MedAdvisor Limited

MDR Details

 Issue of Employee Incentive Options: MedAdvisor Limited (ASX: MDR) has developed a medication management platform, MedAdvisor, to connect users with pharmacies and a network of general physicians. In the US, it has networked with close to 25,000 pharmacies. The company issued ~28,569 shares on 26 November 2021 at nil cost under an employee incentive scheme.

• On 26 November 2021, MDR issued ~1.5 million unlisted options to Gread Management Pty Limited (an associate of the MD & CEO, Robert Read) at $0.30 under an employee incentive option.
• MDR issued ~750,000 unlisted options to Lucas Merrow, a Non-Executive Director, at $0.40 post-approval by the shareholders at the AGM.
• Peter Duncombe Bennetto, ceased to be a Director in MDR on 26 November 2021.

Highlights of the AGM Address to Investors:

• MDR is executing plans to digitalise its current US pharmacy network to leverage the Australian experience and enter the UK market as well. As of 30 June 2021, ~37% of the US pharmacy network have entered agreements to go digital.
• The company has built a strong foundation for the US in FY21 and plans to leverage in FY22. It registered ~1% YoY growth in the US operating revenue in Q1FY22 and has a network of ~25,000 pharmacies in the US.
• MDR also initiated a new product and revenue model of Dynamic Engagement branded as ‘Thriv’ in Q1FY22. It has completed the testing and development of its omnichannel product Dynamic Engagement.
• To grow revenue in the UK market, MDR is investing in SaaS products to introduce SaaS solutions and enter health programs. NHS has rolled out a new v6 mobile application and receiving positive feedback.
• For Australia, LTV (Lifetime value) increased to ~$50.7k in Q1FY22 from ~$34.5k as of 30 June 2021. The number of patients grew to ~2.3 million in Q1FY22 from ~2.0 million as of 30 June 2021.

Key Metrics Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces foreign exchange rate changes, COVID-19 uncertainties, profitability risk. It faces regulatory hurdles and supply chain disruptions.

Outlook:

• The company upgrades the CY21 revenue guidance to ~$59 - $60 million ending December 2021 compared to the previously provided ~$55 - $57 million. The gross margin is expected to be ~55% at the end of CY21. MDR expects the margins to grow in CY22. It plans to release the FY22 revenue guidance in its quarterly report in January.
• MDR will continue with the integration of recently acquired Adheris and plans to complete the digitalisation of its Adheris (US) pharmacy network through CY22. It plans to go live with the Dynamic Engagement model in Q3FY22.
• The company plans to enter the UK and rollout medication adherence solutions in 2HFY22.

Stock Recommendation: The stock of MDR gave a positive return of ~52.08% in the past three months and a positive return of ~17.74% in the past six months. The stock is currently trading above the 52-weeks’ average price level band of $0.230 - $0.415. On a TTM basis, the stock of MDR is trading at an EV / sales value multiple of 3.6x, lower than the industry (Healthcare Equipment & Supplies) median of 8.9x, thus seems undervalued. Considering the growth in operating revenue, cash receipts, growing US pipeline (up ~40% YoY in Q1FY22), ongoing digitalisation of the US pharmacy network, valuation on a TTM basis, upgraded guidance ending CY21, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.365, as of 13 December 2021, 1:55 PM (GMT +10), Sydney, Eastern Australia.

MDR Daily Technical Chart, Data Source: REFINITIV  

Micro-X Limited

MX1 Details

Change in Shareholding: Micro-X Limited (ASX: MX1) develops and markets new products for security and health markets, based on its cold cathode, carbon nanotube (CNT) emitter technology. MX1 has a design and production facility in Adelaide and a techno-commercial team in Seattle to rapidly grow the US business. On 24 November 2021, Perennial Value Management Limited (PVM) increased his shareholding from ~13.50% to ~14.66% voting power in the company.

On 22 November 2021, Regal Funds Management Pty Ltd (RFM) decreased its shareholding from ~7.82% to ~6.64% in MX1.

Q1FY22 (30 September 2021) Results:

• In Q1FY22, MX1 executed three agreements upto ~$13 million for the development of the Airport Checkpoint Portal and Brain CT programmes.
• The US subsidiary Micro-X Inc. entered two (2) agreements with the US DHS (Department of Homeland Security) Science and Technology Directorate to seek up to ~$US 4.0 million funding.
• For the CT division, MX1 implemented the $8.0 million project agreement with the ASA (Australian Stroke Alliance) to finance the development of lightweight CT imaging technology.
• Charlie Hicks was hired as the General Manager of the Mobile DR business unit in Q1FY22. The sales channels of the division were expanded with the hiring of direct sales teams and new distribution contracts. The division shipped and invoiced sales of ~$0.8 million Mobile DR units in the Q1FY22.
• During Q1FY22, the sales team launched Argus, a new X-Ray Camera product. It is undertaking activities to build sales pipeline and awareness at the conferences and the US military forums.
• The company held investor engagement activities in Q1FY22 and presented at the Australian Shareholders Association, Share Café’s Hidden Gems webinar, and the annual Morgans Institutional Investor Conference.
• MX1 obtained ~$0.7 million cash receipts from sales and incurred ~$4.07 million net operating cash outflows
• MX1 held ~$25.66 million cash as of 30 September 2021.

Liquidity & Debt Position Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of product commercialisation and development, adequate funding, regulatory changes. It faces the COVID-19 uncertainties and production risk in launching new technologies to the market. 

Outlook:

• Having laid the foundation for the development and commercialisation activities for the four (4) product lines in the Q1FY22 quarter, MX1 plans to focus on executing on achieving the development milestones and implementing strategies to commercialise.
• MX1 reported plans to launch Rover in December 2021. It expects that the TGA listing of Rover and expansion of new distributors will contribute to boosting sales and marketing activities in the next quarters.
• With the development funding contracts in hand, MX1 plans to fast-track the development activities across the Brain CT scanners and Airport Security to achieve the agreed milestones.

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

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of MX1 gave a negative return of ~8.77% in the past three months and a negative return of ~23.52% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.225 - $0.450. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers, considering its continuing negative net margin, negative ROE, and COVID-19 impact of delays in the supply chain. For this purpose of valuation, few peers like Universal Biosensors Inc (ASX: UBI), Cochlear Limited (ASX: COH), Nova Eye Medical Limited (ASX: EYE), and others have been considered. Considering the low trading levels, low debt levels, progress on all the four product lines to commercialise, plans to launch Rover, contracts and finding achieved for the development of Brain CT and Airport Checkpoint portal programmes, and valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.260, as of 13 December 2021.

MX1 Daily Technical Chart, Data Source: REFINITIV  

Bionomics Limited

BNO Details

New Constitution of BNO: Bionomics Limited (ASX: BNO) is a developer of innovative allosteric ion channel modulators designed for patients suffering from serious “CNS” (central nervous system) disorders. It is progressing its lead product candidate, BNC210 for the treatment of post-traumatic stress disorder (“PTSD”) and social anxiety disorder (SAD). On 2 December 2021, BNO released a copy of its new Constitution sanctioned by the shareholders at the AGM.

Grant of Accelerated Status to BNC210: On 1 December 2021, BNO declared the grant of fast-track status from the U.S. FDA for undertaking clinical trials on the BNC210 candidate to treat acute SAD and other anxiety-related disorders in patients.  

AGM Presentation Highlights:

• The lead candidate, BNC210, is entering clinical trial Phase 2 for patients suffering from acute SAD. BNO has established clinical proof of concept (PoC) in Generalized Anxiety Order (GAD) and obtained a fast-track status from the US FDA for SAD.
• BNO reports that there are over 22 million patients in the US only seeking treatment for SAD and PTSD.
• BNO has a strategic alliance with Merck & Co., Inc. for two drugs under early-stage clinical trials to treat Alzheimer’s disease and other CNS conditions. The companies are currently conducting Ph1 safety and biomarker studies on the drug candidates.
• BNO signed a Memorandum of Understanding (MoU) with EmpathBio Inc to find treatment from the combination of BNC210 & EMP-01 (drug compounds) in PTSD patients.
• The company held ~A$22.2 million cash as of 30 September 2021 /2 December 2021. BNO attracts investment contributions from Apeiron Investment Group Ltd., Biotechnology Value Fund, and Merck & Co.

Trend of Key Financials from FY17-FY21; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of clinical trial outcomes, regulatory delays, and adequate funding for undertaking trials.

Outlook:

• The company plans to start the PREVAIL study for SAD by 2021-end and read out top-line data by FY22-end.
• BNO has a pipeline of early stage partnering candidates targeting sodium (Nav) and potassium (Kv) ion channels to treat pain and schizophrenia.
• BNO is conducting a Phase 2b ATTUNE Study on PTSD patients and plans to release the results from the study in 1HFY23.

Stock Recommendation: The stock of BNO gave a negative return of ~31.42% in the past three months and a negative return of ~46.55% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.105 - $0.448. On a TTM basis, the stock of BNO is trading at a price-to-book value multiple of 2.6x, lower than the industry (Biotechnology & Medical Research) median of 4.5x, thus seems undervalued. Considering the low trading levels, plans to list on NASDAQ and conduct an IPO via the issue of ADRs (American Depositary Shares), low debt levels, decent capitalisation, ongoing trials on the PTSD and SAD patients, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.110, as of 13 December 2021, 10:30 AM (GMT+10), Sydney, Eastern Australia.

BNO Daily Technical Chart, Data Source: REFINITIV  

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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