How is the Business Trending on these Healthcare Stocks - IDT, BNO

IDT Australia Limited

IDT Details

H1FY22 Key Financial and Business Updates: IDT Australia Limited (ASX: IDT) is engaged in supplying products, research, and development in the pharmaceutical space, including medical cannabis.

• Unsuccessful Grant Outcome: The Australian government notified IDT of its unsuccessful grant for Manufacturing Collaboration Stream Grant under the government’s modern manufacturing initiative (MMI).
• Operational Review: Revenue for H1FY22 was $8.56 million, up by 74%. The company embarked upon an NPAT of $1.21 million relative to $1.12 million in H1FY21.
• Financial Position: The cash balance as of 31 December 2021 stood at $13.31 million. Net cash inflow for H1FY22 stood at $6.39 million, relative to an inflow of $0.46 million in H1FY21.

Cash Flow Movements; Analysis by Kalkine Group

Key Risks and Challenges

The business is exposed to a highly complex regulatory environment where any failure can lead the business to fulfil fines and penalties. Health and pharmaceutical companies operate in an uncertain environment, prolonged by years undertaken in clinical trials.

Outlook

The company secured a Sterile manufacturing license from the Therapeutic Goods Administration, bringing IDT’s cGMP sterile manufacturing facility into readiness. IDT is manufacturing Australia’s First cGMP mRNA Drug, destined for clinical trials in CY22.

Stock Recommendation:

The stock of IDT gave a negative return of ~59.770% in the past year. The stock is currently trading lower than the 52-weeks average price level band of $0.168 - $0.755. On a TTM basis, IDT has a Price to Book Value multiple of 1.5x compared to the industry median (Biotechnology and Medical Research) of 3.7x. Given the considerable decent uptick in operating cash flow, sterile manufacturing licence, current trading levels, undervaluation indicated by TTM valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $0.180, up by ~2.857% as of 22 March 2022.

IDT Daily Technical Chart, Data Source: REFINITIV

Bionomics Limited

BNO Details

Key Business Updates and H1FY22 Financial Review: Bionomics Limited (ASX: BNO) undertakes the development of new drug candidates to treat central nervous system disorders.

• Receipt of $264k Licensing Revenue: On 14 March 2022, IDT announced $263,634 in licensing revenue from Cancer Therapeutics CRC (CTx), which has licensed two targets to Pfizer Inc., elevating a potential deal of US$460 million.
• Operating Update: BNO reported an operating loss after tax of $13.05 million relative to $12,735 PcP, resulting from a $704,995 million decline in other income.
• Financial Update: Cash during H1FY22 increased by $11.85 million to $40.35 million as of 31 December 2021. Net cash inflows from investing activities stood at $614,315, driven by precedes from other financial assets.

H1FY22 Cash Flow Movements; Analysis by Kalkine Group

Key Risks and Challenges

The business faces the risk of failure to commercialize BNC210 (drug candidate), potential travel and mobility restrictions, and potential partnership issues in the co-development of programs/studies or lack of government funding.

Outlook

BNO initiated its Phase 2b trial (ATTUNE Study) to evaluate BNC210 in patients with Post-Traumatic Stress Disorder (PTSD) with top-line results to commence in H1FY23. The company engaged in a pipeline expansion strategy and has begun preparing for the initial study.

Stock Recommendation:

The stock of BNO gave a negative return of ~72.174% in the past year. The stock is currently trading lower than the 52-weeks average price level band of $0.063 - $0.265. On a TTM basis, BNO has a Price to Book Value multiple of 1.5x compared to the industry median (Biotechnology and Medical Research) of 3.7x. Given the phase 2b trial commencement, pipeline expansion strategy, current trading levels, undervaluation indicated by TTM valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $0.065, down by ~2.986% as of 22 March 2022.

BNO Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should depend on the investors’ appetite for upside potential, risks, holding duration, and previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is 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.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.