September 2020, the cash balance of the company stood at $20.5 million. In the past three and six months, the stock of OSL has provided returns of 5.35% and 31.11%, respectively. We have valued the stock using a P/BV multiple based illustrative relative valuation method and arrived at a target price with an upside of high single-digit (in percentage terms). For the purpose, we have taken peers such as Nanosonics Ltd (ASX: NAN), Ecofibre Ltd (ASX: EOF), Medical Developments International Ltd (ASX: MVP), to name few. On a technical analysis front, the stock has a support level of ~$0.12 and a resistance level of ~$0.17. Thus, considering the recently received regulatory approval for its OncoSil^TM device in Switzerland, first commercial Sale of OncoSil™ in New Zealand, and plans for entry into the US market, we give a “Hold” recommendation on the stock at the current market price of $0.145 on 3^rd December 2020.

OSL Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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