Telix Pharmaceuticals Limited

TLX’s penetration in Japan:During 1H 2018 ended June 30, 2018, Telix Pharmaceuticals Limited (ASX: TLX) came up with the Japanese subsidiary so that the activities in the Japanese region can be helped with. Another reason for this move was that the company wanted to establish its presence in the Japanese market which, according to the company, is the crucial market with respect to the company’s products. Lately, the group has joined hands with Nihon Medi-Physics Co., Ltd. (“NMP”) of Japan, for conducting and analysing feasibility of 225Ac-labeled (actinium) antibodies for the treatment of clear-cell renal cell cancer (ccRCC).

Meanwhile, the company incurred loss amounting to A$5,190,974 in 1H 2018 ended June 30, 2018, up against prior corresponding year. However, in the month of February, the company has made an announcement that it had collaborated with the Radboud University Medical Center so that TLX-250 can be developed and evaluated further.


Net cash used in operating activities (Source: Company Reports)

In the September 2018 quarter, the company saw $4.8 million of net cash which has been used towards operating activities primarily because of the payments made with regard to the research and development.During the same period, $0.4 million of net cash was used towards the investing activities.

Market Opportunity for TLX: TLX has stated that there is market opportunity in the range of $400-500 million with respect to TLX250 through the treatment. The company stated that the therapy treatment can be offered to 50,000 patients through TLX250. With respect to TLX591, the company stated that the market for the prostate cancer, with regards to therapy treatment, is significantly large and the momentum is also very robust. 

Stock Recommendation: Relative Strength Index or RSI has been applied on the daily chart of Telix Pharmaceuticals and default values have been considered. As per the observation, the 14-day RSI has rebounded from the oversold region and is expected to witness further uptrend. With many approvals in place (including the approval for Glioblastoma Trial) and other research driven developments, the group is expected to benefit in terms of financial performance in the next 12-24 months. Since the stock might witness more bullish momentum, we maintain our “Hold” rating on the stock at the current market price of A$0.695 per share.

Nanosonics Limited

Strategic Investments for growth: Nanosonics Limited (ASX: NAN) is a life science company that researches, develops, and commercializes a range of disinfection and sterilization technologies that are utilized for infection control and decontamination. For the FY 2018, sales came in at $ 60.7 Mn, a fall of 10% on a Y-O-Y basis. This was due to the reduction in sales to GE Healthcare in North America that happened on account of the recent changes in the GE’s inventory holding management system, & in the anticipation of release of Trophon 2. This fall was partially offset by an accelerated adoption of the Trophon in UK. NAN clocked a gross profit of $45.3 Mn resulting into a fall of 10% on pcp. This was on the back of lower sales of base units partially offset by higher consumable sales.
 
What to Expect from Nanosonics Limited: Going further into FY 2019, the firm expects an ongoing growth in their installed base capacity. This expectation is on the back of upgrades/ replacements of Trophon EPR units which are more than 5 years old and this will commence in FY 2019 itself. Also, adoption in Europe is going to rise driven by the MES program in UK which may lead to a 100%-unit growth over FY 2018.
 
Moreover, the new guidelines in Germany & France and adoption of Trophon2 will act as a catalyst to broader adoption.Apart from this, the regulatory approval of Trophon 2 is expected by the end of the FY 2019 in Japan. Considering these expansion programs, the OPEX for FY 2019 is anticipated to be around $53 Mn of which around $13 Mn would be allocated towards the R&D for new product development.
 

Accelerating investments in R&D (Source: Company Reports)
 
Stock Recommendation: Moving Average Convergence Divergence or MACD indicator has been applied on the daily chart of Nanosonics Limited and default values have been considered. As per the observation, the MACD line is about to cross the signal line and after the crossover, it is expected to witness an upward momentum. Therefore, the crossover is expected to be bullish. As a result, we maintain our “Hold” rating on the stock at the current market price of A$3.070 per share.  
 

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