Excerpts from Phillip Securities report
Analyst: Paul Chew
- Revenue is cut from S$12.8mn to S$3.4mn on account of slower Xativa sales and installation of only one freeze-drying machine. Our forecast was 3 machines in FY22e.
- Operating expenses are assumed largely stable.
- Lower other income to account for a possible delay in out-licensing. The global opioid market is around US$19bn. We assume a 5% market share or US$950mn by the licensee.
We narrow down the share price catalyst into 4 areas:
a) Wafermine outlicensing: Wafermine is a drug that uses ketamine to treat pain (and depression). The difference is ketamine will be delivered sublingually through IXBIO’s WaferiX patented manufacturing process. Wafermine has completed Phase 2 FDA trials.
b) Hong Kong IPO: In July 2021, IXBIO announced plans to list its pharmaceutical business on the Hong Kong Stock Exchange as a biotech company (Chapter 18A). A successful IPO will allow IXBIO to raise funds and trigger a price discovery of this segment of its business. The Chapter 18A listing rules require a minimum market cap of HK$1.5 billion (S$260mn). This is higher than the current market cap.
d) Xativa: There are many types of cannabis products, but Xativa is unique because it is delivered sublingually. Sales in Australia commenced in April 2020. We expect medicinal cannabis to be the major contributor of revenue in FY22e. Sales have been affected by delays in securing manufacturing equipment and pandemic lockdowns in Australia. Export agreements have been signed with Brazil and New Zealand. The largest opportunity will be in exporting Xativa to key markets such as the U.S. and Europe.
Maintain BUY with a lower DCF TP of S$0.335 (previously S$0.445) due to lower earnings forecast and rights issue.
Full report here.