Stocks’ Details

Mayne Pharma Group Limited

New Oral Contraceptive Launched in the US: Mayne Pharma Group Limited (ASX: MYX) is a specialty pharmaceutical firm and develops branded and generic medicines. It also offers contract manufacturing and development services to clients globally. As on 11^th January 2020, the market capitalisation of the company stood at ~$596.06 million. On 7 January 2021, the company notified regarding the launch of its another contraceptive tablet - Microgestin® 24FE. The company plans to roll-out up to 7 new such products in FY21 which will consist of novel tablet NEXTSTELLIS™, and another 5 generic products. At the close of 2020, the management addressed the investors regarding the company’s FY20 performance and plans. The company faced maximum impact of COVID-19 on its US business due to less patient visits, and physician office closures. MYX has repositioned business for growth in FY20 through cost restructuring, generic portfolio rationalisation, and investment in sustainable pockets. It reduced its op-expenses by $16 million on YoY, restructured its sales force particularly in the dermatology business. It also saved $15 million on R&D during FY20.

YTD (July-October 2020) Trading Update & FY20 Highlights: The company earned a revenue of $140 million for the first 4 months into FY20, representing a decline of 9% on pcp. This decline was due to a softer generic result and weakened forex (USD). MYX’s operating expenses fell by $10 million (~20%) due to cost restructuring in FY20. The YTD21 revenue and gross profit were in-line with the monthly average of 2H20.

Cash Flow Highlights, FY20 (Source: Company Reports)

Outlook: Licensing of the NEXTSTELLIS® contraceptive in Australian and US markets, launch of gNUVARING® and 5 other OCs, growth of women’s health, dermatology, and infectious disease portfolio remain the priorities for Mayne for FY21. It has an equal focus on driving the growth of TOLSURA® (SUBA-itraconazole), grow global contract services and optimise its cost base.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

EV/EBITDA Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of MYX gave a positive return of 7.81% in the past three months and a negative return of 16.86% in the past six months. The stock of MYX has a support level of ~$0.278 and a resistance level of ~$0.443. The stock is currently trading slightly above its 52 weeks’ average of $0.195-$0.485. We have valued the stock using an Enterprise Value to EBITDA Multiple based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). For the purpose, we have taken peers like Oceania Healthcare (ASX: OCA), Sigma Healthcare (ASX: SIG), Sonic Healthcare (ASX: SHL) and others. Considering the decent cash position, the launch of Microgestin® 24FE in the US, growth plans, outlook for FY21, valuation, and associated key risks we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.345, down by -2.817% on 11^th January 2020.

Althea Group Holdings Limited

Q1FY21 Result Highlights: Althea is Group Holdings Limited (ASX: AGH) is engaged in the production, distribution, and export of medicinal cannabis products. As on 11^th January 2021, the market capitalisation of the company stood at ~$112.93 million. The company registered the highest revenue of $1.19k for the month of December 2020, a 40% increase on November sales. It achieved record sales performance in both UK ($209k) and ANZ ($902k) markets. The sales in the UK and ANZ markets grew by 90% and 22% on month-on-month basis, respectively. In November 2020 also, AGH registered a record in terms of the average number of new healthcare professionals (2.24) and new patients (41.71) on a given business day. Company’s September 2020 quarter results also saw a 32% rise in revenue (QoQ) to $2.1 million and 36% (QoQ) rise in the cash received to $2.07 million. It added a record number (943) of patients in Australia for Q1FY21 from its previous numbers. The company had a cash reserve of $6.98 million at the end of Q1FY21. In another key milestone for the company, Althea’s Canadian subsidiary Peak Processing Solutions has entered an agreement with Collective Project Limited to commence manufacturing of cannabis beverage during Q2FY21.

Monthly Growth of Patients, May18-Nov20 (Source: Company Reports)

Outlook: The company is witnessing early prescription behaviour and trend in the UK like that of ANZ experience. Given the relaxed import restrictions and faster access to cannabis-based medicines treatment, AGH targets to grow a number of patients in the UK to 10K. It also plans to scale operations by employing more in-field personnel and doctors at MyAccess Clinics in the UK. Althea is developing a number of prescription and non-prescription products and aims to make available a few during FY21.

Stock Recommendation: The stock of AGH gave a negative return of 8.99% in the past three months and a positive return of 22.97% in the past six months. The stock is currently trading slightly above its 52-weeks’ average of $0.150 – $0.670. The stock of AGH has a support level of ~$0.407 and a resistance level of ~$0.531. On a TTM basis, the stock of AGH is trading at a price to book value multiple of 2.4x as compared to industry median (Pharmaceuticals) of 4.7x. Considering the decent YTDFY21 results, growing patient base in the UK & ANZ, start of cannabis beverage manufacturing in Canada, growth outlook for rest of FY21, and TTM valuation, we give a ‘Hold’ recommendation on the stock at the current market price of $0.455, up by 2.247% on 11^th January 2021.

Prescient Therapeutics Limited

New Patent Issued in the US: Prescient Therapeutics Limited (ASX: PTX) is involved in the clinical stage development of small molecules for new cancer drugs. As on 11^th January 2021, the market capitalization of the company stood at ~$41.63 million. The company has appointed Professor H. Miles Prince AM, an Australian haematologist and blood cancer specialist to its Scientific Advisory Board. Professor H. Miles Prince AM has been involved in the development of many new cancer therapies and will work with Prescient on the ongoing research of PTX-100. Recently, the company issued unquoted options (2.59% of the fully diluted shares) to be vested over a 3-year horizon as part of its long-term incentive program to its Directors. It issued 17 million options at an exercise price of $0.0968 with expiry on 23 November 2024. The company recently notified regarding a new patent allowed for the use of a specific biomarker to filter and detect cancer patients who would be the most responsive to treatment from PTX-100.  

September 2020 Update: During the quarter, PTX raised $13.5 million capital through an oversubscribed share purchase plan and placement to institutional investors. It will use funds to grow PTX’s pipeline of targeted therapies, cell therapy improvements and growth of CAR-T anti-cancer platform technology. In line with the growth of pipeline and clinical activity, the expenses of the company rose with cash outflows amounting to $1.43 million during this period. For Q2FY21, the company is expecting an R&D tax refund of $1.03 million and prudent resource management. The company continues to progress on its ongoing clinical studies with PTX-100 and PTX-200 and recruited patients safely for studies. During July, PTX partnered with Peter Doherty Institute in Melbourne for use 2 of its assets for SARS-CoV-2 antiviral testing program. Later in August, it entered into a research partnership with the Peter MacCallum Cancer Centre to develop new customized cancer therapies. The net cash inflow from financing activities amounted to $12.7 million and the balance of cash and cash equivalents at the end of quarter stood at $18.61 million.

Cashflow from Financing Activities (Source: Company Reports)

Outlook: For Q2FY21, Prescient is focused on achieving key development milestones and intends to develop a full clinical strategy to develop its OmniCAR platform.

 Stock Recommendation: The stock of PTX gave a positive return of 16.67% in the past six months. The stock is currently inclined towards its 52-weeks high price of $0.088. The stock of PTX has a support level of ~$0.062 and a resistance level of ~$0.076. Considering the current trading levels, low stock returns, and negative ROE, we give an ‘Avoid’ rating on the stock at the current market price of $0.070, up by 7.692% on 11^th January 2021.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

Disclosure: Prescient Therapeutics Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

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