Medlab Clinical Limited

Medlab Clinical Limited (ASX: MDC) is an Australian biotechnology company that deals in developing therapeutics using its proprietary, next-generation delivery platform, NanoCelle. The company provides agile, innovative research with expertise in large and small molecule delivery across the supply chain process, from concept to the manufactured product.

Financial and Operational Update: On 11 November 2021, the company declared the completion of the Australian only rights for the Medlab branded nutraceutical (VMS) lines. The transaction includes cash contributions of $2.2 million from PharmaCare in consideration for transferring specific Medlab IP, pre-paid stock, stock on order and stock on hand. The company has a strong cash position with $13 million in the bank after completing this transaction and an R&D grant. Besides, the company, on 11 November 2021, provided a business update, wherein the company highlighted that the expenditure incurred on its business activities in the previous quarter comprised substantial investment in R&D pertaining to NanaBis and other product development of $0.7 million and incurred spend of $87K in patents and trademarks that of which allowed USA Patent and Trademark Office issues Patent for NanoCelle.

On the financial front, MDC has recorded a 54% growth in total revenue for FY21 amounted to $4.4 million compared to the last year. The net loss after tax stood at $12.4 million compared to the net loss of $13.5 million in FY20.

Technical Analysis:

Weekly Price Chart

Note: The purple color line in the chart depicts RSI (14-period). The sky-blue and green color lines represent 50-Period SMA and 21-Period SMA respectively.

On the weekly chart, MDC prices are hovering near the horizontal trend line support level and taking the support of the same. The momentum oscillator RSI (14-period) is trading at ~41.601 level, reversing form lower levels. However, the prices are trading below the trend-following indicators 21-period and 50- period SMA, which may act as a resistance level for the stock. The crucial support level for the stock is placed at AUD 0.13, while the key resistance is at AUD 0.175.

Stock Recommendation

The completion of the divestment of VMS business to PharmaCare allows the company to make savings of around $2 million per annum on operating expenses and deepen its aim on areas of strategic growth. Further, the company is emphasising on commercialising its global Biotech assets, as well as regulatory approvals, partnering and early market access initiatives.

Therefore, considering the facts above and the current trading levels, we give a “Speculative Buy” recommendation on the stock at the closing market price of A$0.145, up 3.571% as of 17^th January 2022.

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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