Quick Insights on Two FTSE Listed Healthcare Stocks - Silence Therapeutics & EKF Diagnostics Holdings

Quick Insights on Two FTSE Listed Healthcare Stocks - Silence Therapeutics & EKF Diagnostics Holdings

Summary

  • Silence Therapeutics made considerable advancements in the development of SLN360 and SLN124 in H1 FY2020. It got FDA approval for dose escalation of SLN360.
  • The Company entered into a partnership with AstraZeneca for the development and commercialization of siRNA therapeutics. It received a cash payment of USD 20 million and an equity investment of USD 20 million as part of the transaction on H1 FY2020.
  • EKF Diagnostic's revenue increased by 23 percent year on year in H1 FY2020. The Contract Manufacturing division supported the growth in revenue.
  • The Core businesses sales were down in H1 FY2020 as doctor's offices were closed, and labs were focused on covid-19.

Silence Therapeutics PLC (LON: SLN) and EKF Diagnostics Holdings PLC (LON: EKF) are two FTSE listed healthcare stocks. Based on 1-year performance, shares of SLN and EKF were up by close to 102.6 percent and 67.2 percent, respectively. Shares of SLN and EKF were down by close to 1.07 percent and 5.26 percent, respectively from their last closing price (as on 14 September 2020, before the market close at 1:30 PM GMT+1).

Silence Therapeutics PLC (LON: SLN) - Listed American Depositary Shares on NASDAQ

Silence Therapeutics PLC is a UK based healthcare company. It is engaged in the development of novel short interfering ribonucleic acid (siRNA) that is used for medical treatment. The Company also owns therapeutic products such as SLN360 and SLN124 for the treatment of the cardiovascular and myelodysplastic syndrome. Silence Therapeutics is listed on the FTSE AIM UK 50 index.

Business Model

(Source: Company website)

H1 FY2020 results (ended 30 June 2020) as reported on 14 September 2020

During the first-half 2020, Silence Therapeutics incurred a loss after tax of £11.0 million, which widened from loss after tax of £8.2 million in the same period last year. The loss after tax increased as the Company made a significant investment in the research and development of SLN360 and SLN124 products for clinical testing. In H1 FY20, the net cash inflow from operating activities was £0.8 million, which improved against net cash outflow of £10.3 million in H1 FY19. The operating cash inflow was supported by a partnership with AstraZeneca for the development of siRNA therapeutics. As on 30 June 2020, Silence Therapeutics had cash and short term deposits of around £50.3 million.

Operational Highlights in H1 FY2020

In H1 FY20, the Company made considerable advancements in the development of SLN360 and SLN124, and both are wholly owned products of Silence Therapeutics. SLN360 is for treatment of the cardiovascular disease due to high lipoprotein, and SLN124 product is for treatment of beta-thalassaemia and myelodysplastic syndrome. The Company received the dose-escalation approval from the FDA for SLN360 in August 2020. In March 2020, Silence Therapeutics collaborated with AstraZeneca for development of treatment to cure cardiovascular, renal, metabolic and respiratory diseases. Under the new partnership, the Company would develop and commercialize siRNA therapeutics. It received a cash payment of USD 20 million and an equity investment of USD 20 million as a part of the deal. Silence Therapeutics would also get a cash payment of USD 40 million in H1 FY21. The Company would initially work on five targets that are further extendable to five more targets. The Company also has the potential to get USD 400 million in the form of milestone payment and royalties. On 8 September 2020, Silence Therapeutics listed the American Depository Shares (ADS) on NASDAQ for £0.05 per share. On 14 September 2020, the Company announced the appointment of Mark Rothera as the new President and the Chief Executive Officer.

Pipeline of Products

(Source: Company website)

Share Price Performance Analysis

1-Year Chart as on September-14-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Silence Therapeutics PLC's shares were trading at GBX 463.00 and were down by close to 1.07 percent against the previous closing price (as on 14 September 2020, before the market close at 1:30 PM GMT+1). SLN's 52-week High and Low were GBX 646.50 and GBX 161.00, respectively. Silence Therapeutics had a market capitalization of around £387.63 million.

Business Outlook

Silence Therapeutics is engaged in the development of medical products for improving the lives of the patients. In H1 FY20, Silence Therapeutics had a strong performance related to product development, regulatory achievement and partnerships for the development of siRNA therapeutics. The Company has a strong proprietary pipeline, and it would focus on organic growth, in addition to seeking third-party collaboration. The Company recently completed listing on the NASDAQ in the US, and it expects that it would help in accessing the US capital market.

EKF Diagnostics Holdings PLC (LON: EKF) - Invested USD 5 million in Trellus Health

EKF Diagnostics Holdings PLC is a UK based healthcare company. The Company is a manufacturer of point of care products and central lab devices. It also develops chemistry reagents such as haemoglobin tests, HbA1c tests, glucose and lactate tests. EKF Diagnostics is a manufacturer and distributor of PrimeStore® MTM on behalf of Longhorn Vaccines and Diagnostics. The Company categorizes the business under Diabetes Care, Hematology and Central Laboratory and Life Sciences. EKF Diagnostics is listed on the FTSE AIM All-Share index.

H1 FY2020 results (ended 30 June 2020) as reported on 14 September 2020

In H1 FY20, the revenue of EKF Diagnostics stood at £26.3 million, which increased by 23 percent year on year from £21.4 million a year ago. The contract manufacturing for PrimeStore® MTM supported the growth in revenue. The adjusted EBITDA improved from £5.5 million in H1 FY19 to £8.9 million in H1 FY20. The net profit was up by almost 189 percent from £1.4 million in H1 FY19 to £4.1 million in H1 FY20. The Company generated net operating cash flow of £6.9 million in H1 FY20. As on 30 June 2020, EKF Diagnostics had cash of £16.2 million, and it announced the dividend of 1 pence per share that would be paid in December 2020. In August 2020, the Company made a strategic investment of USD 5 million in Trellus Health, a health solution provider for chronic conditions.

Business Performance by Category in H1 FY2020

(Source: Company website)

The sales for Diabetes segment fell by 2 percent year on year in H1 FY20 to £9.4 million from £9.6 million in H1 FY19. Hematology segment reported revenue of £5.8 million in H1 FY20, which declined by 12 percent year on year from £6.6 million in H1 FY19. The sales of Diabetes and Hematology unit were impacted by covid-19. Central Laboratory and Life Sciences division reported revenue of £1.4 million and £1.1 million, respectively. Contract Manufacturing for PrimeStore® MTM division reported revenue of £6.4 in H1 FY20, which grew from £0.1 million in H1 FY19. PrimeStore® MTM witnessed enormous demand in the US and the UK. The core business of the Company was impacted in H1 FY20 as the doctor's offices were closed, and labs were focused on covid-19.

(Source: Company website)

Share Price Performance Analysis

1-Year Chart as on September-14-2020, before the market close (Source: Refinitiv, Thomson Reuters)

EKF Diagnostics PLC's shares were trading at GBX 54.00 and were down by close to 5.26 percent against the previous closing price (as on 14 September 2020, before the market close at 1:30 PM GMT+1). EKF's 52-week High and Low were GBX 60.00 and GBX 16.58, respectively. EKF Diagnostics had a market capitalization of around £259.12 million.

Business Outlook

The trading performance in Q3 FY20 so far is above management's expectation, and the Company expects the overall performance in FY20 to be healthy. The continued growth in contract manufacturing for PrimeStore® MTM would be the focal point. The Company expects the sales demand for McKesson to bounce back to the pre-covid level. The Quo-test cartridge registration in China is expected to complete by the end of 2020 or early next year.

 


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