Oncimmune Holdings PLC
Share price: £1.21 (down 1.6%)
Oncimmune is an early cancer detection kit maker. Today’s results looked very poor. It reported revenue of £0.2m, which was half that last year, along with net losses of £5m, an improvement from last year loss of £8m.
Their main product is called EarlyCDT® lung and it was launched back in 2009.
Reading their commercial progress section, it signed distribution agreements in Asia and Europe: –
Asia; – £6.1m in 5 years;
Europe; – £1.4m in 4 years.
On an annual basis, this comes to £1.5m of sales. Those revenues aren’t able to meet breakeven and are no higher than in 2013 (see below for details).
Their product pipeline for the future includes trailing for EarlyCDT kit for liver and Ovarian in the next two years.
Oncimmune’s financials looked terrible. Since 2012, revenue barely reached £1m per year, and they were accumulating net losses to the tune of £24.2m.
Also, net cash flow saw accumulated losses of £18m. The costs of commercialising and testing new products are funded by debt and equity totalling £25m. (See chart below)
2013 annual report: http://bit.ly/2gTetNA
2015 annual report: http://bit.ly/2xRHper
It is obvious that the business can’t make money for shareholders due to the continuous financing needs.
Since 2009 they mentioned about selling over 150,000 test kit, but the total accumulated sales were under £5m.
Extrapolating this information from above gives us an idea of the approximate average selling price for each test kit sold.
That’s £5m divided by 150,000 = £33 each.
Cash resources used
The level of sales achieved is less than one-fifth of cash resource utilized. And in the past two years, it has burned £6.5m in cash.
Cash balance differences since listing: £6.5m – £1.3m = £4.2m;
Placing since listing: £17.3m;
Therefore, £17.3m minus £4.2m = £13.1m or £6.55m cash burned per year.
(P.S. Listing since 2016.)
The market is valuing this business at £67m, despite the company poor track record. But, thanks to the high share price, they only need to issue a few million to meet their funding requirements each year. But investors want to see results over a reasonable time period. If that time period passes, the share price would decline.
I am 80% certain this company’s share price will decline, unless market participates know something I don’t. Right now, and with their track record I can’t see the company being successful anytime soon.
They may be trailing new products, which could be a commercial success. But, we have to us ourselves the following questions:
1). Will it be able to price their kit above the cost of manufacturing and development?
2). Is this a repeat of their “lung” kit? Will we see slow sales drip?
3). Would all this lead to more money going down the drain?
My advice is to avoid the shares based on the previous commercial failure of their kit back in 2009.
This is a very short report on today’s companies results.
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The above analysis is my opinion and nobody else. It does not constitute professional investment advice. Data is correct on at the time of availability.