Bionomics Limited

BNO Details

Regulatory clearance: Bionomics Limited (ASX: BNO) is engaged in developing innovative treatments for cancer and diseases of the central nervous system.

• Recently, the company obtained U.S. Food and Drug Administration (FDA) approval to carry on with its decision to examine BNC210, its top clinical compound, for the severe medication of Social Anxiety Disorder (SAD) with a planned commencement of a clinical trial.
• BNC210 is an oral proprietary selective negative allosteric modulator of the α7 nicotinic acetylcholine receptor, which is used for the treatment of anxiety and trauma- and stress-related disorders.

Quarterly Highlights (for the Period Ended 30 September 2021)

• The company intends to perform a registered initial public offering of American Depositary Shares (“ADSs”) in the US. Simultaneously, it is also planning to get listed on Nasdaq and file Registration Statement and shareholder approval under ASX Listing Rule 7.1, subject to market and other conditions.
• At the end of 30 September 2021, the company’s cash balance stood at $22.17 million, compared to $28.50 million as of 30 June 2021. Net cash used from operations came in at $5.27 million during the quarter.
• During the quarter, research & development expenditure came in at $3.27 million, up from $1.53 million reported in the prior quarter, depicting an increase of 113.7%, owing to cost related to the ATTUNE Study.

Cash Highlight (Source: Analysis by Kalkine Group)

Key Risks: The company’s operational and financial health could be impacted by any failure in the clinical trial. BNO’s is exposed to a more complex regulatory environment; any failure in non-compliance could lead the business to fines, penalties etc.

What to Expect: The latest oral tablet preparation of BNC210 is expected to penetrate the blood in ~45 to 105 minutes and is currently being assessed for the treatment of SAD patients. The company plans to unveil the SAD trial and commence Phase 2 clinical trial (called the PREVAIL Study) by the end of 2021 and is likely to give top-line data by 2022-end. In addition, the company expects to conduct an AGM on 2 December 2021.

Stock Recommendation: The stock of BNO is trading below its 52-week low-high average of $0.097 - $0.448, respectively. The stock has been corrected by ~24.99% in the past one month. The stock is trading at a P/BV multiple of 2.5x as compared to the industry median (Healthcare) of 3.9x on a TTM basis, and thus seems undervalued. Considering the valuation on a TTM basis, decent liquidity position, regulatory clearance from the U.S. FDA, number of clinical trials in process and expected top-line results, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.120, as on 04 November 2021.

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: -

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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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