Two new abstracts of studies evaluating the ‘rule-in’ EarlyCDT Lung test use in determining malignancy risk of indeterminate pulmonary nodules (IPNs) have been announced supporting the US launch by Biodesix and use in this setting. In the IPN setting, test use focuses on the ability to detect cancers earlier and to avoid unnecessary biopsies. Estimates vary but the prevalence of IPNs is thought to be 33% (range 17–53%) and 13% (range 2–24%), in screening (high-risk) and non-screening study populations, respectively. The problem for clinicians is that biopsies that are used to confirm cancer diagnosis are invasive, complication-prone (up to 25% adverse event rate) and expensive (average $15,000/procedure), and ultimately many are unnecessary as the majority of these IPNs are non-cancerous or benign. The two key takeaways from these abstracts are: i) using the test alongside a rule-out test (Nodify XL2) was able to reclassify 32% of IPNs – either diagnosing cancerous nodules earlier or avoiding unnecessary biopsies; and ii) this provides independent validation of the EarlyCDT Lung panel and of the ‘rule-in’ and ‘rule-out’ strategy being used by Biodesix. The US launch is ongoing (temporarily hindered under COVID-19), but we note that Biodesix has filed a prospectus to IPO on the US NASDAQ and capital raised is anticipated to be deployed to support the launch. We expect Oncimmune’s FY’20 annual results (for the period ending 31 May 2020) to be reported 30 October 2020.
Companies: Oncimmune Holdings Plc
In quick succession after the recent IMPACTT collaboration project to develop a COVID-19 biomarker panel, Oncimmune has signed its first commercial agreement with Cedars-Sinai to provide antibody profiling of its samples. Cedars-Sinai is a leading US hospital organisation, and Oncimmune will be paid on commercial terms to profile the antibodies from samples taken at Cedar-Sinai Hospitals. This first commercial contract is months ahead of our expectations and gives an early look of the strong academic and industry demand for COVID-19 autoantibody profiling. This is one of a number of development-focused collaborations and contracts expected over the coming months, which may be followed by contracts with biopharmaceutical companies once the COVID-19 panel is fully validated.
Today’s announcement of a COVID-19 research project fully funded by a public body (UKRI) is supportive of the broadening investment thesis. The announcement, which has been in development for some months, addresses the evolving current pandemic’s need for stratification, but also represents a new arm of the ImmunoINSIGHTS service offering in Infectious Diseases. This is the first disclosed project in the Infectious Disease therapy area and comes within weeks of a project with Genentech in autoimmune disease, together indicating the broadening utility of the ImmunoINSIGHTS platform beyond immunooncology. This Covid-19 collaboration opens access to over 3,000 Covid-19 samples that can be used to support Oncimmune’s current and future commercial projects, and promises to fuel a pipeline of new potential projects. There is a need for tools to profile and predict an individual’s disease severity, therapeutic response and potential side effects of therapeutics and vaccines. We feel this will have strong importance as we enter the next phase of the pandemic as tools are required to prioritise therapeutics and optimise treatment. There is intense interest in this area, and we note that discussions are already underway with potential academic and biopharmaceutical customers. Development of the Infectious Disease NavigAID panel is with minimal cost burden and expected to take two months, when it will be available for academic customers, and another six months to validate for commercial biopharmaceutical partners. We expect news flow and signing of commercial projects over the coming months as the project progresses that will be at the very least supportive of the platform offering on a longer-term basis.
The award of funding to Oncimmune by the ‘UK Research and Innovation Ideas to Address COVID-19’ project, leverages its proprietary ImmunoINSIGHTS technology to help in predicting disease severity and treatment response, in collaboration with the Government’s research hub, Medicines Discovery Catapult (MDC). This is a strong signal of recognition, enables Oncimmune to participate in critical efforts to mitigate the pandemic, and further showcase its technology on a broad stage. The collaboration paves the way for deeper understanding of the role of immunity in COVID-19, and successful outcomes can result in Oncimmune’s ownership of differentiated proprietary assets with enormous medical value, and with broad commercial applications in COVID-19 drug and vaccine development.
Oncimmune has signed a collaboration with Genentech, a member of the Roche Group, to use its NavigAID panel to profile samples from Genentech’s rheumatology clinical trials, initially focused on Systemic Lupus Erythematosus. If this initial project is successful, it could pave the way for more substantial and lucrative follow-on projects in rheumatology, as was seen in oncology with Roche in May 2020. This is Oncimmune’s first ImmunoINSIGHTS contract in autoimmune disease, and highlights the potential of the ImmunoINSIGHTS platform beyond oncology to better characterise a broad range of diseases, therapy responses and immune-related adverse events. The contract also highlights the depth of the Roche/Genentech relationship and momentum in the platform’s industry perceived valueadd. This latest contract further adds to the Company’s substantial and fast growing pipeline of contracted revenues.
Oncimmune announces that its ImmunoINSIGHTS business has signed a collaboration with Genentech, the US arm of Roche Group known for its ground-breaking contributions to the development of therapies for serious disease, to characterise patient autoantibody profiles from Genentech’s clinical trials for rheumatological diseases, including Systemic Lupus Erythematosus (SLE), an area of high unmet clinical need.
Oncimmune have seen highly encouraging cost-effectiveness study data for its EarlyCDT Lung test in the diagnosis of lung cancer patients that it will be able to leverage in ongoing adoption discussions with healthcare providers. The study shows that at a reimbursed price of £70/test, EarlyCDT Lung test use in combination with Computed Tomography (CT) compared to CT surveillance alone (the current standard of care), produced an incremental cost-effectiveness ratio (ICER) of £2,417/quality adjusted life year (QALY). A lower £/QALY equates to a more cost-effective test, and is attractive for decision makers and is substantially below the £20,000/QALY threshold for acceptance set by NICE. This sets a benchmark for test use with healthcare providers across the UK and internationally further afield. This full data effectively ticks a major box for implementation, and builds on earlier cost-effective study findings and the excellent 3-year data published from the ECLS study in July (36% reduction in late-stage lung cancer diagnoses compared to CT surveillance alone). We anticipate the outcome of ongoing discussions with NICE in FY’21, but potentially as soon as Interims in November 2020. Additionally, we view the recent reshuffle of Public Health England and the formation of a new UK-wide national screening committee as a favourable tailwind for the implementation of future UK screening programmes. As a potential roll-out of the EarlyCDT Lung test looks more likely in a UK-wide screening programme, the service offering continues to gain momentum (see note yesterday), and investors should take comfort in the execution of management’s strategy and the future outlook of the firm.
Oncimmune Holdings (ONC.L): Collaboration with leading global biopharma | Avacta (AVCT.L): Manufacturing agreement with Abingdon Health
Companies: Oncimmune Holdings Plc (ONC:LON)Avacta Group plc (AVCT:LON)
Oncimmune has announced another ImmunoINSIGHTS contract win with a Top-ten pharmaceutical partner. This is the fourth partnership agreement announced in four months, and shows significant industry interest in the SeroTag autoantibody library technology and adds confidence to revenue expectations for FY’21. We believe that the agreement today alongside the significant follow-on contract with Roche announced in June shows clear industry engagement and momentum. Service revenues are typically project-based, but are high margin, highly repeatable (>70% repeat business over the last 5 years) and a lower risk revenue base to support the commercialisation of EarlyCDT tests. We believe the long-term value of the platform is only now starting to become visible as management converts pipeline opportunities to contracted revenues. This platform momentum complements the anticipated uptake of EarlyCDT Lung tests with the NHS and other health systems later this year. With only 3 months of the financial year now complete, this adds confidence around revenue expectations (consensus FY’21 revenue of £5.7m - excl. a possible Biodesix screening milestone of $9.0m), and suggests that future upgrades are possible later in the year.
Oncimmune has signed a new autoantibody profiling collaboration with a top ten biopharmaceutical company at the forefront of the field of immune checkpoint inhibitor development, highlighting the success of the Company’s partnering strategy and the value of its technology. Under the agreement Oncimmune will leverage its proprietary ImmunoINSIGHTS platform in the collaboration which will initially focus on identifying tumour associated antibody markers using its proprietary biomarker discovery engine SeroTag®, based on data from a single immune checkpoint trial. The evaluation aims to provide insights that can improve patient outcomes by profiling those likely to respond to treatment, while minimising adverse events. Successful completion of the pilot phase of the programme can develop into a much broader and higher value partnership with the biopharmaceutical company for a range of immuno-oncology trials.
AEX Gold (AEXG.L) has joined AIM alongside a £42.5m placing at 45p. Mkt Cap £79.7m. The Company, led by CEO Eldur Ólafsson, has established the largest land package of gold assets in Greenland with a current portfolio of licences covering 3,356 square kilometres, in the two known gold belts in Southern Greenland, the Nanortalik and Tartoq gold belts. Nalunaq is a high-grade gold asset with an updated Inferred Mineral Resource covering 422,770 tonnes at 18.5 grams per tonne of gold, or 250,970 ounces of gold, which covers the area in and around the historical mine. AEX has an existing listing on the TSX Venture Exchange
Companies: PYC THR PRP GDP YOU BBB MRL ONC RENE
Bigblu Broadband (BBB): Corp UK & European satellite operations to be sold to Eutelsat | Independent Oil & Gas (IOG): Corp Core project update | Oncimmune Holdings (ONC): Corp ELCS (lung cancer) data peer-reviewed in publication
Companies: IOG BBB ONC
Destiny Pharma (DEST): Corp | K3 Business Technology (KBT): Corp | Oncimmune Holdings (ONC): Corp | President Energy (PPC): Corp
Companies: KBT PPC DEST ONC
Oncimmune announces that Roche has exercised its option to expand the scope and value of the cornerstone contract announced in May profiling patient samples from Roche cancer immunotherapy trials. The augmented contract allows for a substantial increase in the number of patient samples from cancer immunotherapy trials being profiled by Oncimmune. Clearly this is a strong message of confidence in the scientific value of Oncimmune’s ImmunoINSIGHTS service based on its proprietary discovery platform SeroTag®. It also signals an increase in the potential financial returns from the contract.
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Novacyt Initiation of Coverage: Through the rapid commercialisation of a COVID-19 test, Novacyt has transformed its financial position. Demand for the Group's COVID-19 test and other COVID-19 reagents are expected to make up the majority of revenue generated until FY22E, whereupon the Group is looking to drive long-term growth across its business via the development of high-margin clinical diagnostics and establish itself as a leader in infectious disease testing.
Companies: Novacyt SAS
A positive trading update from SDI Group justifies upgrading FY 2021 sales and adjusted EPS forecasts by 10% and 15%, respectively, broadly to the levels we were forecasting before the COVID-19 pandemic struck in early 2020. Contract wins for MPB Industries (flowmeters for ventilators) and Atik Cameras (supplying cameras for PCR DNA amplifiers) are expected to be fulfilled within FY 2021 and consequently we leave FY 2022 forecasts unchanged. We are encouraged by the news that the other businesses within the group are seeing order patterns returning towards normality. We upgrade our target price to 110p, at which level the stock trades on multiples that compare favourably to both the market and peer comparators. Our forecasts exclude the potential for further acquisitions as the company continues to execute on its buy and build strategy.
Companies: SDI Group plc
Venture Life aims to become a global leader in the self-care branded product market, where there are a number of structural growth drivers. It has a unique and scalable platform to develop, manufacture and distribute products, including its own brands and international customers’ brands. What is already a high margin business is poised to deliver a compelling mixture of top line growth with significant operating leverage. Performance in H1 (EBITDA +347%) highlights the potency of VLG’s model. Acquisitions can also leverage the platform to drive growth, and management has a very strong track record here. On top of this exciting growth play, there is also a chance that its Dentyl dual-action mouthwash could have applications to slow/reduce CV19 transmission, adding to the upside potential.
Companies: Venture Life Group Plc
Full-year results were 4% above expectations, with revenues and adjusted pre-tax profit rising 21% and 27%, respectively, boosted in part by acquisitions in FY 2018 and 2019 but also from COVID-19 related buying, particularly Cache surface disinfection products. We raise FY 2021 adjusted pre-tax profit by 3% to £7.2m and introduce FY 2022 forecasts, which point to c.11% EPS growth. FY 2021 growth is held back by the stated c.£0.75m commitment to developing a fuller pipeline of products to take to the FDA/EPA and Canada Health. We view this as a strong endorsement of the progress that has been made to date. We also lift our target price to 500p on the back of a small FY 2021 upgrade and outlook for growth in 2022, supported by renewed commitment and resourcing for North American regulatory approvals.
Companies: Tristel Plc
The strong recovery experienced in the early part of the year has continued, particularly in China, meaning H1 revenues are now expected to be materially ahead of expectations. Whilst up against soft comparatives, this implies strong growth YoY and, if trends persist, a FY21 performance ahead of expectations. We upgrade our FY21 revenues by 14% to £82.0m driving a meaningful 23% increase to Adj EBIT. Whilst there remain some macro uncertainties, we have sufficient confidence at this stage to nudge up our FY22 estimates (Revenues +8%, Adj EBIT +5%). This is clearly a very strong performance, with the business recovering well from the ASF-related setback in China last year and benefitting from the strong market positon of lead product Aivlosin. This looks to be at odds with recent share price weakness, leaving the shares trading on an EV/Sales of just 1.5x current year estimates, vs recent transactions in the space at 3-6x.
Companies: ECO Animal Health Group plc
IXICO has provided a trading update for the fiscal year to 30 September 2020, expecting revenues of £9.5m, up 26% and ahead of our current £9.1m estimate. EBITDA is expected to be at least in line with our £1.1m forecast. This represents the fourth consecutive year of +25% revenue growth and a period over which EBITDA has progressed from -£2.1m (FY16A) to +£1.1m. FY21E revenues and beyond are underpinned by an order book which has increased by c£5.8m over the year supported by new contracts booked of over £15m, approximately twice the amount booked in FY19A. We believe IXICO is a strong position to deliver ongoing growth and we maintain our Buy recommendation.
Companies: IXICO Plc
Hemogenyx Pharmaceuticals (HEMO.L): Presentation at American Society of Hematology meeting | IXICO plc (IXI.L): FY20 Trading update | Shield Therapeutics (STX.L): Patent dispute update
Companies: HEMO IXI STX
Synairgen has raised £80m to fund a Phase III trial for SNG001 in COVID-19 disease, which is due to commence in Q4 2020 and will be run globally by Parexel, with results expected in Q2 2021, and scale up manufacturing. This follows a successful pre-IND meeting with the FDA, which provided the guidance to commence such a study. Assuming that this trial replicates the results seen in the 100-patient Phase II trial, we would expect Emergency Use Approval (EUA) to follow shortly thereafter. Meanwhile, the Managed Access Programme (MAP) in the UK and Europe, run by Clinigen, could generate early commercial revenues. We have made adjustments to forecasts to reflect these costs and raise our SOTP rNPV target price to 420p, which could rise further should stockpiling orders be received.
Companies: Synairgen plc
Aided by a strong improvement in trading in the core business and ongoing demand for the Primestore MTM device, EKF has indicated it is on track for a record monthly performance in October. In addition, Primestore MTM has recently been successfully evaluated by Public Health England in a peer-reviewed comparative study, which concluded it was the only commercially available sample collection device where no residual virus was detectable out of 23 tested. We believe this may bode well for wider UK market adoption in future. Having upgraded several times already this year, we make no further changes to our estimates, but continue to see sensitivity to the upside.
Companies: EKF Diagnostics Holdings plc
ANGLE plc (AGL.L): Acceptance of FDA submission | Feedback plc (FDBK.L*): Partnership agreement | Open Orphan (ORPH.L): Human Challenge Study Model contract with UK Government
Companies: AGL FDBK ORPH
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has released a positive year-end update, pointing to results for the year to 30 September 2020 slightly ahead of market expectations at the revenue and EBITDA level, whilst net debt has moved sharply lower in H2 2020E to £268.9m. Against the Covid-19 backdrop, the core business is reported to have performed strongly, with Cambian on track to achieve the targets set out at the time of acquisition. On the back of the update, we have raised our FY 2020E earnings expectations by 3%, with our FY 2021E and FY 2022E estimates moving 4% and 7% higher respectively, now implying EPS growth of over 40% from FY 2019A to FY 2022E. These upgrades are on the back of the 3% increase two weeks ago following the acquisition of Smartbox. Furthermore, the Board believes the group's net debt/EBITDA ratio will now move below 3.0x in the current financial year. Set against these positive factors, we view CareTech's current year PER of 9.4x and EV/EBITDA multiple of 8.4x as undemanding, particularly when considering the £774m freehold property valuation and c.3.0% dividend yield. Our estimate of fair value now stands at 590p.
Companies: CareTech Holdings PLC
RUA Life Sciences announced its trading update for the six months to 30 September 2020. The global pandemic and the reduction in the number of elective surgeries had a (previously announced) impact on RUA Medical Device’s revenues. There was also a slight reduction in RUA Biomaterial’s licensing income, but in both divisions there has been a recent recovery and catch-up. Our valuation remains unchanged as our model had included these delays, and those divisions comprise minor components of our total valuation.
Companies: RUA Life Sciences Plc
SDI reported full-year results to 30 April that were slightly ahead (+2%) of the trading update issued by the company on 23 April with net debt of £4.0m comparing favourably to our forecast of £4.3m. Underlying organic growth of 3.7% organic growth, despite the COVID-19 disruption in Q4, was supplemented by growth from acquisitions in FY 2019 and FY 2020. Adjusted pre-tax profit rose 44% to £4.3m with adjusted EPS up 21% to 3.4p. Net debt at 30 April was £4.0m. With evidence of trading activity normalising and the positive outlook statement, indicating adjusted pre-tax profit to be at least as good as FY 2019, we reinstate forecasts. We re-introduce a target price of 100p, which implies the stock trading on FY 2021 P/E of 27.5x falling to 24.6x in FY 2022 – in line with its peer group (e.g. Judges Scientific which trades on 33.8x, falling to 27.5x for slightly lower growth) and underpinned by a FY 2020 free cashflow yield of 3.2%.
4D pharma’s Blautix has met its primary endpoint in the Phase II irritable bowel syndrome (IBS) trial of improving overall response rate (ORR) in IBS patients with either IBS-Constipation and IBS-Diarrhoea vs. placebo, although we note a lower level of significance (0.1) was used. Whilst this presents a statistical concern, the results do enough to show a efficacy signal in IBS and the observed ORR effect size demonstrated by Blautix vs. placebo is numerically comparable to other drugs approved solely in either IBS-C or IBS-D. There is currently no approved therapy for IBS-mixed but the safety profile of Blautix was also comparable to placebo, indicating a favourable safety profile that may provide future differentiation vs. current approved IBS drugs. We look forward to more detailed trial data expected by YE 2020. IBS is a vast market opportunity, and there is currently no approved disease modifying therapy available in any IBS subtype, any therapy that can treat all subtypes, or specifically addressing patients with IBS-mixed (fluctuating symptoms of constipation and diarrhoea), which represents c. 30% of all IBS patients. As such, Blautix has the potential to be a first-theclass drug, and management believe this data in its totality will be sufficient to progress the programme into a Phase III pivotal programme, whether independently or with a licensing partner (TBC). We note that 4D are in ongoing discussions with leading pharmaceutical developers in the IBS space, and data should be viewed with interest by potential partners
Companies: 4d Pharma PLC
Novacyt reported FY16 results on 27 April. Headline sales announced in January showed that total FY16 sales grew 25% y-o-y to €11.1m (38% at a constant exchange rate, CER). The acquisition of Primerdesign (consolidated from May 2016) added to total group H216 sales, which grew an impressive 47% (68% at CER) y-o-y. Novacyt’s earnings showed that sales growth was accompanied by a substantial expansion in gross margin from 48.1% in FY15 to consolidated 54.9% in FY16 or 59.0% pro forma. All this boosted consolidated EBITDA close to break-even at -€0.7m in H216 versus €1.6m in H116. We find the combination of a continuing high growth trend and near break-even EBITDA comforting and supportive for the share price.
Companies: NCYT NVYTF ALNOV NYZ
