Paradigm Biopharmaceuticals Limited

R&D Investments Expected to Improve Bottom-Line: Paradigm Biopharmaceuticals Limited (ASX: PAR) is an ASX-listed biotechnology company focused on repurposing Pentosan Polysulfate Sodium (PPS), an FDA-approved drug that has a long safety track record over sixty years. Further, the company stated that re-purposed drugs have become true blockbusters. Recently, the group reported a good set of number for 1HFY19 with top-line growth of 25.99% to $28,140 against the prior corresponding period. However, its net loss attributable to its members increased by 23.14% pcp to $4,400,269. This was majorly due to the rise of Research & Development expenses during the same period.

In another release on ASX, the group stated that as per March 2019 Quarterly Rebalance of the S&P/ASX Indices, the stock of PAR was added to All Ordinaries index, effective from March 18, 2019.


H1FY19 P&L Statement (Source: Company Reports)

What to expect from the company: The minimum life of the company’s patents is 2030. Its patent portfolio comprises patent applications for Ross River virus & Chikungunya virus, osteoarthritis & concurrent BMEL. It has an exclusive 20-year supply agreement with bene PharmaChem which makes the only FDA-approved form of PPS. There are expectations that the valuable patent portfolio and secured manufacturing and supply might attract the attention of market players.

Stock Recommendation:Paradigm’ share generated positive YTD return of 103.94% and in the past one month, it posted a 78.45% return. The stock is trading slightly towards the 52-week higher level of $2.20. Hence, considering the return delivered along with decent outlook, we recommend a “Hold” rating on the stock at the current market price of $1.960 (down 5.314% on April 2, 2019).
 

Nanosonics Limited

Decent Top-line & Bottom-line performance for NAN: Medical technology company, Nanosonics Limited (ASX: NAN), in a recent update, stated that 77,961 performance rights were exercised under the Employee Share Option Plan and Nanosonics Omnibus Equity Plan. Post the development, total number of securities quoted on ASX are 299,962,256. Besides this, there is now a total of 4, 084,786 unlisted Options and Performance Rights on issue.

In its 2019 half-yearly results, it reported an increase in total first-half revenues by 36% pcp to $40.7 million. The company’s operating profit before tax amounted to $11.0 million which reflects the rise of 195% on the prior corresponding period. Also, the distribution agreement with GE Healthcare expanded to include Denmark, Finland, Spain and Portugal. The company also stated that a new product development program is progressing well.


H1FY19 P&L Statement (Source: Company Reports)

What to expect from the company: Nanosonics is expected to focus on strategic growth by establishing the trophon technology asthe standard of care in those markets where trophon is already represented. It plans to expand into new markets and develop new products. The company is expecting continued growth in installed base in North America with FY19 adoption similar to FY18. Also, the company stated that upgrades/replacements of trophon EPR units over five years old would start in FY19.

Stock Recommendation: Nanosonics’ share generated a return of 22.38% in the span of the previous 6 months and is trading towards the higher level of $4.580. Its current ratio stands at 8.11x better than the industry median of 2.48x implying a decent liquidity position of the company to address its short-term obligations as compared to its peer group.

Hence, considering the aforesaid facts and current trading level, we recommend a “Hold” rating on the stock at the current market price of $4.470 per share (up 0.903% on April 2, 2019).
 

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