Clinuvel Pharmaceuticals Limited

CUV Details

Latest Update: Clinuvel Pharmaceuticals Limited (ASX: CUV) is engaged in the development of its drug candidate SCENESSE, which it aims to commercialise in the US, Europe for the treatment of a rare, genetic metabolic disorder erythropoietic protoporphyria (EPP). On 25 February 2022, Director, Jeffrey Rosenfeld purchased ~485 shares for ~$9,263.50 in an on-market transaction and now holds ~2,848 ordinary shares in CUV.

Key Takeaways of 1HFY22 (Ended 31 December 2021):

• The revenue from the distribution of SCENESSE® increased by ~60% Y-o-Y in 1HFY22 due to robust growth in the US commercial distribution program. Steady patient demand from the European EPP expert centres is also attributed to the growth in revenue.
• The total expenses (~67% YoY) increased due to higher investment in the expansion of the R&D and marketing activities.
• The net operating cashflows increased from ~$9.18 million in 1HFY21 to ~$17.32 million in 1HFY22 due to higher cash receipts from customers and revenue growth.

Comparative Liquidity & Debt Position; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of expanding accredited centres and patients for conducting clinical trials efficiently. It risks expansion of trials across geographies and new COVID variants, and restrictions on mobility.

Outlook:

• CUV has a new multi-pronged expansion strategy in place to develop as an integrated specialty pharmaceutical company. It focusses on robust cash flow generation and operational efficiency to self-finance the expansion strategy and create financial surplus for adverse situations. It plans to increasingly merge critical components of the in-house value chain.
• It plans to develop new melanocortin products and accelerate the commercialisation of the first dermatocosmetic (non-prescription) product.

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 CUV gave a negative return of ~33.35% in the past three months and a negative return of ~52.57% in the past six months. The stock is currently trading below its 52-weeks’ average price level band of $18.110 - $44.670. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ median EV/Sales multiple, considering the increased expenses, decline in net profit, COVID-19 supply chain issues, geo-political unrest due to Ukraine and Russia war. For this purpose of valuation, a few peers like AVITA Medical Inc (ASX: AVH), Immutep Ltd (ASX: IMM), Telix Pharmaceuticals Ltd (ASX: TLX), and others have been considered. Considering the current trading levels, revenue growth, improved liquidity position, increasing demand for the SCENESSE® treatment from Israel, Europe, and the US, and indicative upside in valuation, we give a ‘Buy’ rating on the stock at the closing market price of $19.060, down by ~5.644%, as of 11 March 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

CUV Daily Technical Chart, Data Source: REFINITIV  

Bionomics Limited

BNO Details

Operational & Financial Results of 1HFY22 (31 December 2021): Bionomics Limited (ASX: BNO) undertakes the development of new drug candidates for the treatment of central nervous system disorders. It operates drug discovery and development and contract services segments across the US, Australia, and France.

• The total assets increased from ~$54.26 million as of 30 June 2021 versus ~$67.84 million as of 31 December 2021.
• BNO progressed on its alliance with Merck & Co for the co-development of α7 receptor positive allosteric modulators (PAMs) during 1HFY22.
• BNO has a large market opportunity to fulfil the medical needs of more than ~22 million patients in the US only suffering from PTSD (Post-Traumatic Stress Disorder) and SAD.
• BNO’s liquidity position improved from ~$28.49 million as of 30 June 2021 to ~$40.35 million as of 31 December 2021 with ~US$23.04 million raised from the NASDAQ listing & IPO in the US for the development of BNC210and to meet the operating expenditure.

Relative Debt & Liquidity Status; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of commercialising its drug candidate (BNC210), COVID-19 travel and mobility restrictions, partnership issues in the co-development of programs/ studies, lack of funding or government grants for R&D.

Outlook:

• With improved liquidity and access to the US investor base, BNO plans to progress on its development and commercialisation plans for BNC210.
• BNO initiated the Phase 2 PREVAIL Study in January 2022 to evaluate BNC210 for the acute treatment of Social Anxiety Disorder (SAD). It expects to receive the topline results of the study by FY22-end.

 Stock Recommendation: The stock of BNO gave a negative return of ~43.33% in the past three months and a negative return of ~62.22% in the past six months. The stock is currently trading very near to its 52-weeks’ low level of ~$0.066. On a TTM basis, the stock of BNO is trading at a price to book value multiple of ~1.6x, lower than the industry (Biotechnology & Medical Research) median of ~3.7x, thus seems undervalued. Considering the current trading levels, improved liquidity position, advancement on the MSD collaboration and Phase 2 trials for the PREVAIL Study, an international profile with the NASDAQ listing, valuation on a TTM basis, and associated key business we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.068, as of 11 March 2022, 11:53 AM (GMT+10), Sydney, Eastern Australia. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BNO Daily Technical Chart, Data Source: REFINITIV  

Micro-X Limited

MX1 Details

New Director Appointment: Micro-X Limited (ASX: MX1) provides technology products for medical and security imaging using cold cathode X-ray sources to the medical, veterinary, defence, and security screening industries. Recently, Ms. Ilona Meyer was added to the Board of Directors as a Non-Executive Director from 7 March 2022.

Accelerating Commercialisation Activities, 1HFY22 (31 December 2021):

• MX1 undertook significant development work on its new IED X-ray camera, Argus. It has started demonstrations to customers across police, industry, and defence organisations at multiple conferences in the US, the UK, and Australia for the future procurement of its new IED technology.
• MX1 received ~$0.4 million milestone payment from the US Department of Homeland Security (DHS) contracted for the development of the airport self -screening and portal programs. MX1 opened its US office in Seattle in May 2021 to support the Checkpoint program for the DHS.

Comparative Position of Earnings; (Analysis by Kalkine Group)

Key Risks: The company faces the slowdown of sales activities, lack of face-to-face customer engagement, delays in the planned evaluation of its Rover brand by the US military, and delays in the receipt of some components due to the COVID-19 impact.

Outlook:

• MX1 expects to commercially launch Argus (X-ray camera) in the international IED market in June 2022 and plans to focus on completing agreements with new distributors and dealerships for the Mobile DR products.
• MX1 plans to seek completion of the certification for the Rover Mark II and the European approval for the Rover to increase sales volumes for the Mobile DR range.

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 MX1 gave a negative return of ~38.46% in the past three months and a negative return of ~45.76% in the past six months. The stock is currently trading near its 52-weeks’ low level ~$0.150. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ median EV/Sales multiple, considering continuing net losses, negative operating cashflows, and COVID-19 delays on project development. For this purpose of valuation, a few peers like Atomo Diagnostics Ltd (ASX: AT1), Ramsay Health Care Ltd (ASX: RHC), Healius Ltd (ASX: HLS), and others have been considered. Considering the current trading levels, the receipt of milestone payments from DHS, expansion of sales and marketing activities for the Mobile DR division, new US premises, and pre-launch activities for Argus camera, a decline in debt-to-equity ratio, and indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.160, down by ~3.031%, as of 11 March 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

MX1 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: -

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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