Mayne Pharma Group Ltd

Facing headwinds in the U.S.:Mayne Pharma Group Ltd (ASX:MYX) slipped by 6.7% on November 03, 2017 at the back of the news that the U.S. states could expand a lawsuit against generic drug company Teva, who sold a portfolio of drugs to Mayne earlier this year.Teva also reported for a weak third-quarter update with alower than expected guidance.Meanwhile, the group had made a new announcement regarding receiving Therapeutic Goods Administration approval for Monurol (fosfomycin trometamol) (3g) granules and has recently launched Urorec (silodosin) (8mg) capsules in Australia. Meanwhile, MYX stock has fallen 44% in the last six months as on November 02, 2017. In addition to the recent headwind, price deflation of generic drugs in the U.S. and the risk of legislative changes by the Trump administration continually seem to pose the pressure on the stock. This is because 94% of Mayne’s revenues are earned in the U.S. with 73% of total revenue coming from its generics division. We give an “Expensive” recommendation on the stock at the current price of $0.625
 

Nanosonics Ltd

Efforts on geographic expansion:Nanosonics Ltd (ASX:NAN) stock fell about 2.4% on November 03, 2017, while the group shed light on growth plans at its annual general meeting that looked decent. NAN in FY17 had reported 58% growth in the sales to $67.58 million, while the pre-tax profit was of $13.9 million compared to $136,000 in the prior year. The free cash flow for the year was $15.1 million, compared to $1.9 million in FY16.
 
In North America, the company expects growth in its installed base continuing from the second half of FY17 performance. However, the uncertainty surrounding healthcare reform in the United States is expected to impact the timing of capital purchases.In Europe, the Managed Equipment Service (MES) continues to gain momentum while new unit growth is expected in the range of 75% to 100% in FY18, with over 90% of the installations expected to be under MES.
 
As highlighted during the AGM, the management expects operational expense of about $48 million, including $14 million for research and development in FY18 largely due to its expansion into new markets and the development of two new products. In addition, NAN has continued global market expansion and established its direct sales operations in Canada and signed the agreement with Sakura Seiki for the distribution of the trophon system in the Japanese market. Further geographic expansion is planned across Europe, Middle East and Asia Pacific to broaden the footprint.
 
On the other hand, NAN has highlighted that the first population-level study demonstrates increased risk of both infection and antibiotic prescriptions after the semi-invasive ultrasound probe procedures. This is indicative of the extent of risk to patients if semi-invasive ultrasound probes do not undergo disinfection, and this paves an opportunity for the group.
 
Meanwhile, NAN stock has risen 25.76% in three months as on November 02, 2017. While growth is expected based on expansion efforts and any favourable regulatory change, we give a “Hold” recommendation on the stock at the current price of $2.81, given the trading scenario.

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