Medical Developments International Limited

MVP Details

Business Update: Medical Developments International Limited (ASX: MVP) manufactures and distributes pharmaceutical drugs and medical and veterinary equipment. It operates via three segments: Pharmaceuticals, Medical Devices, and Veterinary Products. On 03rd February 2022, MVP announced that it is winding up the CSIRO Active Pharmaceutical Ingredient (API) Continuous Flow Technology Project. The announcement reflects both MVP’s focus on its respiratory and pain business and the commercial realities of the project.

FY21 Financial Performance

• Top-Line Update: Gross revenue for the period stood at $25.7 million, portraying a 9% YoY growth, with much of the growth contribution coming from contract income. Respiratory sales were down due to COVID-19 impact, and Penthrox sales slipped due to distribution sold through stocks. Modest growth was assumed in the European Penthrox business.
• Bottom Line Update: The company net loss increased to $12.6 million because of COVID-19 impact on AU Penthrox and respiratory business. Loss attribution from impairments stood at $9.0 million and Penthrox EU transaction cost of $9.5 million. The positive effects of contract income and Penthrox sales support the profitability metric.
• Long-Term Growth Roadmap: MVP focuses on the following guidance from the US FDA in April and achieving ethics approval for the Pharmacokinetic study in China. The company entered the final engineering stage of new devices, including the enhanced container closure system. Lidocaine has successfully approached ‘Stage 4’ of commercial production.

FY21 Financial Snapshot, Analysis by Kalkine Group

Key Risks and Challenges

The US FDA guidance remains on track until April, with MVP’s intentions to submit a protocol to FDA by November 2022. Any rejections from US FDA can cause substantial development risk. In addition, strategic planning, new developments, and capital project reviews may burn high cash flows in the short term.

Outlook

The improved COVID-19 environment has boosted access to hospitals in UK and France, registering the highest Penthrox units’ sale of ~14,000 units. MVP aims to expand the Medical Affairs resources at global HQ and Europe to support commercial execution. The market potential for Penthrox remains robust, with early encouraging signs in France.

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 MVP gave a negative return of ~34.019% in the past year. The stock is currently trading lower than the 52-weeks’ average price level band of $3.210 - $6.390. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in percentage terms). The company might trade at some discount to its peers’ EV/Sales multiples average, considering the expected cyclical effects of COVID-19 and net losses committed in FY21, etc. For valuation, few peers like Starpharma Holdings Ltd (ASX: SPL), Neuren Pharmaceuticals Ltd (ASX: NEU), Mayne Pharma Group Ltd (ASX: MYX), and others have been considered. Given the high growth potential for Penthrox, improved international distribution prospects, awaited US FDA approval, current trading levels, upside illustrated by valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $4.160, down by ~2.804%, as of 09 February 2022.

MVP Daily Technical Chart, Data Source: REFINITIV

Invion Limited (ASX: IVX)

Invion Limited (ASX: IVX) is an Australian life-science company focused on researching and developing Photosoft technology for a range of cancer treatments. The company has conducted multiple clinical trials for Photosoft technology development. Its Photo Dynamic Therapy (PDT) treatment optimises non-toxic photosensitisers and light to eliminate cancer and stimulate the immune system.

Q2FY22 Key Updates – IVX held onto $13.6 million in cash reserves, up by circa $10.7 million from the previous quarter owing to $12.1 million equity infusion via Share Placement and Share Purchase Plan. The capital raised shall be utilised for pre-clinical and clinical work and expand IVX’s expansion plan via exclusive agreement concerning RMW Cho (the licensor of Photosoft™ technology) and cancer-related treatments. IVX registered net cash outflow in operating activities of $705,000, with primary areas being $550,000 in R&D and $680,000 in administration & corporate costs.

The long-Term focus for Photodynamic Therapy (PDT) – For culminating clinical needs, IVX has collaborated with the world-class expertise of Peter Mac and Hudson Institute. PDT held a strong therapeutic profile, being non-toxic at 100x therapeutic dose.

Technical Analysis: IVX's prices are sustaining above an upward sloping trend line for the past 8 months and are currently taking the support of the same trend line. On the weekly chart, prices are trading above the trend-following indicator 50-period SMA, supporting a positive bias; however, 21-period SMA is above CMP and may act a resistance level for the stock. The leading indicator RSI (14-period) is hovering around mid-point and trading at ~50.50 levels. Now the next important support level for the stock is at AUD 0.160, while resistance is at AUD 0.190 level.

Considering the company’s current price levels with indecisiveness, investing in this stock at such uncertain levels should be taken with a calculated approach; hence a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 0.018 per share on 09^th February 2022.

Weekly Technical Chart – IVX

Source: REFINITIV

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

Note 2: Investment decisions should be made depending 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 the stock prices tend to find resistance when they are rising, and the uptrend may pause due to profit booking or selling interest. 

The Green colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).

The Blue colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently in a bullish trend (Vice – Versa).

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.

Note: Invion Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

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