Dimerix Limited

DXB Details

Raising Capital for Project Advancement: Dimerix Limited (ASX: DXB) is a clinical-stage biopharmaceutical company, engaged in developing medical therapies for the global markets. DXB is currently developing DMX-200 (For Reducing Inflammation) and DMX-700, which aid patients with Chronic Obstructive Pulmonary Disease (COPD). The company has recently announced on an unsecured loan agreement with Mr Peter Meurs, who holds 13.4% shareholding with DXB. The loan amount of $5mn will aid DXB to fund the progress of the Dimerix phase 3 clinical programs in Focal Segmental Glomerulosclerosis (FSGS), which includes the clinical study activities with a global Clinical Research Organisation (CRO).

1HFY21 Financial Highlights: DXB has posted a decline in its revenues to $1,182 in 1HFY21 as compared with $1,779 in 1HFY20. Due to higher Research & Development (R&D) expenses of $3.65mn and corporate administration expenses of $0.71mn in 1HFY21, the company has registered a loss of $4.26mn in 1HFY21. The total assets were almost halved to $5.01mn as at 1HFY21 as compared with $10.39mn as at 1HFY20.

Expenditure Growth in 1HFY21 (Source: Company Reports)

Outlook: The company will utlilise the funds for the development of proposed Phase 3 pivotal program in FSGS. Similarly, the company will progress towards developing two phase 3 studies of DMX-200 in Covid-19 patients and develop the COPD programme for the clinical stage of development. 

Stock Recommendation: In the last one month, DXB has increased by ~8.33% but went down by ~28.76% in the last six months. The current market capitalisation of DXB stands at ~$52.46mn as of 30 March 2021. The stock is currently trading below the average 52-weeks’s price level range of $0.120-$0.780. On the technical analysis front, the stock has a support level of ~$0.242 and a resistance of ~$0.282. On a TTM basis, the stock of DXB is trading at a Price/Book Value multiple of 6.8x, higher than the industry median (Biotechnology and Medical Research) of 4.8x. Considering, the company is registering losses and decline in revenues, increasing loans to fund its growth activities, increasing expenses, low market capitalisation and current trading levels, we recommend an “Avoid” rating on the stock at the current market price of $0.260, decreased by 1.88% as on 30 March 2021.

DXB Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Cann Global Limited

CGB Details

Export Permit to Boost Growth Momentum: Cann Global Limited (ASX: CGB) is engaged in the medicinal cannabis and hemp segment. The company operates through two divisions: Medical Cannabis and all-Natural Foods. Through its subsidiaries, it is engaged in growing and cultivating, processing, and marketing of hemp and medical cannabis. The company has recently updated on receiving a permit to export Canntab’s hard pills in Australia for the first time through its joint venture partner Canntab Therapeutics Limited. The company is convinced about the demand for hard pills in Australia and therefore, placed order for six products from the Canntab range.

Strong Balance Sheet with Zero Debt: The company has posted higher cash as at 31 December 2020 to $12.4mn as compared with $7.4mn as on 30 June 2020. The company has nil debt on its balance sheet as on 31 December 2020. The company has recently raised funds amounting to $7.9mn via rights issue in July 2020 and placement of shares in December 2020.

Cann Global Revenue (Source: Company Reports)

Key Risks: The company is present in product development and manufacturing, which needs a regulator approval to further launch in the market, this may pose a risk for the company to receive a timely approval from the regulators for its products, any delay in approvals may lead to financial losses for the company. The company exports and imports products from various countries, hence, any fluctuation in the foreign exchange may lead to financial losses for the company. 

Outlook: CGB has set up its strategic priorities for future growth by continuing to work towards cost optimisation in cultivation and production activities in Thailand. The company will be working towards innovating new products to create new market, in order to address the growing demand for these products. Moreover, CGB continues with strengthening its existing and new distribution channels and support its research activities for medical advancement in new products. 

Stock Recommendation: In the last one month, CGB has decreased by 11.11% and increased by 77.77% in the last six months. The current market capitalisation of CGB stands at ~$45.66mn as of 30 March 2021. The stock is currently trading below the average 52-weeks’ price level range of $0.004-$0.020. On the technical analysis front, the stock has a support level of ~$0.007 and resistance of ~$0.01. On a TTM basis, the stock of CGB is trading at a Price/Book Value multiple of 2.2x, lower than the industry median (Pharmaceuticals) of 3.9x. Considering, the company has received the export permits recently, strong balance sheet with higher cash reserves and nil debt, positive long-term outlook, current trading levels and key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the closing price of $0.008, as of 30 March 2021.   

CGB Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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