Here is a summary of the report:
Cellmid Limited (ASX:CDY) is an Australian biotechnology company with a revenue generating consumer health division and a strong pipeline around a novel target, midkine (MK), with applications in the treatment of cancer and inflammatory diseases.
Cellmid has a fast growing consumer health division, which is generating increasing revenues from the Company’s proprietary FGF5 inhibitor hair growth products. Via its wholly owned subsidiary, Advangen, the Company develops and sells scientifically validated treatments for various forms of hair loss (alopecia). Its branded product, évolis®, contains natural extracts that inhibit FGF5, a growth factor that regulates hair growth.
Recently, a 32 patient clinical study showed strong positive results in both reduction of hair loss and increase in hair growth for the product.
Cellmid acquired the Advangen business in 2013 and has closed its first full year of operation in 2014 with AUD 1.15 million revenue. In 2015 the Company’s revenues increased by 63% to AUD 1.82 million and it is expected to generate close to AUD 4 million during the 2016 financial year from sales in Australia and Japan alone.
Cellmid is expected to expand its distribution globally during the coming years, with the key target markets of US, Europe and China.
In addition to this revenue generating business Cellmid holds the largest and most comprehensive portfolio of intellectual property related to the novel target MK and MK antagonists globally.
The Company’s most advanced development programs involve using its anti-MK antibodies for the treatment of cancer and inflammatory conditions in addition to commercializing MK as a biomarker for the early diagnosis and prognosis of cancer.
Its first in class MK antibody drug, CAB102, was the first ever anti-MK drug subject to formal toxicology tests and showed no dose limiting toxicities in a single dose study of rats and cynomolgus macaques. Cellmid is currently planning its ‘first in men’ clinical study for CAB102.
Recently, the company was successful in raising AUD 4 million with new investors to leverage its sales growth in relation to its FGF5 inhibitor hair growth products. Earlier this year, the company entered into an R&D advance loan agreement to receive A$1 million to accelerate its research and development into the CAB102 program.
The current cash level should be sufficient to continue the development of its MK programs as well as rolling out the marketing of its évolis® products in Australia.
Based on NPV based valuation, we believe that Cellmid is clearly undervalued at the current share price of AUD 0.03. Using our valuation model, the Company’s current total value is AUD 80 million, or AUD 0.086 per share.
This is based on the current value of évolis® and the further roll out of its consumer care business in Australia, Asia and North America. This valuation represents a substantial upside from the current share price.
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