Next Science Limited

NXS Details

Agreement with Zimmer Inc.: Next Science Limited (ASX: NXS) is involved in commercialising and developing its Xbio technology. Recently, the company has inked a US distribution agreement with Zimmer, Inc (a wholly owned subsidiary of Zimmer Biomet) for XPERIENCE^TM. The agreement was effective on an immediate basis and has a 5-year term plus and a 5-year renewal option. In addition, the company anticipates the revenues from sales of the Zimmer white label XPERIENCE^TM product to become material.

Insights of Q4FY21:

• For the quarter ended 31 December 2021 (Q4FY21), the company reported a growth of 32% in revenue (Unaudited) to US$2.9 million over Q3FY21, supported by sales contributions by all its products in the market. This took the total FY21 revenue (Unaudited) to US$8.9 million, reflecting a rise of 160% over pcp.
• NXS entered an XPERIENCE^TM distribution agreement signed with TELA Bio, Inc for the US plastic and reconstructive surgery market during the quarter.
• The company witnessed the continued growth of the BlastX^TM customer base under the direct sales model. In addition, adoption of XPERIENCE^TM is gaining pace, evident by the use of 93 Hospitals and 160 surgeons at the end of December 2021.
• NXS closed the quarter with a cash balance of US$7.4 million and a net cash burn of US$2.4 million.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company operates in a very competitive environment; hence rising market share of competitors in the industry could pose an operational risk to the business. NXS is exposed to a more complex regulatory environment; any failure in the compliances could lead the business to fines, penalties, etc.

Outlook:

• The company’s clinical studies and publications are continuing to grow and expecting commercial benefits in greater brand awareness and steady improvements in customer adoption.
• The company intends to launch Zimmer labelled product in 2HFY22 with a material positive impact on XPERIENCE^TM
• For FY22, the company would prioritise In vivo bioburden study, Inflammation study and pull-out study.

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 NXS is trading around its 52-week low level of $0.990, offering a decent opportunity for accumulation. The stock has been corrected by ~11.29% and ~18.14% in the past one and three months, respectively. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ average EV/Sales multiple, considering the COVID-19 uncertainties and inefficiency in generating profits, etc. For the purpose of valuation, peers such as Visioneering Technologies Inc (ASX: VTI), Ansell Ltd (ASX: ANN), Nanosonics Ltd (ASX: NAN), and others have been considered. Considering the indicative upside in valuation, growing revenue, decent liquidity position, signing of agreements, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $1.060, as on 16 February 2022, 10:30 AM (GMT+10), Sydney, Eastern Australia.

NXS Daily Technical Chart, Data Source: REFINITIV  

Bionomics Limited

BNO Details

Q2FY22 Financial and Operational Summary: Bionomics Limited (ASX: BNO) is involved in the development of innovative treatments for cancer and diseases of the central nervous system.

• In November 2021, BNO received US-FDA clearance to evaluate its lead clinical compound, BNC210, for the acute treatment of Social Anxiety Disorder (SAD) in Phase 2 clinical trial. In addition, FDA provided Fast Track designation to the BNC210 development program.
• During the quarter, the company closed an offering of 1,622,000 ADSs, each indicating 180 ordinary shares of the company at a public offering price of US$12.35 per ADS.
• Subsequent to the end of the quarter, BNO commenced Phase 2 clinical trial (the PREVAIL Study) to assess BNC210 for the acute treatment of SAD and the topline results are expected to come by the end of 2022.
• At the end of the quarter, BNO had a cash balance of $40.35 million as compared to $22.17 million as on 30 September 2021.

Cash Balance (Source: Analysis by Kalkine Group)

Key Risks: BNO’s operational and financial health could be impacted by any failure in the clinical trial. The company is exposed to a more complex regulatory environment; any failure in compliance could lead the business to fines, penalties etc.

Outlook: Looking forward, BNO would continue to undertake drug and clinical development and would also seek to commercialise the outcomes. The company expect multiple potential value-driving clinical milestones in the upcoming 4 – 8 quarters.

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 BNO is trading at par to its 52-week low level of $0.085, offering a decent opportunity for accumulation. The stock has been corrected by ~17.14% and ~20.90% in the past one and three months, respectively. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ average EV/Sales multiple, considering the COVID-19 uncertainties, nil revenue in FY21 and inefficiency in generating profits, etc. For the purpose of valuation, peers such as CSL Ltd (ASX: CSL), Clinuvel Pharmaceuticals Ltd (ASX: CUV), AVITA Medical Inc (ASX: AVH), and others have been considered. Considering the expected upside in valuation, completion of US-IPO, decent liquidity position, clearance from US-FDA, low debt to equity, optimistic outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $0.085 as on 16 February 2022.

BNO Daily Technical Chart, Data Source: REFINITIV 

Micro-X Limited

MX1 Details

Q2FY22 Financial and Operational Summary: Micro-X Limited (ASX: MX1) is involved in designing, developing and manufacturing ultra-lightweight CNT based X-Ray products for global healthcare and counted IED imaging security markets.

• During the quarter ended 31 December 2021, the company progressed with 20 new distributor and dealer contracts in North America and EMEA. IED X-ray camera ‘Argus’ is now well advanced for first customer demonstrations and sales in 2022.
• The company reported customer receipts of $0.46 million for the quarter, and these are likely to grow with the expanded network.
• During the quarter, the company shipped Mobile DR units to Seattle to combat global supply chain issues.
• At the end of the quarter, the company had a cash balance of $19.94 million as compared to $25.7 million as on 30 September 2021.

Cash Trend (Source: Analysis by Kalkine Group)

Key Risks:  MX1’s financial and operational performance could be impacted by the rising market share of its peers. In addition, the company is exposed to a more complex regulatory environment; any failure in the compliances could lead the business to fines, penalties, etc.

Outlook: MX1 has an addressable market of over $30 billion for its four-product line, which may provide a decent opportunity for business growth, and it would be focused on resourcing and accountability to maximise growth in all product lines.

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 is trading near to its 52-week low levels of $0.220, offering a decent opportunity for accumulation. The stock has been corrected by ~16.66% and ~24.99% in the past three and six months, respectively. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ average EV/Sales multiple, considering COVID-19 uncertainties and inefficiency in generating profits, etc. For the purpose of valuation, peers such as Atomo Diagnostics Ltd (ASX: AT1), Universal Biosensors Inc (ASX: UBI), Cochlear Ltd (ASX: COH), and others have been considered. Considering the expected upside in valuation, new dealers and distributors, decent liquidity position, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $0.225, up by ~2.272% as on 16 February 2022.

MX1 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 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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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