iX Biopharma - DBS Research 2016-10-11: Pain management specialist

iX Biopharma - DBS Research 2016-10-11: Pain management specialist IX BIOPHARMA LTD. 42C.SI

iX Biopharma - Pain management specialist

  • Key products for pain management.
  • Growing pain market; out-licensing opportunity to fund R&D and accelerate profitability.
  • DCF fair value of S$0.43; expect slow turnaround in FY18F and FY19F but operations should ramp up from FY20F onwards.
  • Key risks: Delay in clinical trials/approval process, no out-licensing or lower than expected fees; high cash burnout rate.



The Business 


Key products for pain management. 

  • iX Biopharma, a speciality pharmaceutical company with expertise in formulation and drug delivery, currently has five drugs under development – three are for pain management: WafermineTM, BnoXTM and WafernylTM; WafeRestTM for jetlag and improved sleep quality; and PheoniXTM for the treatment of male erectile dysfunction. 
  • Combining with the sublingual delivery method to improve drug absorption and bioavailability to achieve a lower dosage, iX Biopharma’s products could potentially be key drugs in their respective market segments.

Growing pain market; out-licensing opportunity to fund R&D and accelerate profitability. 

  • The global pain management is growing, especially with the ageing population. We expect iX Biopharma to capture a significant market share once WafermineTM and BnoXTM are ready for commercialisation and exportation, likely in late 2018/ early 2019. 
  • To fund further R&D and clinical operations and to accelerate profitability, iX Biopharma could explore out-licensing opportunities likely in 3Q17.


The Stock 


DCF fair value of S$0.43. 

  • Based on our conservative 5-year DCF valuation and assumptions as stated in Table 1, we derived a fair value of S$0.43. We are expecting a slow turnaround in FY18F and FY19F but operations should ramp up from FY20F onwards.

Key risks: 

  • Delay in clinical trials and approvals by relevant parties; no out-licensing or lower-than-expected out-licensing fees; high cash burnout rate.


NOT RATED
Return *: 2
Risk: High
Potential Target 12-mth*: S$ 0.43 (17% upside)



Lee Keng LING DBS Vickers | http://www.dbsvickers.com/ 2016-10-11
DBS Vickers SGX Stock Analyst Report NOT RATED Maintain NOT RATED 0.43 Same 0.43

*This Equity Explorer report represents a preliminary assessment of the subject company, and does not represent initiation into DBSV’s coverage universe. As such DBSV does not commit to regular updates on an ongoing basis. The rating system is distinct from stocks in our regular coverage universe and is explained further on the back page of this report.


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