MAYNE PHARMA GROUP LTD
Tracking well towards a key regulatory milestone: Up 3.4% on March 20, 2018, Mayne Pharma Group Ltd (ASX: MYX) announced that its Abbreviated New Drug Application (ANDA) for generic NuvaRing® (intra vaginal hormonal contraceptive delivery device) has been accepted for filing by the US Food and Drug Administration (FDA). The group expects to commercialise the generic NuvaRing in FY19. The group now has a growing pipeline of approximately 30 products targeting US markets with IQVIA sales greater than US$5 billion. Recently, the group also launched doxycycline monohydrate immediate release (IR) capsules (50mg, 75mg, and 100mg) in the United States. These Doxycycline IR capsules are a generic alternative to Monodox(R) that has similar usage to fight bacteria within the body. Further, this capsule will be used for the treatment of several infections, including adjunctive therapy in acne and psoriasis. Besides this, the company also announced the launch of methylphenidate extended-release (ER) capsule (10 mg) in the United States. This Methylphenidate ER capsule is a generic alternative to Ritalin LA capsule, indicated for attention deficit hyperactivity disorder (ADHD). These launches are expected to broaden Mayne Pharma's dermatology portfolio of branded and generic products in the market. On the other hand, MYX’s 1H18 revenue was down by 17% as compared to 1H17. Gross profit declined by 44% and gross profit margin was impacted by $17m of one-off abnormal stock adjustments including stock obsolescence, write-downs and sales of short-dated stock below cost to mitigate the full obsolescence risk as well as $3m of restructuring costs to improve the cost base. The group’s pipeline of commercial manufacturing opportunities seems to be growing, and the company expects to receive its first commercial manufacturing revenues in 2HFY18. Meanwhile, the stock moved up 5.67% in last three months as on March 19, 2018 as the stock seems to change its momentum scenario. While some headwinds in the generic sector still prevail, the stock can be watched for further key catalysts. As of now, we give an “Expensive” recommendation at the current market price of $0.77
1HFY18 Performance (Source: Company Reports)
HEALTHSCOPE LIMITED (ASX: HSO)
Potential to regain momentum: Healthscope had lately reported its half year result that entailed statutory NPAT fall of 12.8% to $77.5m while revenue was $1,222.1m, up 4.9% from last year corresponding period. Diluted EPS was 4.5 cents compared to 5.1 cents last year. Net operating cash flow was $170.6m compared to $176.9m last year. As a result, the interim dividend declared was 3.2 cents, below the interim dividend figure of 3.5 cents of last year. Despite this result, the group has a decent pipeline of projects relating to hospital construction and expansion and has room for improvement based on ageing population trends. Further, support from government in terms of private health insurance reform package is expected to lift the momentum. Meanwhile, HSO’s key projects are on track and Newcastle Private has been completed in 1H18. Seven projects are under construction with additional 3 to start in second half. Lately, Ellerston Capital Ltd and associates enhanced their interests in HSO from 7.26% to 8.3%. While the stock has plunged by 5% this year to date, the price has been up 18.7% in six months. We give a “Hold” at the current price of $1.96
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