Total Brain (ASX:TTB) is the developer of a neuroscience-based mental health monitoring and support platform powered by the largest standardised neuroscientific database in the world formed over almost two decades and with >$50m of R&D funding. The company has reported Q2 FY22 cash receipts of $3.96m, representing a four-fold increase year-on-year and a six-fold increase quarter-on-quarter. Total Brain reported its best-ever operating cash profit of $0.92m. The jump in receipts was driven by recent licensing deals for its iSPOT-D (International Study to Predict Optimised Treatment for Depression) in the pharma support segment, its first invoice of $150k to population health segment partner, IBM, and growing revenues from the provider support segment (which includes clinical support providers). Q2 FY22 cash outflows declined 25% or $0.97m quarter-on-quarter to $2.91m, following the company’s decision in Q1 to reduce costs across the board by 25%. The company noted it expected business expenses to remain at this level in the current quarter. The result puts TTB well on track to beat our FY22 cashflow forecasts. We will address our forecasts when the company reports its interim result at the end of next month. Our base-case DCF valuation is $0.77/share, and derived from a WACC of 14.7% (Beta 2.0, terminal growth rate 2.2%). In our view, continued evidence that Total Brain is gaining traction and generating revenue from its target segments should underpin the share price in the near term.
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Profitable quarter driven by licence sales
- Published:
31 Jan 2022 -
Author:
Finola Burke -
Pages:
7
Total Brain (ASX:TTB) is the developer of a neuroscience-based mental health monitoring and support platform powered by the largest standardised neuroscientific database in the world formed over almost two decades and with >$50m of R&D funding. The company has reported Q2 FY22 cash receipts of $3.96m, representing a four-fold increase year-on-year and a six-fold increase quarter-on-quarter. Total Brain reported its best-ever operating cash profit of $0.92m. The jump in receipts was driven by recent licensing deals for its iSPOT-D (International Study to Predict Optimised Treatment for Depression) in the pharma support segment, its first invoice of $150k to population health segment partner, IBM, and growing revenues from the provider support segment (which includes clinical support providers). Q2 FY22 cash outflows declined 25% or $0.97m quarter-on-quarter to $2.91m, following the company’s decision in Q1 to reduce costs across the board by 25%. The company noted it expected business expenses to remain at this level in the current quarter. The result puts TTB well on track to beat our FY22 cashflow forecasts. We will address our forecasts when the company reports its interim result at the end of next month. Our base-case DCF valuation is $0.77/share, and derived from a WACC of 14.7% (Beta 2.0, terminal growth rate 2.2%). In our view, continued evidence that Total Brain is gaining traction and generating revenue from its target segments should underpin the share price in the near term.