Oncimmune Holdings PLC

Oncimmune Holdings PLC (LON: ONC) is a FTSE AIM All-Share listed Company that develops immunodiagnostics, focusing on immuno-oncology, infectious diseases, and autoimmune disease.

Investment Rationale – HOLD at GBX 167.50

• Strong Fundamentals to Support Growth: ONC has demonstrated excellent top-line growth in FY21 despite the Covid-19 challenges. Over the past eight years, it has kept an average of 40% quarter on quarter revenue growth. The continued strength of ImmunoINSIGHTS services business shall deliver strong revenue growth in FY22.
• Partnerships: It has bolstered relationships with Roche and Genentech, and other pharma giants. It has growing commercial pipeline to unlock the Group's growth potential.
• Acquisition: The strong commercial foundation following the acquisition of Protagen Diagnostics AG holds long-term revenue potential.
• Technical Indicator: From a technical standpoint, the current stock price is trading above the 20-day EMA (GBX 167.20), indicating a bullish price momentum.

Key Risks

• Losses: The Company has a history of operating losses, which can take some time to be profitable amid the rising level of supply chain disruption and market inflation.
• Macroeconomic Risk: British inflation rose to its highest in 10 years, while the strengthening of US Dollar with an increase in US Treasury Yields can hinder the ONC’s growth prospects.

Recent News

Commercial Update: On 7 December 2021, ONC reported that

• ImmunoINSIGHTS pharma services business witnessed a strong commercial activity in Q2 FY22.
• It also signed significant number of new contracts and expanded business development team in the US and Europe.

Agreement: On 20 September 2021, ONC signed an autoantibody profiling agreement with a leading global pharmaceutical to profile patients using ImmunoINSIGHTS service.

Financial Highlights (for the 12 months ended 31 May 2021, as on 2 November 2021)

(Source: Company Website)

• Top-line Growth: During FY21, revenue jumped over six times over FY20.
• Outlook: The Group expects to continue the growth momentum with excellent progress on three-year strategy and expected potential of ImmunoINSIGHTS services business.
• Liquidity: It ended FY21 with cash balance of £8.6 million and net debt of £0.8 million including lease liabilities.

One Year Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Valuation Methodology: EV/Sales Approach (FY22) (Illustrative)

 Conclusion 

During FY21, Oncimmune Holdings reported over six times increase in revenue on FY20 to £3.7 million. Moreover, the Company has recently conducted an equity placing to bolster operating capacity and ImmunoINSIGHTS business development.

Longer term prospects remained compelling, as it conducted several broader strategic commercial partnerships, scaled up Dortmund facility, and expanded bioinformatics capability.

Nevertheless, the investors are also recommended to gauge their respective risk-return profile before punting on this penny stock since its small market capitalization is exposed to market volatilities. The stock made a 52-week High and Low of GBX 261.63 and GBX 151.00, respectively.

Based on the recent commercial partnerships, outstanding top-line growth, capital boost with equity placing, and support from the valuation conducted above, we have given a “HOLD” recommendation on Oncimmune Holdings PLC at the closing market price of GBX 167.50 (as on 7 December 2021).

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

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