iX Biopharma

Price target: PhillipCapital “buy” 44.5 cents PhillipCapital is maintaining its “buy” call on iX Biopharma, but with a lower target price of 44.5 cents, down 10 cents from previously, according to analyst Tay Wee Kuang.

“While many business plans have been put on hold by the Covid-19 pandemic, the company should be on the cusp of profitability once the disruptions are over,” says Tay in his Feb 19 report.

In its recent results for 1HFY2021 ended December 2020, the company reported net losses of $2.8 million, down 51% y-o-y. Revenue for the six-month period was up 182% y-o-y to $830,000, following a 112% surge in income from the specialty pharmaceutical segment.

Tay notes that income from the segment could have been even stronger if not for the on-off lockdowns in Melbourne which affected footfall in pharmacies and sales to clinics.

The company’s inability to conduct training for its newly-launched medicinal cannabis wafer, Xativa, had hurt potential sales too, adds Tay. Meanwhile, revenue from Nutraceuticals grew 267% y-o-y to $488,000, following strong sales on their JD.com and Tmall online platforms. Similarly, the company also benefitted from stronger demand for its skincare supplement LumeniX, anti-ageing NAD (nicotinamide adenine dinucleotide) products, MetaboliX and RestoriX.

Overall, iX Biopharma’s gross margin was down 16% in 1HFY2021, improving from the 57% plunge a year ago.

He adds that the Covid-19 pandemic and the resultant disruptions to supply chains has delayed the installation of additional freeze dryers. Once installed, these will increase wafer production by between five and six times.

Tay notes that the timeline for this hinges on when border restrictions will ease in Australia.

“The disruptions will slow down iX’s business turnaround that was previously expected by FY2021. Nevertheless, with vaccine rollout in Australia soon, we are confident that deal-making and production expansion can resume by early FY2022,” he adds.

Against this backdrop, Tay has cut his FY2021 earnings forecast for iX Biopharma by $9.5 million to reflect a sales loss of $1.5 million due to the delays in capacity installation. —