What can make these Health Care Stocks take a more focused Growth Route – AGH, BOT, SDI, M7T, OSL?

  • Nov 14, 2019 AEDT
  • Team Kalkine
What can make these Health Care Stocks take a more focused Growth Route – AGH, BOT, SDI, M7T, OSL?

In this article we are discussing five ASX-listed health care stocks, Althea Group Holdings Limited (ASX: AGH), Botanix Pharmaceuticals Limited (ASX:BOT), SDI Limited (ASX: SDI), Mach7 Technologies Limited (ASX: M7T), OncoSil Medical Limited (ASX: OSL) that are trading low on ASX with share price of less than a dollar and try to find out their recent financial and clinical developments that may allow these stocks to pursue a more focused growth route.

Althea Group Holdings Limited (ASX: AGH)

An Australian based company that holds license for production, supply as well as export of pharmaceutical grade medicinal cannabis products, Althea Group Holdings Limited announced that continuing its expansion into European market, it has commenced its entry into Germany. The company also provides medicinal cannabis education access and management services.Althea Group Holdings Limited

UK health regulator grants licence to AGH’s MyAcess Clinics

On 14 November 2019, AGH notified the market that the Bristol site of its 100% owned subsidiary, MMJ Clinic Group Limited t/a MyAcess Clinics has secured a licence from Care Quality Commission (regulator of health and social care in the UK).

Inked Memorandum of Understanding with Nimbus Health GmbH
  • For the sale and supply of AGH’s medicinal cannabis products in Germany region via its pharmacy network, Althea has signed a MOU with Nimbus to distribute Althea’s full suite of pharmaceutical grade medicinal cannabis products under the Althea brand.
  • Based in Frankfurt, Germany, Nimbus is a leading pharmaceutical licence holder wholesaler and specialised in the distribution and import of medicinal cannabis products.
Althea Replicating Australian strategy
  • To underpin the entry into the German market, Althea has been replicating its strategy that has already been successfully implemented in Australia and the UK.
  • For the German market, Althea would be developing a localised version of its Althea Concierge platform and Medicinal Education in Cannabinoids (MEDIC) learning portal to offer comprehensive medical education for healthcare professionals, in turn, simplify the process required to prescribe Althea products.
Robust Market Opportunity Ahead in Germany

It has been reported that in Germany 60,000 patients were treated with medical cannabis with an estimated value of €73.7 million in 2018, and the number of patients is expected to increase further to 1 million by 2024. The medical cannabis market is estimated to expand, worth of €7.7 billion by 2028.

Emerging as a leader in European Cannabis Space, after medicinal cannabis was legalised in Germany in 2017, Althea group is positioned well to become a key cannabis player globally in future.

Botanix Pharmaceuticals Limited (ASX:BOT)

Clinical stage cannabinoid company, Botanix Pharmaceuticals Limited (ASX:BOT) develops secure topical medications for acute skin ailments leveraging distinctive anti-inflammatory, immune modulating and antimicrobial properties of synthetic cannabidiol.

Botanix’s Quarterly Activities Update

Announcing further development across its robust product pipeline for synthetic cannabinoids (CDBs), dated 31 October 2019, Botanix released its quarterly activities report. Key highlights are discussed below-

  • Announced in October 2019, Botanix completed the BTX 1503 Phase 2 acne clinical study with encouraging efficacy and safety results, providing confidence to move forward with preparation for Phase 3 clinical studies.
  • Botanix is planning an end-of-Phase 2 meeting with the US FDA.
  • Botanix’ atopic dermatitis study (BTX 1204) currently in phase 2, is moving into the final stages. Patient recruitment is on track which is scheduled to complete in Q4 CY2019 and the study data is expected to be released in Q1 CY2020.
  • Formulation development and pre-clinical studies for its new product, BTX 1702, for the treatment of papulopustular rosacea (highly visible and distressing chronic inflammatory skin disease) has been successfully completed.
  • New data on Botanix’s cannabidiol antimicrobial development program released.
  • Botanix has also undergone management changes with the appointment of new senior US-based executives to lead Botanix’s next phase of development.
  • To provide funding for key clinical development programs as well as to accelerate its broader commercialisation strategy, a US-led institutional placement worth A$40 million was completed by Botanix.
SDI Limited (ASX: SDI)

Established in 1972 and listed in 1985, SDI Limited (ASX: SDI) is primarily engaged in the research and development, manufacturing and marketing of specialist dental materials, marketed in over 100 countries across the world.

Financial Highlights for FY 2019 ended June 30
  • SDI limited declared significant rise in incomes with an increase of 29.4% in net profit after tax (NPAT) amounting to $7.3 million from $5.7million in FY2018.
  • SDI also reported growth in sales by 6.8% of value $79.7 million in comparison to $74.5 million for FY2018.
  • SDI’s largest product segment, Aesthetics sales, realised a growth of 12% in local currencies which in Australian Dollars was up by 16%.
  • No debt has been reported for FY2019 with strong cash generation.
  • SDI also reported an 8% hike in fully franked ordinary dividend amounting to 2.7 cents per share subsequent to 1.0 cent per share special dividend which was paid at the interim.

A glance at SDI Financials is given in the table below.

SDI Limited

Mach7 Technologies Limited (ASX: M7T)

Mach7 Technologies Limited (ASX: M7T) is a leading provider of enterprise image management software for health care domain that allow healthcare companies to effortlessly recognise, connect, and share diagnostic image and patient care intelligence when required.

Business Updates of First Quarter FY2020

Strongest quarterly cash flow results reported in its history

  • M7T generated $1.7 million of positive operating cash flows, bringing its bank balance to $4.3 million at quarter end.
  • Cash receipts from customers amounted to $4.7 million, comprising support fees of value $1.6 million (recurring cash) and software and service receipts of $3.1 million.
  • For the given quarter, cash payments valued at $3.1 million were made. These payments are mainly consistent with the payments made in the preceding quarter valued $3.0 million.
  • Positive free cash flow (operating less investing cashflow) result was reported to be $1.6 million.
  • Mach7 is well-funded towards accomplishing its 12-month free cashflow break even target ending February 2020.
Updates on Quarterly Sales Order
  • Secured $7.5 million of sales orders for Q1 with total contract value over 5 years, including.
  • Won largest US sales deal worth $5.7 million.
  • Contracted annual recurring revenue (ARR) continues to increase while standing at $8.5 million.
  • M7T anticipates generating $2.2 million in services revenue under its software development and installation projects by FY2020.
OncoSil Medical Ltd (ASX: OSL)

A medical device company, OncoSil Medical Limited (ASX: OSL) has a prime focus on providing localised treatments for patients with pancreatic and liver cancer seeking to improve radiation for cancer patients. OncoSil™ a targeted radioactive isotope (Phosphorus-32), that is implanted directly into a patient’s pancreatic tumours through an endoscopic ultrasound is OncoSil Medical’s lead product.

OncoSil Receives Positive CE Mark Status Report
  • In a recent announcement dated 01 November 2019, the company announced on receipt of a positive CE Mark Status Report from the British Standards Institute (BSI) confirming the completion of data analysis presented to Clinical Oversight Committee (COC) for review.
  • To further assess the post market clinical, follow up (PMCF) programme, the CE Mark review process advances to the next and final phase outlining how the OncoSil™ device would be rolled out into the European market by OncoSil.
  • PMS/PMCF plans to be presented in detail to BSI on November 14th.
An Overview of OncoSil Device

Overview of OncoSil Device

Source: Company’s Report

OncoSil’s Investment Highlights

OncoSil’s has a clear mission to commersialise groundbreaking implantable radiotherapy treatment for solid tumours with sound science that demonstrated an excellent local disease control, prolonged overall survival, promising resection rates. In addition, superior outcomes to comparators as well as outstanding safety and tolerability profile.

OncoSil’s clear strategy path include
  • $2 billion market opportunity for improving standard of care in pancreatic cancer.
  • Aiming for CE Mark for unresectable locally advanced pancreatic cancer.
  • Post the Grant of US Humanitarian Use Designation (HUD) the company is aiming for US Humanitarian Device Exemption (HDE) for bile duct cancer.
  • Strong backbone of highly experienced management team.
  • For supply of commercial quantities, manufacturing and logistics have already been optimised.

Let us now have a look at the stock performances of each of the stocks under discussion (as on 14 November 2019, at AEST 3:48 PM)

OncoSil’s clear strategy


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