Stocks’ Details

Opthea Limited

Substantial Shareholder Notified: Opthea Limited (ASX: OPT) is a clinical-stage biotech firm developing drugs and innovative, biology-based therapies to treat eye disease. OPT notified that Bank of America Corporation and its related bodies corporate had become a substantial shareholder in the company with a total voting power of 5.20% on 9 August 2021.

Online Ophthalmology Conference: OPT declared that CEO, Dr Megan Baldwin, will participate and present at the H.C. Wainwright Ophthalmology Conference on 17 August 2021 at 9:00 PM AEST.

Phase 3 Trial Expands in Canada:

• On 9 August 2021, OPT notified the opening of patient recruitment in Canada for the Phase 3 trial of OPT-302 and will administer patients to treat wet age-related macular degeneration (AMD)/retinal disease.
• OPT will enrol patients for two simultaneous Phase 3 registrational trials-COAST (Combination OPT-302 with Aflibercept Study) and ShORe (Study of OPT-302 in combination with Ranibizumab) in Canada.
• The studies will assess the benefits of the VEGF-C/D ‘trap’ inhibitor, OPT-302, for patients suffering from wet AMD.

1HFY21 Financial Performance:

• Growth in Revenue: The company posted an increase of 15% YoY in revenue to $314,295 in 1HFY21.
• Increase in Net Loss: OPT reported a net loss of $34.98 million after-tax attributable to shareholders in 1HFY21, up by 359% YoY. The higher net loss is because of the increased R&D spend on the manufacturing of OPT-302 and the Phase 3 clinical trials’ planning for OPT-302 in wet AMD.
• Higher Cash Balance: OPT held $202.54 million cash as of 31 December 2020 versus $62.02 million as of 30 June 2020.

Total Revenue & Net Loss from 1HFY20-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• Regulatory Delays: The company faces changes in regulations/ delays in sanction from various authorities in different geographies and for various trials.
• COVID-19 Impact: The pandemic could cause a delay in the preclinical studies/ trials, disruption in the clinical supply impacting the bottom line.

Outlook: OPT has received fast track status from the US-FDA for conducting trials for OPT-302. Simultaneously, OPT is also progressing for regulatory approvals from other countries in Europe, South America, and the Asia Pacific, to expand the geographical reach of its OPT-302 Phase 3 program.

Stock Recommendation: The stock of OPT gave a negative return of 10.18% in the past three months and a negative return of 32.32% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $1.210 - $3.280. On a TTM basis, the stock of OPT is trading at a price-to-book value multiple of 2.2x, lower than the industry (Biotechnology & Medical Research) median of 5.1x, thus seems undervalued. Considering the current trading levels, expansion of OPT-302 Phase 3 trial in Canada and plans to extend it to other geographies, valuation on TTM basis, and associated risks of COVID-19, regulatory changes, and financial risks, we give a ‘Speculative Buy’ rating on the stock at the market price of $1.235, as on 12 August 2021, 10:52 AM (GMT+10), Sydney, Eastern Australia.

OPT Daily Technical Chart, Data Source: REFINITIV 

ImpediMed Limited

Business Highlights of June 2021 Quarter (Q4FY21): ImpediMed Limited (ASX: IPD) is a medical device firm developing bioimpedance spectroscopy (BIS) devices and software services to analyse body composition in healthy individuals. IPD issued 155,000 securities at $0.096 per share on 6 August 2021 due to the vesting of performance rights (IPDAA) as per an employee incentive scheme.

• Increase in Revenue: IPD posted an increase of ~117% YoY in revenue to $2.6 million due to a surge in SOZO SaaS sales from the core business, Clinical business and new contracts signed.
• Cash Receipts & Net Outflows: The cash receipts collected from the customers stood at $2.27 million in Q4FY21. IPD incurred net cash outflows of ~$3.43 million from operating activities in Q4FY21.
• Increase in Patient Tests: IPD registered an increase in patients tests to over 37,000 in Q4FY21, up by ~109% YoY.
• Growth in Annual Recurring Revenue (ARR): IPD posted an ARR of $8.7 million, up by 67% YoY in Q4FY21. ARR growth consisted of $6.1 million from the Core Business and $2.6 million from the Clinical Business.
• The company had a Contracted Revenue Pipeline of $14.5 million in Q4FY21 and an already signed Total Contract Value (TCV) of over $12 million in FY21.
• Cash Balance: IPD had a cash balance of $19.68 million as of 30 June 2021.

Total Revenue & Net Loss from 1HFY20-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• Technology Risks: The company must keep its software services and technology platform -SOZO® Digital Health platform updated to mitigate the risk of technology and peer competition.
• Regulatory Delays for Patents: IPD faces the risk of regulatory changes and delays in approvals and marketing authorisations for new geographies.

Outlook:

• IPD expects net operating cash outflows in Q1FY22 to be well below $4.0 million and anticipates a considerable dip in cash outflows in 2HFY22.
• The company is focusing on growing the commercial sales of heart failure via pilot programs at key centres. It will present further new heart failure data at the HFSA Annual Scientific Meeting in September 2021.
• IPD will continue to supply the devices for the AstraZeneca trials in the US & globally and advance on Renal Failure's commercial and regulatory strategies.
• IPD will release its annual results for FY21 on 23 August 2021.

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 IPD gave a positive return of ~18.27% in the past nine months and a positive return of ~37.50% in the past year. The stock is currently trading lower than the 52-weeks’ average price level band of $0.060 - $0.185The stock has a support level of $0.093 and a resistance level of $0.135. We have valued the stock using the Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). We believe that the company can trade at a slight premium than its peer mean, considering an increase in revenue, growth in SaaS sales, new contract wins, signing of TCV of over $12 million in FY21, decent outlook, etc. For this purpose, we have taken peers like Universal Biosensors Inc (ASX: UBI), Micro-X Limited (ASX: MX1), Lumos Diagnostics Holdings Limited (ASX: LDX) and others. Considering the decent financial performance in Q4FY21, growth outlook for FY22, valuation, and associated risks of regulatory changes and technology, we give a ‘Hold’ rating on the stock at the current market price of $0.110 as on 12 August 2021.

IPD Daily Technical Chart, Data Source: REFINITIV 

MedAdvsior Limited

New Appointments: MedAdvisor Limited (ASX: MDR) is a developer of a medication management platform, MedAdvisor, to connect users with pharmacies and a network of GPs.

• On 10 August 2021, Lucas Merrow joined the Board as the new Non-Executive Director and held 940,290 shares in MDR as initial interest.
• Besides, Ms Ruba El-Afifi joined as the new Chief Operating Officer on 10 August 2021.

Options Issued: On 2 August 2021, MDR issued 500,000 shares/options under the code ‘MDRAI’ as per an employee incentive scheme.

Q4FY21 Financial Highlights:

• Increase in Q4FY21 Revenue: MDR reported $13.3 million of revenue, up by 338.1% YoY in Q4FY21.
• Higher Cash Receipts: The company generated $13.8 million cash receipts from operations in Q4FY21, up by 39.8% QoQ.
• Growth in the US Region: MDR has posted continuous growth for three quarters in the US market after acquiring Adheris in November 2020.
• Digital Growth of Pharmacy Network: MDR reported growth in the digitalisation of the US Pharmacy network, up by 12.5% QoQ in 4QFY21.
• Net Cash Outflows: MDR reported $2.70 million of net cash used in operating activities in Q4FY21.
• Cash Balance: As of 30 June 2021, MDR held $7.2 million of cash and had ~$5.0 million of available undrawn facilities.

Total Revenue & Net Income from 1HFY20-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• COVID-19 Uncertainties: The company faces the impact of COVID-19 lockdowns in the UK and evolving landscape for medication in the Philippines.
• Regulatory Risks: MDR faces the change in regulations and delays in approvals for accessing new markets.

Outlook:

• MDR has contracted a sales pipeline of more than 100% of the CY21 revenue target for the US business.
• The company confirms its revenue guidance of $55-$57 million for CY21 and a gross margin of ~55%.

Stock Recommendation: The stock of MDR gave a positive return of ~18.03% in the past month and a positive return of ~24.13% in the past three months. The stock is currently trading above the 52-weeks’ average price level of $0.275 - $0.493. The stock has a support level of $0.337 and a resistance level of $0.380. Considering the current trading levels, technical levels mentioned in the below para, decent returns in the past month and the past three months, increase in net losses, high debt-to-equity ratio, fall in current ratio in 1HFY21, negative net cash flows from operations in Q4FY21, and associated risks of funding and COVID-19, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the market price of $0.375, as on 12 August 2021, 2:06 PM, (GMT+10), Eastern Australia.

Technical Overview:

MDR prices have witnessed significant upside movement in the past four weeks. However, stock prices are now getting resistance of the downward sloping trend line resistance at $0.380 that indicates the prices could witness some downside correction from current levels. The momentum indicator RSI (14-period) is trading at ~56 on a weekly chart that indicates indecision in the stock prices. Immediate support level is $0.320 while immediate resistance is $0.390.

MDR Daily Technical Chart, Data Source: REFINITIV 

Note: The purple color line in the charts indicates RSI (14-period)

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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