Botanix Pharmaceuticals Ltd

BOT Details
 
Qualified Infectious Disease Product Status: Botanix Pharmaceuticals Ltd (ASX: BOT) is an Australia and USA based cannabinoid company, which is engaged in the development of pharmaceutical products. The market capitalisation of the company stood at $33.07 Mn as on 24^th April 2020. Recently, the company announced that its first antibacterial product (BTX 1801) has been granted a Qualified Infectious Disease Product (QIDP) status by US-FDA. This product is used for the prevention of post-surgical infections. In another update, the company stated that it has wrapped up its review of the BTX 1204 program study data with respect to its broader dermatology platform, current economic and clinical trial conduct conditions.
The company will be focusing on its development resources mainly on its antimicrobial platform as well as the progression of its first clinical program for BTX 1801. BOT has implemented a significant reduction in operational costs and overhead in order to ensure enough cash reserves for supporting planned programs. During 1H FY20, it witnessed a growth of 62% in revenue, which amounted to $7,664,648.

Revenue Growth (Source: Company Reports)
 
Exploring Opportunities: BOT is discovering opportunities for its synthetic cannabidiol and its cannabinoid analog assets in other secondary infections and throughout different routes of administration. The company is also exploring additional opportunities in order to expand its pipeline of therapeutics, which are responsive to pandemics associated and resistant bacterial threat.

Stock Recommendation: The stock price of Botanix has increased by 61.765% during the intraday session (24^th April 2020) on the back of QIDP status to its first antibacterial product (BTX 1801) by US-FDA. It has corrected by 49.25% and 63.44% during the time frame of one month and three months, respectively. Hence, considering the above-stated factors, we have a watch stance on the stock at the current market price of $0.055 per share, up by 61.765% on 24^th April 2020.

 
BOT Daily Technical Chart (Source: Thomson Reuters)
 
 

PolyNovo Limited

PNV Details
 
Robust Growth in NovoSorb BTM Sales: PolyNovo Limited (ASX: PNV) is in the development and commercialisation of innovative medical devices by using its NovoSorb BTM technology. The market capitalisation of the company stood at $1.31 Bn as on 24^th April 2020. PNV recently notified the market with the first use of NovoSorb BTM in Canada, which was initiated by one of the leading surgeons of Canada. However, the company has not yet applied for regulatory clearance in Canada. PolyNovo also stated that it has changed Paul Brennan’s position from Chief Executive Officer to Managing Director.

During 1H FY20, the total revenue of the company stood at $10.18 million, which includes commercial sales of NovoSorb BTM amounting to $8.57 million and revenue from the BARDA clinical trial program of $1.61 million. The company reported 129% higher NovoSorb BTM sales during 1H FY20, relative to pcp. BTM sales in January 2020 were more than three times as compared to the sales in January 2019. The company noted research and development costs of $1,359,616 for the period with respect to the hernia, breast and BARDA projects along with other projects to support new product pipeline initiatives


NovoSorb BTM Sales (Source: Company Reports)

Expected Sales for FY20: The company anticipates NovoSorb BTM sales for FY20 to be double as compared to the sales figure of FY19.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

EV/Sales Based Valuation (Source: Thomson Reuters)
 
Note: All forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: As at 31 December 2019, the cash balance of the company stood at $8,144,298 (including short-term investments). Gross margin of the company stood at 90.9% in 1H FY20 as compared to the industry median of 72.1%. Current ratio of PNV stood at 6.28x in 1H FY20 against the industry median of 2.84x; this reflects that the company is in a decent position to address its short-term obligations as compared to the broader industry. Debt to equity of PNV stood at 0.09x against the industry median of 0.30x. We have valued the stock using EV/Sales based illustrative relative valuation method and arrived at a target price, which is offering correction of mid-single digit (in percentage terms). The stock of PNV has witnessed correction of 30.04% and 17.15% during the last three months and six months, respectively. Hence, considering the correction in the stock, we have a watch stance on the stock at the current market price of $2.010 per share with a rise of 1.515% on 24^th April 2020.
 
 
PNV Daily Technical Chart (Source: Thomson Reuters)

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