Bionomics Limited

A Quick Look on Strategic Review Outcome and Program Updates: Bionomics Limited (ASX: BNO) is a global, clinical stage biopharmaceutical company. The company recently announced strategic review outcome and program updates and mentioned that it continues to evaluate out-licensing opportunities and potential merger candidates. Patient enrolment in BNC210 exploratory clinical trial has been completed and top line data is expected by the end of June 2019. The company is building on learnings from the Phase 2 RESTORE trial and exposure-response analysis. Costs have been further reduced and a capital and debt structure review are being conducted by management. As per the management, the company was unable to find a compelling alternative after extensive discussions with potential counterparties for continuing development and partnering discussions for the assets related to monetising all or part of the Bionomics portfolio of clinical and pre-clinical assets. However, the company will continue to entertain credible proposals in relation to transactions that could add value to shareholders from any source.

Highlights of Quarterly Cash Report and H1 FY19 Financials: As per the Quarterly Cash Report submitted in April 2019, BNO’s cash balance as at 31 March 2019 was $22.1 million. The net operating cash outflow during the quarter amounted to $3.32 million with cash receipts from customers amounted to $1.94 million. Following the completion of BNC210 Phase 2 Clinical Trial in PTSD, the R&D costs reduced by 62%.

Revenue for the company in 1HFY19 including other income stood at $5.29 millionas compared to $7.17 million for 1HFY18. The company incurred an operating loss of $11.18 million in 1HFY19 as compared to $8.84 million in 1HFY18 due to continued investment in R&D programs.


1H FY19 Result Highlights (Source: Company reports)

What to Expect Moving Forward: Bionomics will continue to assess its strategic options for partnering and portfolio prioritisation whilst conserving cash.While the internal focus and current R&D spend is restricted to CNS programs, Bionomics has continued limited activities to maximise the value of its legacy oncology programs through divestment and/or out-licensing both BNC101 and BNC105. In addition, it is pursuing drug discovery programs in core areas of cognition and pain to therapeutic candidate identification and partnering.

Stock recommendation: At the current market price of $0.125, market capitalization for the stock stands at ~$76.26 million. Looking at the price performance, the stock has risen around 30% on YTD basis whereas it has given negative returns of ~42% in last 3-months. Considering the above factors, the company is positioned to maximise its potential through various strategies in pipeline, going forward.  Hence, we give a “Hold” recommendation on the stock at the current market price of $0.125 per share (down 10.714% on 29 May 2019).
 

BrainChip Holdings Ltd

March 2019 Quarter Update: BrainChip Holdings Ltd (ASX: BRN) develops software and hardware accelerated solutions for advanced artificial intelligence (AI) and machine learning applications with a primary focus on the development of its Akida Neuromorphic Processor Unit hardware product.

The company, on 28 May 2019, announced about the availability of the Akida Neural Processing Core (Akida NPC) as intellectual property (IP) available for licensing which marks a significant development in the BRN’s market presence.

Cash for the company stood at US$5.1 millionfor the March quarter FY19. BRN has adopted steps to control expenses including headcount reduction associated with BrainChip Studio End-User sales and a temporary reduction in salary for certain executives.

Akida™ Market Focus: The AI Acceleration Chip Set Market is expected to grow from roughly US$5 billion in 2018 to over US$60 billion in 2025. This projection includes Server Central Processing Unit Implementations (CPUs), Server Graphics Unit Processors (GPUs), Server Accelerators with Field Programmable Gate Array (FPGAs) and dedicated neuromorphic integrated circuits.


AI Acceleration Chipset Forecast (Source: Company Reports)
 
Outlook: The company is progressing with the Akida product development and engagements with manufacturers to launch a first-in-kind product to the market. The Akida Neuromorphic System-on-Chip (NSoC) provides the ability to AI Edge solutions for high-growth, high-volume applications. Thecompany faces competition with other well-financed private companies. BRN anticipates raising additional capital in the coming quarters which will help the company to finalize the development of the Akida product.

Stock Recommendation: At the current market price of $0.061, the market capitalization for the stock stands at ~$46.19 million. The stock has given a negative return of ~55% on YTD basis. However, with the news of BRN’s Akida Neural Processing Core as intellectual property available for licensing, the stock zoomed 38.636% on 29 May 2019. The company had also stated that it would be advising the market once it has settled the appropriate arrangements to raise the capital. Hence, considering the industry outlook, availability of IP licensing and aforesaid parameters along with current trading level, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.061 per share (up 38.636% on 29 May 2019).  

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