Three Diversified Stocks Under 20 Cents Well Placed for Future Growth- PYC, PAN, IBX

1. PYC Therapeutics Limited (Recommendation: Speculative Buy, Market Cap: $523.20Mn)

Decent Revenue Growth in H1FY21: PYC Therapeutics Limited (ASX: PYC) is a biotechnology company focused on the development of a new generation of RNA therapeutics to change the lives of patients with inherited diseases.

For the half-year ended 31 December 2020, the company reported revenue of $106k, up 82% YoY from pcp. Net loss for H1FY21 stood at $7.75 million, up from the loss of $2.1 million in pcp. During the March 2021 quarter, the company achieved continued validation of its PPMO technology in its lead candidate VP-001 for retinitis pigmentosa type 11. The company recently announced that its second investigational drug candidate restores the levels of the target protein (OPA1) towards normal in models derived from patients with the indicated disease – Autosomal Dominant Optic Atrophy (ADOA).

Cash and Debt Scenario: With a cash balance of $54 million as at 31 March 2021, the company seems well capitalised to support program discovery and development and continued U.S. expansion. As at 31 December 2020, the company had total lease liabilities of ~$763k. Current ratio for H1FY21 stood at 49.17x, up from 37.28x in pcp.

Outlook: Looking ahead, the company is focused on validating its PPMO technology platform across indications to develop treatments for patients with a range of significant unmet needs. The company expects the development of further ocular drug candidates will leverage the de-risked ocular PPMO platform.

A Pictorial Presentation of Liquidity Profile:

Source: Analysis by Kalkine Group

SWOT Analysis: 

Stock Recommendation:

• The stock has provided a return of 10.3% in the last three months.
• The stock is currently trading above the average 52-week price level band of $0.083 - $0.203.
• Studies for larger animal model readouts is on track for 2021, with IND submission expected in mid-2022.
• Key Risks: Regulatory and Legal Risks, Failure of Clinical Trials, Foreign Currency Risk, etc.
• Considering the continued validation of its PPMO technology, the company’s focus on cultivating a rich pipeline of novel development candidates to address additional ocular diseases, rising cash balance, low debt levels, and associated key risks, we give a “speculative Buy” recommendation on the stock at the current market price of $0.160, down by 3.031% as on 28 May 2021.

PYC Daily Technical Chart, Data Source: REFINITIV

2. Panoramic Resources Limited (Recommendation: Speculative Buy, Market Cap: $317.89Mn)

Restart of Operations at Savannah Nickel Project: Panoramic Resources Limited (ASX: PAN) is a base metal mining and exploration company that owns high-quality, long-life Savannah underground nickel sulphide mine and processing plant in Western Australia.

• During the half-year period ended 31 December 2020, the Savannah Nickel Project remained on care and maintenance due to the suspension of operations in April 2020. The company reported a net profit of $7k in H1FY21. In April 2021, the company got the Board’s approval to restart the operations at Savannah Nickel following a detailed assessment. During the March 2021 quarter, the company awarded a four-year underground mining contract to leading underground miner Barminco with site mobilisation commencing July 2021.
• As at 31 March 2021, the company had a cash balance of $26.4 million to support current project development activities. As at 31 December 2020, the company had total borrowings of $6.7 million. Current ratio for H1FY21 stood at 6.51x in H1FY21, up from 0.54x in H1FY20. Debt to equity ratio has declined to 0.04x in H1FY21, compared to 0.50x in H1FY20.
• Outlook: In order to support the operations at the project, the company has entered into a new five-year nickel and copper concentrate offtake agreement from February 2023 to February 2028 with Trafigura Pte Ltd. Ore processing at the project is scheduled to begin in November 2021 with first concentrate shipment targeted for December 2021.

A Pictorial Presentation of Key Metrics:

SWOT Analysis:

Stock Recommendation:

• The stock has provided 10% return in the last three months.
• The stock is trading higher than the average 52-week price level band of $0.064- $0.180.
• The Savannah Nickel Project has the potential to grow the resource through further exploration at Savannah North and via various other regional exploration targets identified.
• Key Risks: Exploration-Related Risk, COVID-19 Uncertainties, Metals Price Volatility, etc.
• Considering the recent Board approval regarding the restart of operations at the Savannah Nickel Project, the potential of the project to grow the resource base, rise in current ratio, and associated key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.165, up by 6.451% as on 28 May 2021.

PAN Daily Technical Chart, Data Source: REFINITIV

3. Imagion Biosystems Limited (Recommendation: Speculative Buy, Market Cap: $119.76Mn)

Progressing MagSense^TM HER2 Phase I Study: Imagion Biosystems Limited (ASX: IBX) is focused on earlier detecting cancer and other diseases by combining biotechnology and nanotechnology. The company plans to explore several development areas including manufacturing scale-up and preparing for a larger pivotal study.

• During FY20, the company was focused on progressing the development of the novel MagSense^TM technology and initiate a first-in-human study for HER2 breast cancer. Over the year, the company obtained Human Research Ethics Committee (HREC) approval for the MagSense^TM HER2 Phase I study. The company recently enrolled the first patient in the study. During FY20, the company raised a total of A$12.2 million to support the development of MagSense^TM HER2 Breast Cancer product and to expand the product pipeline. For FY20, the company reported a net loss of $5.4 million, higher than the loss of $3.4 million in FY19, mainly due to increase in expenditure as the company progressed towards the Phase 1 Study.
• Cash and Debt Scenario: As a result of several capital raising, the company’s cash balance grew to $13.2 million at the end of 2020, as compared to $3.4 million in FY19. Total lease liabilities (current and non-current) stood at $660.97k. For FY20, the company reported a current ratio of 14.91x, up from 2.78x in FY19. Debt to equity ratio for FY20 stood at 0.05x, down from 0.29x in FY19.
• Outlook: Looking ahead, the company is focused on providing a range of diagnostics and therapeutics that use its magnetic particles to better diagnose, image and treat a range of cancers and other diseases. With the combination of the first clinical data from its HER2 imaging agent, combined with a developing pipeline of imaging agents for other cancers, the company seems well placed to commercialize its products.

A Pictorial Presentation of Key Metrics:

SWOT Analysis:

Stock Recommendation:

• The stock has corrected by 36.11% in the last three months.
• The stock is currently trading lower than the average 52-week’s price level band of $0.025 and $0.225, offering a decent opportunity for accumulation.
• Moving forward, the company is focused on completing MagSense® HER2 breast cancer Phase I first-in-human study, which is expected to enroll around 15 patients.
• Key Risks - Regulatory Risks, Failure to Obtain Desired Outcome in Clinical Trials, Foreign Currency Risk, etc.
• Considering the company’s ongoing MagSense® HER2 breast cancer Phase I first-in-human study, rising cash balance, modest outlook, current trading level and associated key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.120, up by 4.347% as on 28 May 2021.

IBX Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Disclaimer

Kalkine New Zealand Limited is authorised to provide class advice only. The information on this site does not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions.