Comparisons, Connections & Conspiracy Theories, page-78

Great night on the DOW Jones , can the stock price hold all time lows .

Broker Valuations on many occasions are not correct but here is another one from Broker Report from 2014 , 8. 4 cents which today after consolidation is $1.68 , there have others since , yet the stock price is trading at 0.024 ( 0.012 ) .


Cellmid attracts higher $0.084 share price target: Perth broker



04:36 04 Feb 2014

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Cellmid (ASX: CDY) is the subject of a research report from RM Capital. Here is a summary of the note.

First-in-Class mAb Oncology Program Will Rerate the Stock; Lots of Room To Grow For Advangen; New Target Price of 8.4c

Summary - In the 10 months since our last update Cellmid has had several major announcements, trial results, Cxbladder launch and the Advangen Inc acquisition. In view of that we provide a company update and our fresh view on Cellmid going forward.

Whilst the share price since our last report remained range bound between 3c – 5c, we believe that the company has moved to the next level and is currently significantly undervalued by investors.

Cellmid now has (A) a first-in-class oncology program (anti-midkine monoclonal antibody) that we expect to go into clinic late 2014 / early 2015; (B) a global consumer healthcare brand for hair loss with successfully launched products in Australia and Japan; and (C) a royalty stream from the Cxbladder test that was launched in the US in 2013.

Our price target of 8.4c (+1.2c vs. previous) include: 3.9c (+1.2c vs previous) for the consumer healthcare business; 1.7c (-1.3c vs. previous) for the LungDx test; and 2.8c (+1.3c) for the Cxbladder test.

We do not currently include the oncology program into our model, but believe that this represents major upside for the share price and our current valuation in the next 12-18 moths, once the program is at the clinical stage (first trial in humans).

Moving to oncology with anti-MK antibody is the right decision - We support management’s choice to progress with a cancer indication, rather than diabetic nephropathy.

In our view, if the company is successful in moving into the clinic with the oncology program, the quality of that asset will put Cellmid in the same echelon as US biotechs that are developing first-in-class antibodies as cancer therapeutics (e.g. Onconova, Oncomed, Verastem).

Even in the US, such companies represent a rare opportunity, as most of the industry R&D is focused on the same targets (e.g VEGF, VEGFR, EGFR, PI3K). In contrast, Cellmid is the first and only company to target midkine and will have significantly lower differentiation risks, easier clinical development and regulatory pathways (see pages 4-5 of the report).

There are only a few companies in Australia with first-in-class antibody programs that employ new mechanism of action, with Patrys (ASX: PAB) as the only other we are aware of. We believe that positive data from the midkine program will validate overseas interest and upside for investors.

Advangen and consumer healthcare - lots of room to grow - We currently value Cellmid’s consumer healthcare business at 3.9c (vs. 2.7c previously) as we include the Advangen Inc. acquisition and update our estimates for its Australian subsidiary.

In our view, investors underestimate the fact that Advangen has a global consumer health brand and with management taking all necessary steps to increase the brand equity, it’s just a matter of time until it becomes a very significant business.

This represents substantial upside to the current share price, once the company moves ahead with their commercial strategy. According to a recent industry report, the leading hair care brands are valued between $0.9B and $2.9B, and we see a big opportunity for Advangen in major markets given its therapeutic claims.

We expect considerable increase in product sales in CY2014, CY2015. In our valuation we only consider Australia, China and Japan while note that all additional markets (rest of Asia, North America, EU) represent significant mark up to our valuation.

Update on diagnostics segment (see inside note for details) - Last quarter Pacific Edge completed the first commercial sales of its Cxbladder tests signalling the start of the royalty revenues to CDY. We are increasing our estimates of market share and valuation to 2.8c (+1.3c vs previously) given the better than expected reimbursement landscape for the test.

We are a bit disappointed in Quest’s lack of action regarding the LungDx test. As a result we reduce our market penetration rates and postpone the launch to FY2015 to remain conservative. We Value LungDx at 1.7c (vs. 3c previously).

We change our royalty rate on diagnostic business from 2% to 4% in line with the current industry standards. We believe that future molecular diagnostic partnership could add 2 cents per share per test.

Action and recommendation - with positive investors sentiment towards biotechnology sector and upside opportunities coming from each of Cellmid’s three business units (therapeutics, diagnostics, consumer healthcare) we reiterate our Speculative Buy recommendation and increase our target price to 8.4 cents.