ImpediMed

About the author:

Author name:

By Scott Power

Job title:

Senior Analyst

Date posted:

22 November 2016, 9:11 AM

Sectors Covered:

Healthcare, Life Sciences

Key points

• The recent AGM highlighted a productive CY16 which included the commercial launch of the L-Dex for high risk breast cancer patients and key alliances entered into which will optimise and expedite SOZO™'s entry into the heart failure market.
• Our near term revenue assumptions have been moderated reflecting a lower 1QFY17.
• There are a number of key catalysts expected in CY17, including European and FDA clearance for SOZO™ for lymphoedema and heart failure.
• Our investment thesis remains firmly intact following recent management briefings.

AGM – significant progress made in 2016

At IPD's recent AGM and subsequent management briefings we were reminded of the significant progress made during CY16. Key highlights included:

• the commercial launch of L-Dex across 55 leading cancer centres in the US; and
• entering partnerships with leading institutes including the Mayo Clinic, Harvard and Scripps Health to assist with the chronic heart failure trial.

IPD released its 1QFY17 results recording total revenue of A$1.7m (including A$1.2m in lymphoedema sales) and A$0.7m as an R&D tax incentive refund. The net cash outflow was A$6.9m for the quarter with cash on hand of A$73.4m.

Forecasts revised down near term

Following lower revenue in 1QCY17, we have moderated our full year revenue forecast to A$12.7m from A$19.6m by adjusting our market share assumption for lower limb cancers to 0.7% from 2.0%. Offsetting the lower revenue is a lower cost base, resulting in our FY17 net loss increasing to A$26.7m from A$23.4m. A similar change has been made to our market share assumption for lower cancers in FY18 to 2% from 4%, and as a result we forecast a net loss of A$0.6m from a net profit of A$9.8m. Only a minor downward revision has occurred in FY19.

Catalysts aplenty in 2017

There are a number of key catalysts to look forward to in 2017. In our view the more significant include European and US clearance for SOZO™ for lymphoedema and heart failure indications, private payers beginning to cover the L-Dex and progress on inclusion of lymphoedema in additional cancer guidelines.

Investment view – positive stance maintained

As a result of changes to forecasts our share price target has been reduced slightly. The key risk to our price target is a delay in the commercial launch of SOZO™ in the heart failure market. We believe upcoming newsflow will the share price higher.

We maintain our Add recommendation.

More information

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Disclaimer(s): Analyst owns shares.

Morgans Corporate Limited was a participating broker to the placement and SPP offer by Impedimed Limited and received fees in this regard.

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