Imagion Biosystems Limited

IBX Details

Q3FY21 Key Highlights: Imagion Biosystems Limited (ASX: IBX) is involved in the research and development of medical diagnostics. The company aims to detect cancer and other diseases, combining biotechnology and nanotechnology.

• Addition of Clinical Sites: During the quarter, the company added a third clinical site, namely the Royal Brisbane Women’s Hospital, for its MagSense® HER2 Breast Cancer Phase I Study. It also added the Lake Macquarie Private Hospital as the fourth clinical site after the quarter’s close.
• Clinical Trials: In 3QFY21, the Monash University researchers concluded the first set of animal studies, thanks to the CSIRO Federal Government grant, which was received in March 2021 and is currently being used to fund preclinical research for the same.
• Managerial Changes: The company appointed Dr Yalia Jayalakshmi as Chief Development Officer of IBX in 3QFY21. With his vast knowledge and leadership in cancer imaging and nanotechnology, he is expected to provide leadership for the company’s current MagSense® HER2 breast cancer Phase I study and take IBX to newer heights.
• Signing of Joint Development Agreement: Recently, the company has inked a joint development agreement with Global Cancer Technology (GCT) to develop GCT’s novel nanoscintillator technology for the treatment of breast cancer.
• Liquidity Details: At the end of the quarter, the cash balance stood at $11.98 million, down from $13.93 million reported in the previous quarter. The company reported an operating cash outflow of $2.18 million in 3QFY21, against a cash outflow of $1.9 million reported in the previous quarter (excluding R&D tax incentive of $2.6 million received in Q2).

Revenue (Source: Analysis by Kalkine Group)

Risks Analysis: The company’s operational health could be impacted by any failure in clinical trials, which may disrupt running its operations smoothly. Also, the company’s business model is exposed to a more complex regulatory environment.

Outlook: The company remains on track to make progress on its MagSense® Phase I clinical study. IBX advances its development pipeline and expects R&D expenditures and staff costs to increase in the coming quarters. For 4QFY21, IBX expects additional receipts from the exercise of options (particularly the IBXO listed options, which are due to expire in November 2021).

Stock Recommendation: The stock of IBX has a 52-week low and high level of $0.062 and $0.225, respectively. The stock has been corrected by ~60.53% and ~31.82% in the past nine and six months, respectively. The stock of IBX is trading at a P/BV multiple of 5.2x as compared to the industry median (Healthcare) of 3.8x on a TTM basis. As a result, the stock seems overvalued at the current trading levels. Considering the valuation on a TTM basis, technical levels as mentioned below, COVID-19 led uncertainties, and key risks associated with the business, we give a ‘Sell’ rating on the stock at the current market price of $0.080 as on 28 October 2021, 11:55 AM (GMT+10), Sydney, Eastern Australia.

Technical Commentary: IBX prices are consolidating at lower levels from past several weeks between $0.064 and $0.080. Prices has today hit the upward sloping trend line resistance level of $0.080 that also lies at 21-period SMA that further indicates profit booking might occur in the coming weeks. RSI (14-period) is hovering at ~60 level on a daily chart.

IBX Daily Technical Chart, Data Source: REFINITIV 

Note: The purple color line in the chart depicts RSI (14-period).

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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