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Cellmid raises $4M to drive sales growth

The placement will further expand growth of the company’s consumer health business in Australia and internationally. Highlighting its sales momentum, half of the company’s forecast FY2015 revenue of $2 million was generated during the last quarter.

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Cellmid Limited (ASX:CDY) has raised $4 million through an oversubscribed placement of shares priced at $0.03 to leverage increasing sales and further expand its growth in Australia and internationally.

Earlier this month, it upgraded its revenue guidance for the financial year ending 30th June 2015 to $2 million due largely to increased sales of its FGF5 inhibitor hair growth products.

Notably, half of this revenue was generated during the last quarter of FY2015 with Australian sales up more than 400% during the last quarter with its évolis® shampoos available in selected pharmacies since May 2015.

This lays the foundation for FY2016 sales to significantly exceed the previous year.

Besides its consumer health business selling the FGF5 inhibitor hair growth products, the company also operates two other strategic businesses: a high value therapeutic program in midkine and a cancer diagnostic asset portfolio.

The issue price of $0.03 represents a 20% discount to the 5 day volume weighted average price of the company’s shares immediately prior to the placement.

Shares in CDY last traded at $0.04.

Cellmid will issue about 116.7 million placement shares worth $3.5 million. Issuing of the remaining 16.7 million shares will be subject to approval by an extraordinary general meeting to be held on or about 8th September 2015.

KTM Capital acted as manager for the placement, which was supported by new institutional and sophisticated investors.


Consumer Health


Of the Total forecast revenue of $2 million, about $1.84 million is likely to be recorded for the consumer health business. This represents a 63% increase from last year.

Total sales during the last quarter of FY2015 when Cellmid started implementing its new business plan were about $958,000.

This compares with around $296,000 during the same period last year, a threefold increase.

In Australia, the company has brand its évolis® lotions over-the-counter listed medicines.

Its objective is to have by the end of 2015 its Active Packs, which contain both shampoos and lotions sufficient for 12 weeks, be available in over 1,000 pharmacies in Australia.

The company will also continue to develop its hair salon business, which is expected to deliver revenue in line with pharmacy revenue, although running 12 months later.

Later on in the FY2016, it plans to launch 15 products, all branded évolis®, to replace its Advangen® range in salons.

With a full range of active anti-aging hair care products and dedicated distribution, the company expects to see a dramatic increase in the number of salon retailers.

Cellmid will also focus on increasing online sales in Japan.

It expects to become the first Japanese company to use digital tools in the salon market, with technical presentation and ordering made handy by the use of a tablet.

This will reduce the burden from salons to carry stock for sale – a limiting factor for smaller businesses.

In Asia, the company will continue to build distribution for its existing brands, including Lexilis and Jo-Ju in China, both of which have import permits as quasi-drugs.

The more medium term opportunity is to launch évolis® ONE through distribution partners in the region.


Analysis

The oversubscribed placement to raise $4 million demonstrates the confidence institutional and sophisticated investors have in Cellmid and its growing sales revenue.

Already the company expects to deliver a 63% increase in revenue for its consumer health business to $1.84 million in FY2015 with half of this recorded in the last quarter.

Sales in FY2016 are expected to grow further given that in Australia, the company has yet to ship products to 70% of its planned distribution while its GP sales force only started in May.

Cellmid will also start its consumer advertising and pharmacy sales representation in September, which will increase the rate of sell through.

It has also broadened Japanese distribution from two sales channels to five dynamic ones, including private label, duty free retail, TV shopping, export and website sales.

Outside of these two regions, the company is in discussions with multiple parties in the U.S., Europe and Asia for the licensing and/or distribution of its products and technologies.



Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.

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