Viralytics Limited (ASX: VLA)

VLA Details

Weak half year result: Viralytics’ half-yearly result for the period ending 31 December 2017 entailed the loss after tax of $9.3 million against prior comparative half-year loss of $7.1 million. This increase in loss was largely due to an increase in operational expenditure including trail costs and manufacturing of drug; and to offset this increase, R&D tax incentive revenue of $5.0 million was recognised, which was nil in the prior year. The Group’s cash on hand decreased in the six months ending on 31 December 2017 by $12.2 million and now amounted to $22.0 million. Operating cash outflow for the period was $11.9 million as compared to $7.4 million in the prior corresponding year (six months to 31 December 2016).
 

Overall Foundation as at November 2017 (Source: Company Reports)
 
Recently, the Company announced a scheme of Implementation Agreement with Merck Sharp & Dohme of Kenilworth NJ, United States and under the terms of the agreement, it was proposed that Merck will acquire 100% of the Company by way of a Scheme of Arrangement for A$1.75 cash per share. The Company also completed a $29.6 million of share placement to Lepu Medical Group of China at a significant premium. Although any superior proposal can boost the stock price further, the half year performance has not been very encouraging. We give a “Sell” recommendation at the current price of $1.67
 

VLA Daily Chart (Source: Thomson Reuters)
 

Adalta Limited (ASX: 1AD)

1AD Details
Continues to execute its planned strategy:The Company announced its half-yearly results ending 31 December 2017 and the loss after tax for the half-year amounted to $3,409,565 against the loss of $2,265,692 for six-months ending 31 December 2016. The cash held as on 31 December 2017 was $5.26m, while it stood at $6.22m as on 30 June 2017. The Company received a Research and Development tax incentive refund of $1,777,030 for 2016/2017 financial year and the Company anticipates an R&D tax refund in September 2018 quarter that is in excess of last year’s refund. In January 2018, Bioshares highlighted Adalta as one of its four M&A ideas for 2018-2019. The Company’s focus remains on progressing it key product AD-114 towards the clinic as a therapy for Idiopathic Pulmonary Fibrosis which has significant unmet medical need and a clear pathway to registration.
 

AD 114 Development Milestones (Source: Company Reports)
 
The Group completed three non-human primate studies each of which demonstrated the safety of AD-114. The share price has been lifted by 54.55% in last six months and by 13.33% in the past one week. However, the stock seems to be overvalued at the current price of $0.34, in view of the latest financial performance.
 

1AD Daily Chart (Source: Thomson Reuters)
 

Bionomics Limited (ASX: BNO)

BNO Details

Continues to invest in its pipeline programs: The Group released the half year results as at December 31, 2017. Cash at the end of the half-year was $32,021,777 against $42,873,656 as on 30 June 2017. Revenue for the period including other income was $7,168,539 which included R&D Tax Incentive estimate for the half-year ending 31 December 2017 as compared to $7,136,513 of revenue for the period ending 31 December 2016. The operating loss after tax for the half year ending on 31 December 2017 was $8,846,833 as compared to $9,696,734 for the prior comparable period ending on 31 December 2016 which was in line with the expectations.
 

Half year Results (Source: Company Reports)
 
One of the major achievements included expansion of the Phase 2 clinical trial of BNC210 in patients. The Group has anticipated a significant progress in completion of the recruitment in the Phase 2 clinical trial of BNC210 in patients with PTSD. Positive data from the BNC101 Phase 1 trial was also found to be supportive. Meanwhile, the share price declined by 8.51% during last six months but managed to recover and was up by 16.22% in the last week. We give a “Buy” recommendation at the current price of $0.43, with the improving trends.
 

BNO Daily Chart (Source: Thomson Reuters)
 

Virtus Health Limited (ASX: VRT)

VRT Details

Strategic efforts: Australia’s largest IVF provider recently announced that it has exercised its first option in accordance with an option deed which was dated 5 December 2014 to acquire a further 15% stake in TAS IVF Pty Limited, Tasmania’s market leading IVF provider for $2.8 million through its fully owned subsidiary IVF Finance Pty Limited. The acquisition was funded through its existing cash resources and it brings Virtus’ ownership of TAS Pty to 85%. Virtus recently acquired 90% of CFL (Complete Fertility Limited) for a cash free debt free consideration of approximately AUD$8.8 million and this is forecasted to be EPS accretive in FY 2019.
 

Revenue Growth (Source: Company Reports)
 
Virtus is otherwise setting high standards in ARS and is leading best practice globally. The stock price climbed up by 4.91% in the past one week at the back of the recent developments. The strength is also showing in the financial performance with group’s Diagnostic Revenue and EBITDA for 1HFY18 increasing by 5.8% and by 31.2%, respectively on pcp basis. We give a “Hold” recommendation on the stock at the current price of $5.68
 

VRT Daily Chart (Source: Thomson Reuters)

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