RAC Oncology Limited 

RAC Details

Results of Preclinical Research Program: RAC Oncology Limited (ASX: RAC) is a precision oncology firm engaged in the commercialisation of its Phase II/III cancer drug Bisantrene for chemotherapy. As of 17 March 2021, the market capitalisation of the company stood at ~$555 million. On 15 March 2021, RAC notified regarding the change in the shareholding of William James Garner to 11.72 million fully paid ordinary shares with 8.47% voting rights from 10.12% rights held previously. On 9 March 2021, RAC announced the results of its preclinical research program undertaken in partnership with The University of Newcastle and Hunter Medical Research Institute. Both interim and latest results have shown Bisantrene to be an effective drug for an array of various breast cancer subtypes. Bisantrene showed the potential to kill breast cancer cells resistant to the present breast cancer drugs. With these results, RAC is confident of taking the drug into Phase II breast cancer trials.

1HFY21 Result Highlights: The company incurred a net loss of $2.05 million, up by 37% YoY on pcp for 1HFY21. RAC received a Research & Development tax incentive refund of $387k in 1HFY21 for FY20. On 10 December 2020, the company announced the resignation of Professor Borje Andersson as an Executive Director and continue as the Chief Medical Officer. During 1HFY21, RAC announced its partnership with George Clinical, a CRO to scope a Phase I/II clinical trial by combining Bisantrene with cyclophosphamide for the treatment study. During 1HFY21, RAC declared its three-pillar strategy built upon Bisantrene’s distinct credentials as a chemotherapy drug and capitalising this through the dysregulation of the Fat Mass and Obesity-related protein (FTO) of Pillar 1. It held a cash balance of $5.57 million as of 31 December 2020 compared to $1.73 million as of 30 June 2020.

1HFY21 P&L Highlights (Source: Company Reports)

Key Risks: The company faces the risk of not seeking the desired clinical trial results, experience delay in trial results, might be unable to find a suitable partner or adequate funding for the research programs. 

Outlook: The company has formulated a three-pillar strategy during 1HFY21 to strengthens its outlook for the future. RAC has a pipeline of clinical opportunities which it aims to optimise by completing regulatory, and consultant driven feasibility assessments. RAC will announce these outcomes before the close of March 2021.

Stock Recommendation: The stock of RAC gave a positive return of 25.87% in the past one month and a positive return of 391.82% in the past six months. The stock is currently trading towards its 52-weeks’ high level of $4.23. The stock of RAC has a support level of ~$3.781 and a resistance level of ~$4.158. Considering the high trading levels, significant returns in the past three months and six months, debt-free status, we are of the view that most of the positive factors have been factored at the current juncture. Hence, we give an ‘Expensive’ rating on the stock at the current market price of 3.910, down by 2.494% on 17 March 2021.

RAC Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Oneview Healthcare Plc

ONE Details

Investor Awareness Agreement with S3 Consortium Pty Limited: Oneview Healthcare Plc (ASX: ONE) is a provider of online tools for families, patients, and caregivers to offer the care experience. As of 17 March 2021, the market capitalisation of the company stood at ~$77.56 million. ONE announced an investor awareness contract with S3 Consortium Pty Limited (StocksDigital) for 1.5 years to seek research, investment thesis and commentary on its stock. For this transaction, ONE will allot 6.25 million CHESS depositary interests (CDIs) to StocksDigital. ONE has also agreed to $1 million of investment from S3CPL and key investors on its network. It will issue and allot 16.66 million of CDIs at $0.06 (a discount of 18.9%), subject to obtaining CDI holder approval to avail this investment in the company. ONE will use the funds to complement its sales and marketing initiatives in the US and Australia on its new Cloud platform. In case the issue of CDIs is not approved at the proposed EGM on or around 15 April 2021 as per the agreement terms, ONE will have to pay a cash sum of $375,000 to StocksDigital.

FY20 Result Highlights: The company reported an increase in recurring revenue from ordinary activities to €5.10 million, up by 13% YoY in FY20. The total revenue increased by 0.1% YoY to €7.10 million in FY20 on FY19. ONE registered a net loss from ordinary activities after tax of €9.45 million, down by 44% YoY in FY20 on a pcp basis. The total number of live beds increased by 9% YoY to 9,259 during FY20. During FY20, ONE undertook a conditional placement to raise ~A$8.7 million for its growth plans for FY21. It held a cash balance of €6.80 million as of 31 December 2020.

P&L Financials, FY20 (Source: Company Reports)

Key Risks: The company runs the risk of limited hospital access during COVID-19, disruptions in the technology, timely launch of its new platform, meeting working capital needs and expanding marketing activities in ANZ and the US.

Outlook: The company is on track to shift to complete SaaS platform and ISO 27001 certification for 31 March 2021. The various key partnerships entered in 2H20 lay the foundation for executing G2M strategy in the US (6k hospitals -market size).

Stock Recommendation: The stock of ONE gave a positive return of 331.37% in the past three months and a positive return of 474.55% in the past six months. The stock is currently trading towards its 52-weeks’ high level of $0.250. The stock of ONE has a support level of ~$0.190 and a resistance level of ~$0.259. On a TTM basis, the stock is trading at an EV/Sales value multiple of ~7.5x higher than the industry (Technology) median of ~3.7x, thus seems overvalued. Considering the high trading levels, significant returns in the past three months and six months, high gross margin, and valuation on a TTM basis, we are of the view that most of the positive factors have been discounted at the current juncture. Hence, we suggest investors to wait for better entry levels, and we give an ‘Expensive’ rating on the stock at the current market price of $0.220, up by 12.820% on 17 March 2021, owing to the news of an investor agreement entered with StocksDigital and proposed allotment of CDIs for the services to be provided under the agreement.

ONE Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.