Stocks’ Details

Volpara Health Technologies Limited

FY19 Gross Margin at 82.6%: Volpara Health Technologies Limited (ASX: VHT) is a digital health company focused on early detection of breast cancer by improving the quality of screening using Artificial Intelligence. The company recently announced a change in directors’ interest where John Diddams and John Pavlidis, each acquiring 450,000 Options, for the consideration of AUD$1.51 per share, each with an expiry date on August 20, 2026.  In another update, the Management updated that it has appointed PwC as the Company’s new external independent auditor. PwC’s work will commence with the review of the Company’s interim financial results for the period ended 30 September 2019.
 
Q1FY20 Key Highlights: During the period, Volpara raised $55 Mn and acquired MRS systems Inc. of Seattle. The acquisition of MRS provides Volpara with an experienced US office, much greater market penetration and strong cross-selling opportunities.Moreover, it also provides a range of products today and in the future that is likely to offer much greater potential ARPU (average revenue per user) in the US and other markets.

Group’s cash receipts for Q1 from customers rose 137% on pcp to NZ$2.3 Mn.Its cash on hand at the end of Q1 was reported at NZ$39.9 Mn, that excludes ~NZ$4.8 Mn of the capital raising funds which were only received in early Q2. Its operating cash outflow was under NZ$3 Mn, up 3% on y-o-y. The group continued to hold no debt on the balance sheet at the end of the period.

Group’s Annual Recurring Revenue (ARR) at the end of Q1 was reported at NZ$14.6 Mn, which comprised NZ$13.6 Mn from Breast sales and NZ$970 K from Lung sales.


June ’19 Quarter Operating Cash Flow Statement (Source: Company Reports)

What to expect: Going forward, Volpara’s ARR is expected to grow 50- 80% with MRS generating a minimum of ARR of US$4.5 Mn, resulting in a mid-range Group ARR forecast of US$11.5 Mn or NZ$17.1 Mn in FY20. The company is also on track to achieve the forecast of 27% of US women having a Volpara Group product contracted to be used on their images and data.

Stock Recommendation: VHT’s share generated positive YTD return of 32.26%. Its gross margin FY19 stood at 82.6%, better than 77.0% in FY18, which implies that the company is effectively managing its input costs. Its current ratio for FY19 stood at 3.68x, better than the results in FY18 at 2.42x, which implies that the company is in a better position to address its short-term obligations. Its debt to equity for FY19 reduced stood at 0.02x, lower than 0.08x in FY18, which implies the company is deleveraging and utilizes its own funds to fuel its operations. Hence, considering the aforesaid facts along with current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $1.465, up 1.384% on August 21, 2019.

Medical Developments International Limited

PAT increases by 326.8% to $1.04 Mn in FY19 on y-o-y: Medical Developments International Limited (ASX: MVP) is involved in the manufacturing and distribution of pharmaceutical drug, and medical and veterinary equipment. The company on August 21, 2019, published its preliminary final report for FY19 where it highlighted that gross revenue from ordinary activities increased by 19.3% to $21.38 Mn, and its net revenue from ordinary activities increased by 19.6% to ~$20.88 Mn. Its gross margins decreased slightly from 68% to 66%, reflecting a higher weighting of international Penthrox® sales. Its profit after tax from operating activities attributable to members increased by 326.8% to $1.04 Mn. Its operating expenses grew by 8% for the period on account of higher pharmacovigilance costs, cost related to employee share based payments, marketing expenses, etc.

Its basic earnings per share for the year ended 30 June 2019 was reported at 1.61 cents as compared to 0.41 cents in the previous year.The net tangible asset backing per ordinary share as on June 30, 2019 was reported at 5.6 cents as compared to negative of 17.9 cents as on June 30, 2018.

The Board of Directors declared a fully franked final dividend of 2 cents per share, with record date and payment date on 4 September 2019 and 4 October 2019, respectively.A Dividend Reinvestment Plan (DRP) is being offered with a 5% discount to the 10-day volume weighted average price leading up to record date.


FY19 Income Statement (Source: Company Reports)

What to expect: Over the next 12 months, MVP’s ambition is to globalise Penthrox® and bring it to the mainstream analgesic of choice around the world with complete role out into remaining European countries, Mexico, Iran, Jordan, South Korea and Thailand. It plans to consolidate and grow its respiratory device sales in the USA, Europe and elsewhere. The company would also be submitting a response to the FDA clinical hold and resubmit its IND for Penthrox® in the USA.

Stock Recommendation: MVP’s share generated positive YTD return of 11.74%. It is presently trading close to the average of its 52-week high and low levels of $6.500 and $3.480, respectively. Its current ratio for H1FY19 stood at 4.52x, better than the industry median of 1.68x, which implies the company is in a better position to address its short-term obligations than its peer group. Its debt to equity for H1FY19 stood at 0.01x, lower than the industry median of 0.14x, which implies the company is virtually debt free. Hence, considering the aforesaid facts along with current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $4.970, up 4.412% on August 21, 2019, owing to the release of full year results for financial year 2019.

Imugene Limited

Decent Cash Balance of $19.05 Mn at the end of June ’19 Quarter: Imugene Limited (ASX: IMU) is an immuno-oncology focused biopharmaceutical company developing mimotopes that induce B-cells to produce antibodies against cancer targets and development of small molecule drug candidates known as arginine modulators. The company recently published its June’19 quarter report wherein it highlighted that it made four presentations on Imugene’s B-cell vaccine programs in the period at the AACR conference in Atlanta, Georgia, USA. Company’s HER-Vaxx cancer vaccine was presented at the prestigious American Society of Clinical Oncology (ASCO) annual meeting in Chicago Illinois, USA and the European Society of Medical Oncology World Congress on Gastrointesinal Cancer in Barcelona Spain. New clinical data from the Phase Ib study of its HER-Vaxx cancer vaccine showed cancer fighting antibody and clinical response rates continue to be positive in the patients receiving the optimal biological dose of vaccine.

During the period, Dr Lesley Russell and Dr Jens Eckstein joined the Board as Non-Executive Directors. Both are highly credentialed and accomplished leaders with significant experience building and operating innovative life science companies. Subsequent to the quarter end, IMU announced the proposed acquisition of a highly promising oncolytic virus platform developed at the prestigious City of Hope cancer research and treatment centre in Los Angeles, California.

As per the cash flow statement, its net cash outflow from operating activities for the period was reported at $1.94 Mn. Its cash and cash equivalent at the end of the period was reported at $19.05 Mn.


June’19 Quarter Operating Cash Flow Statement (Source: Company Reports)

What to expect: Recent clinical data from the Phase Ib study of its HER-Vaxx cancer vaccine showed promising results. Moreover, the company’s upcoming acquisition program is expected to help the company to deliver sustainable value for its shareholders in the coming times.

Stock Recommendation: IMU’s share generated YTD return of 11.11%. Its current ratio for H1FY19 stood at 19.85x, better than the industry median of 4.55x, displaying its better liquidity position to address short-term obligations than its peer group. Its debt to equity for H1FY19 stood at 0.04x, lower than the industry median of 0.25x. The stock has corrected by ~18.51% from its 52-week high level of $0.027. Hence, considering the aforesaid facts and current trading levels, we suggest investors to wait and watch the stock at the current market price of $0.022, up 10% on August 21, 2019.


Comparative Price Chart (Source: Thomson Reuters)

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