Clinuvel Pharmaceuticals Limited

CUV Details

Positive Results from Clinal Trial: Clinuvel Pharmaceuticals Limited (ASX: CUV) is engaged in developing drugs to treat a broad range of severe skin illnesses.

• CUV recently announced positive final findings from the CUV801 study on Arterial Ischaemic Stroke (AIS). 
• The study revealed that 5 out of 6 patients demonstrated significant clinical and functional recovery up to 42 days after being treated with CUV’s drug afamelanotide.

Q3FY22 Key Highlights (for the period 01 January to 31 March 2022): The company’s cash receipts, and prudent control of expenditures aided the company in growing its commercial operations based on SCENESSE® for EPP patients. During the quarter, the company remained on track to progress well on its commercial operations for the distribution of SCENESSE® for EPP in Europe, Israel, and the USA.

Cash and Liquidity Highlight; Analysis by Kalkine Group 

Risk Analysis:  The clinical trial process is designed to assess the safety and efficacy of a medical device before commercialisation. A failure to achieve the desired results may hamper the company’s financial performance. 

Outlook: With a robust commercial operation, higher European orders for SCENESSE® products and a leading biotechnology company, the company remains well-placed for long-term growth. CUV expects the clinical demand to remain robust, indicating the benefits earned out of investment for the development of SCENESSE®. CUV stated that results from the ongoing study of CUV156 is expected in 2022.

Valuation Methodology: Price/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 the company has been corrected by ~15.66% in the past three months. The stock reached a 52-week low level of $15.11 as on May 9, 2022. The stock has been valued using the price to sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at some discount to its peers, considering its supply chain disruption risk, increased expenditure with commercialising SCENESSE®, strict regulatory approval, etc. For that purpose, peers such as Starpharma Holdings Ltd (ASX: SPL), Telix Pharmaceuticals Ltd (ASX: TLX), and Medlab Clinical Limited (ASX: MDC) have been considered. Considering robust liquidity position, positive cash flow from operations, higher product adoption, encouraging long-term outlook, current trading levels, and indicative upside in the valuation, we recommend a “Buy” rating on the stock at the closing market price of $15.130, down by ~2.825% as on 9 May 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 

PolyNovo Limited

PNV Details

Director’s Interest Notice: PolyNovo Limited (ASX: PNV) is a medical device company that designs, develops, and manufactures dermal regeneration solutions utilising its patented technology. In a recent update, the company announced that Christine Emmanuel, a director, has acquired 115,000 fully paid ordinary shares.

3QFY22 Trading Update:

• Impressive Top-line Growth: For the March 2022 quarter, the company posted a growth of 59.3% year over year in revenue (unaudited) to $12.26 million as compared to $7.69 million. YTD revenue stood at $30.42 million, which included the contribution of $1.00 million and $108k from BARDA and from Victorian State Government grant, respectively.
• Sales from United States: The US sales surged by 79.4% year over year in Q3. On a YTD basis, revenues came in at $23.73 million, up ~65.9% on a pcp basis. Fifteen new accounts were added during the quarter, bringing the total to 169.
• Australia and New Zealand Sales: The company’s sales in Australia and New Zealand remained on track and came in at $1.16 million, up 81.9% year over year.
• Liquidity Position: At the end of 31 March 2022, the cash balance stood at $3.80 million, which excluded any proceeds from the sale of the Lorimer Street property, depicting a rise of $517k over cash recorded as at 31 December 2021.

Cash Highlight; Analysis by Kalkine Group

Risk Analysis:  The company is exposed to foreign currency risk, interest rate risk, liquidity risk and credit risk. Further, stiff competition from peers, and strict regulatory requirements, add to the woes. 

Outlook: PNV gains from an expanded geographic reach and increasing customer referral networks. The company remains focused to invest higher in expanding its business strategies and research and development programs to enter new markets, grow market share and commercialise its new products. 

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: Currently, the stock is trading below the average of its 52-week’s high and low levels of $2.92 and $0.835, respectively. The stock of the company has been corrected by ~17.81% in the past three months. The stock of the company has been valued using the EV/Sales multiple-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 compared to its peers, considering COVID-19 led uncertainties, regulatory measures, etc. For the purpose of valuation, peers such as Paradigm Biopharmaceuticals Ltd (ASX: PAR), Imricor Medical Systems Inc (ASX: IMR), Nanosonics Ltd (ASX: NAN), and others have been considered. Considering a diversified portfolio, decent top-line growth, geographical expansion, decent long-term outlook, current trading levels, indicative upside in valuation, and key risks related to the business, we recommend a “Speculative Buy” rating on the stock at the closing market price of $0.930, up by ~3.33% as on 9 May 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.

PNV Daily Technical Chart, Data Source: REFINITIV 

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.

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.

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