Transforming into a pure-play biotech

Medlab Clinical 27 January 2022 Update
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Medlab Clinical

Transforming into a pure-play biotech

Company update

Pharma & biotech

27 January 2022

Price

A$0.13

Market cap

A$44m

Net cash (A$m) at end-November 2021 (after the completion of the transaction)

13.0

Shares in issue

342.2m

Free float

90%

Code

MDC

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.8)

(24.2)

(63.2)

Rel (local)

(7.9)

(18.9)

(63.9)

52-week high/low

A$0.36

A$0.13

Business description

Medlab Clinical is an Australian biotechnology company that is developing therapeutics using its proprietary delivery platform NanoCelle. Its most advanced programme is in cancer pain management with lead drug candidate NanaBis, a medicinal cannabis product for cancer-related bone pain. Medlab is now developing a synthetic THC/CBD analogy of NanaBis, which should significantly streamline the regulatory approval pathway.

Next events

Update on synthetic NanaBis development progress

2022

Update on NanoCBD regulatory progress

2022

Update on ERGBiotic reformulation

2022

Update on mRNA and NanoCelle combination

2022

Analyst

Dr Jonas Peciulis

+44 (0)20 3077 5728

In its former shape, Medlab used the cash flows from selling innovative nutraceuticals to fund pharmaceutical research. With lead product NanaBis (NanoCelle encapsulated 50:50 THC:CBD for pain) preparing to enter a Phase III trial in pain, management has decided to fully focus on therapeutics development and divested its nutraceuticals portfolio in November 2021. As a pure-play biotech, Medlab is also focused on optimising its R&D portfolio, which has many initiatives. Historically, Medlab has explored its proprietary drug delivery technology NanoCelle in combination with various generic active pharmaceutical ingredients (APIs), extracts and other products. The management is now prioritising the likely winners, with NanaBis leading the pack. Our valuation has increased to A$239m or A$0.70 per share.

Year end

Revenue (A$m)

PBT
(A$m)

EPS*
(A$)

DPS
(A$)

P/E
(x)

Yield
(%)

06/20

5.8

(13.5)

(0.06)

0.00

N/A

N/A

06/21

8.1

(12.4)

(0.04)

0.00

N/A

N/A

06/22e

8.0

(12.7)

(0.04)

0.00

N/A

N/A

06/23e

10.4

(11.0)

(0.03)

0.00

N/A

N/A

Note: *EPS are normalised, excluding exceptional items.

Nutraceuticals portfolio divested

In October 2021, Medlab announced it had agreed to divest the rights to its nutraceuticals portfolio in Australia for A$2.2m in cash to PharmaCare, a well-established consumer health company (FY21 nutraceuticals sales were A$3.7m). The terms stipulate two yearly earn outs, which amount to the greater of A$250k or 5% of net sales. The portfolio underwent a strategic review last year, so the news was not a surprise. Medlab’s increasing focus on clinical drug development meant that from a shareholder value-creation perspective, the combination of these two business models became incompatible, with different risk/reward profiles and investments needed. As a result, Medlab is now a focused biotech.

Lead product NanaBis: Reformulation work ongoing

NanaBis is being reformulated from its botanical version to a product that will contain only synthetic APIs (the regulator’s preferred option). This should be completed later this year. Medlab will also discuss with the FDA if any bridging studies are needed before it proceeds to a Phase III trial. The US patent office has granted the NanoCelle patent, which means NanaBis is now protected in most major key markets.

Valuation: A$239m or A$0.70 per share

We value Medlab at A$239m or A$0.70, higher than previously (A$0.59 per share) due to an increased success probability. Our model is only based on NanaBis in cancer-induced bone pain. After the completion of the transaction (November 2021), the company had cash of A$13m, which should last well into H222. Our model suggests a funding gap of A$23m in 2022–23. Using a bottom-up approach, we assume NanaBis launches in 2025 and we calculate peak sales of US$410m in just this one indication.

Medlab Clinical is a research client of Edison Investment Research Limited

R&D progress update: Picking the leaders

Historically, management has explored the feasibility of its NanoCelle delivery technology in combination with many different pharmaceutical compounds searching for a product that could be protectable via fresh IP, but would also offer an attractive commercial opportunity. This resulted in a broad R&D pipeline (Exhibit 1 demonstrates only some of Medlab’s project pipeline).

NanaBis is Medlab’s lead asset, but we see signs of portfolio optimisation with management picking the likely winners (Exhibit 1, projects with a green star). This mix of projects also includes fairly recent initiatives, such as the mRNA-based COVID-19 vaccine encapsulated in NanoCelle. Portfolio optimisation is typical for pure biotechs in the R&D stage, that is, picking the best prospects and going to the market as fast as possible. Subsequently, licensing income or cash flows from the marketed products support the development of other projects.

In its latest investor presentation (16 November 2021), Medlab states its priority projects are:

NanaBis for cancer-induced bone pain (preparing to enter Phase III; product optimisation ongoing); a follow-up project is expansion into non-cancer pain;

NanoCBD for stress (preclinical);

NRGBiotic for depression (Phase II, product optimisation ongoing); and

mRNA-based COVID-19 vaccine coated with NanoCelle, Medlab’s proprietary drug delivery technology (preclinical).

NanoCelle: Medlab’s core innovation

At the heart of Medlab’s innovation is NanoCelle, a patented drug delivery platform designed to bypass the digestive tract and first-pass metabolism. NanoCelle’s particles (micelles) have a hydrophobic core and hydrophilic shell, therefore the formulation is water-soluble (suitable for the delivery of insoluble drugs) and stable at room temperature despite the original solubility characteristics of the API.

The API encapsulated in NanoCelle can be absorbed via buccal or nasal delivery using a spray, as opposed to a peroral or intravenous route. The benefits of transbuccal delivery are closer to those of intravenous administration versus peroral (quick resorption, avoids first-pass metabolism in the liver, so the dose can be lowered, no issues with interactions with food), but without intervention.

With minor adjustments to the manufacturing procedure, the NanoCelle technology can be applied to a wide variety of active ingredients, both nutritional and pharmaceutical. The exact composition, possible variations of it and combinations with various APIs are protected by a patent that was first filed in 2016, and now granted in all key markets including Australia, Europe, Canada and the United States. The protection period extends to at least 2036. See our initiation report for a more detailed introduction to NanoCelle.

Exhibit 1: R&D pipeline

Source: Medlab

NanaBis: Working on a synthetic version

Current status of the project

Medlab’s lead product is NanaBis, a combination of THC (tetrahydrocannabinol) and CBD (cannabidiol) (1:1) cannabinoids encapsulated in NanoCelle particles, which enable a convenient buccal spray formulation. The clinical development of NanaBis gained speed with the initiation of the Phase I/II trial in cancer patients with pain. The trial was completed in March 2020, and subsequently Medlab initiated a large observational study (n=2,000) to gather real world evidence of NanaBis use in cancer patients via the Special Access Scheme in Australia. This is ongoing, but the reduction in pain scores recorded so far is consistent with, or exceeds, the level obtained in the Phase I/II trial. Consequently, Medlab has decided to pursue the registration of NanaBis as a drug.

This work has been done with the botanical version of NanaBis (a cannabis extract). As Medlab announced in May 2021, it has successfully produced a synthetic version of NanaBis, thus significantly streamlining the regulatory pathway. Two synthetic cannabinoids, CBD and THC, will replace the botanical extract in the new version of NanaBis (there was previously no drug master file for neat synthetic THC, known as dronabinol, which Medlab developed with its contract manufacturer; see our initiation report for more detail). Although the transition to a new formulation will require additional work (being carried out at the moment), the advantage that a synthetic formulation offers is significant, as regulators typically prefer synthetic compounds. Botanical extracts can still have trace amounts of many other molecules, which need to be characterised, involving lots of chemistry work. Also, the quality of the source material (cannabis plants in this case) can vary depending on cultivation conditions.

With the opioid crisis unravelling, we believe support for nonopioid pain killers from various stakeholders will only grow. The initial indication is cancer-induced bone pain. The study is designed to demonstrate that NanaBis is effective as monotherapy for the management of opioid-requiring bone pain due to metastatic cancer and that NanaBis monotherapy is non-inferior to opioid treatment (see our initiation report for more detail on the design). Although it is a niche in pain disorders, Medlab believes it represents the fastest route to market. If the data are positive, NanaBis’s label could be expanded via a bridging trial to other pain disorders.

Next steps

The reformulation should be completed this year, but the COVID-19 pandemic could have an impact. It is still to be determined whether any bridging studies will be required. If not, NanaBis will re-enter Phase III clinical development as a fully synthetic, non-opioid pain relief drug optimised with proprietary delivery technology. The IND application has already been approved by the FDA, which Medlab will complement with the reformulation data. The Phase III protocol has already been designed as well.

NanoCBD: Fast track to OTC setting

NanoCBD is Medlab’s second cannabinoid product in development utilising its proprietary NanoCelle delivery platform. CBD is the next most abundant, but nonpsychotropic cannabinoid in the plant.

In 2021, Medlab announced an agreement with Arrotex Pharmaceuticals, Australia’s largest generics supplier to pharmacies. Medlab and Arrotex are preparing for guidance from Australia’s Therapeutic Goods Administration (TGA). Medlab’s goal is to register NanoCBD as a pharmaceutical grade product, so it could be supplied to Australian pharmacies as an OTC product (Schedule 3 drug).

Initially, Medlab plans to position NanoCBD as a stress reliever. To date, the FDA has approved one pharmaceutical-grade CBD product, cannabis-derived Epidiolex, for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients aged two years and older (purified CBD, GW Pharmaceuticals, approved in 2018, expected 2021 sales of US$730m, growing to US$1.4bn by 2026; EvaluatePharma). Although there are no plans with Arrotex to initiate clinical trials at the moment, the strategy is to enter a very large market of anxiety-related medications with a pharmaceutical grade product that is OTC and priced at accessible out-of-pocket levels.

For this reason, the project appears in the preclinical setting in the R&D pipeline (Exhibit 1); however, the product could reach the market quickly. We do not expect it will reach the same levels of peak sales and profitability as therapeutic drugs that have undergone clinical trials and can make legal claims about efficacy. But this a near-term opportunity that could provide a path to a ‘proof-of-concept’. If NanoCBD finds traction in the OTC setting, it means customers are returning to buy more, which would create an incentive to initiate clinical trials and would then support adding specific claims to the product. There is a tailwind in the industry at the moment, which enables this pull-push strategy. The cannabis and related products are being recognised socially and politically more and more. The fact that CBD does not have any significant psychoactive effects yet is one of the most abundant cannabinoids in the plant makes it the most popular cannabis-related product in the consumer market globally. Medlab will report on the progress of discussions with the TGA later this year.

NRGBiotic: Phase IIa study finished

The second most advanced project is NRGBiotic for depression. It is a probiotic formulation that contains Lactobacillus acidophilus, Bifidobacterium bifidum and Streptococcus thermophilus species with orotate. The preliminary results from a Phase IIa study were announced in February 2021 and showed a significant reduction in depression scores and a significant improvement in quality of life from baseline. The final results announced in July 2021 confirmed this.

A recent announcement stated the US patent office has granted the formulation patent for this product, providing protection until 2037. The patent is focused on orotic acid (orotate) in depression, which is the key component of NRGBiotic. Orotate is now protected in United States, Australia, Canada, Europe, New Zealand, Singapore and Hong Kong.

As the next step, Medlab indicated the data from this trial also gave ‘insights how to further optimise’ the formulation. No details were mentioned, but management has stated it will ‘consult with Australian Health Authorities on potential development and evidence next steps’.

NanoCelle and an mRNA-based COVID-19 vaccine

The mRNA-based COVID-19 vaccine project is the latest entrant to Medlab’s R&D pipeline. No details have been disclosed so far, but management indicated it is one of the prioritised projects. We presume the rationale here is to encapsulate an existing COVID-19 vaccine with NanoCelle, enabling a non-invasive vaccination. COVID-19 vaccines are a rapidly developing market, but it now seems re-vaccinations (boosters) will be needed for the foreseeable future. Annual flu jabs already put a burden on some parts of the population and some people simply do not want or do not tolerate intramuscular injections. If the combination with NanoCelle is effective, then there could be demand for it. Given the size of the market, even a small market share would translate into significant revenues. The project is still in an early preclinical stage.

Financials and valuation

The nutraceuticals segment divestment

In October 2021, Medlab announced it had agreed to divest the rights to its nutraceuticals portfolio in Australia for A$2.2m in cash to PharmaCare, a well-established Australian health and wellness company. Medlab retained ownership of its R&D and both parties have agreed to work together on future product development, potentially providing ongoing innovation to PharmaCare as well as an ongoing income stream to Medlab. All nutraceuticals rights for the rest of the world are still with Medlab, which is actively pursuing opportunities.

Business segment performance

Medlab reports the two business segments separately. Nutraceuticals sales (excluding NanaBis for a compassionate use programme) grew to A$4.1m in FY18 and A$5.1m in FY19, before being affected by the COVID-19 pandemic (A$2.0m in FY20), but then a strong rebound to A$3.7m in 2021, as the company shifted its strategy towards online sales. On an EBITDA level this segment reported negative earnings over the same period.

The pharmaceutical research segment generates recurring income from the sales of its cannabinoids via a special access scheme in Australia (A$843k in FY20 and A$733k in 2021). Medlab plans to continue offering its cannabinoid products via this programme in Australia and plans similar initiatives in the UK, other European countries and the United States, so there is potential to grow the top line even before NanaBis completes the Phase III trial.

Company performance and estimates

Medlab’s total FY20 and FY21 revenues were A$5.8m and A$8.1m respectively. Of those amounts A$2.9m and A$3.7m were R&D tax incentives, government grants and other revenues. The rest was from product sales as described above.

Medlab’s total operating expenses were A$19.3m and A$20.5m in FY20 and FY21 respectively, with a net loss of A$13.5m and A$12.4m in the same periods. The costs associated with pharmaceutical research should increase once the Phase III trial starts; however, Medlab will save around A$2m per year after the divestment of the nutraceuticals business (as stated in the announcement). Although the business was being reported as a separate segment, it is difficult to evaluate how the cost structure will change, as some of management had duties in both segments. No pro forma statement is available. For this reason, our estimates are subject to change after the H122 report, which will fully reflect the divestment.

Medlab guided that after the transaction completed (November 2021) it had cash of A$13m. Our profit before tax forecasts for FY22 and FY23 are A$12.7m and A$11.0m. According to our model, the existing cash provides funding well into FY22. We assume an illustrative long-term liability of A$5.1m in FY22 and A$18.2m in 2023 (as per our research principles in lieu of equity funding).

Valuation

We value Medlab at A$239m or A$0.70 per share, marginally higher than previously (A$0.59 per share) after rolling our model forward and increasing our success probability to 45% from 40%.

As we explained in our initiation report, the probability of success of 40% we used at that time was lower than for a typical non-oncology asset in Phase III (Wong and Siah, 2018; the probability of success for non-oncology assets in Phase III is 60–70%). At that time, Medlab announced the transition to a synthetic version of NanaBis which, according to the latest updates, is going well. In addition, together with its quarterly business update, Medlab released interim real-world evidence analysis from the observational study. In total, 46% of the planned 2,000 participants have now been recruited into the study (up from 40%). The findings from the latest analysis track the previous update and the Phase I/II results (more details on this study can be found in our initiation report). Based on this progress, we increase our success probability to 45%. Once the fully synthetic NanaBis is developed and the Phase III trial starts, we will look to revise our success probability further.

Our valuation is based on NanaBis in cancer-induced bone pain (a detailed discussion of our assumptions is in the initiation report). However, we can see that management is working on many other projects that could progress at varying speeds, and we are re-assessing them for inclusion in our valuation model on an ongoing basis.

Exhibit 2: NanaBis valuation

Product

Indication

Launch

Peak sales* (US$m)

NPV
(A$m)

Probability of success

rNPV
(A$m)

rNPV/share
(A$)

NanaBis

Cancer-induced bone pain

2025

410

515.1

45%

225.7

0.66

Net cash, Nov 2021

13.0

100%

13.1

0.04

Valuation

 

 

528.1

238.8

0.70

Source: Edison Investment Research. Note: WACC = 12.5%. *Peak sales are rounded to the nearest US$10m.

Furthermore, to better understand the value of Medlab’s core technology, NanoCelle, we have looked at comparable deals involving drug delivery platforms (as opposed to product-centric deals). Exhibit 3 summarises the EvaluatePharma database of drug delivery platform deals since 2015. The upfront payments averaged $22m, while potential milestone payments averaged $623m. We note that most of these deals were classified as preclinical, meaning that the licensee companies paid for access to the delivery technology and then spent their own funds to continue product development (while the licensor companies collected the payment without involvement in clinical development). With minor adjustments to the manufacturing procedure, the NanoCelle technology could be applied to a wide variety of active ingredients. Since NanoCelle’s key patent has recently been granted in the key US market, in theory there are now no obstacles to Medlab engaging in more concrete out-licensing discussions.

Exhibit 3: Deals involving drug delivery platforms (2015–22)

Date

Licensor

Licensee

Stage

Upfront (US$m)

Milestones (US$m)

Comments

29/06/2020

Bioasis Technologies

Chiesi

Preclinical

3

141

Bioasis xB3 platform for the delivery of therapeutics across the blood-brain barrier of undisclosed enzymes to treat four lysosomal storage disorders.

22/06/2021

ViiV Healthcare

Halozyme Therapeutics*

Preclinical

40

700

Global rights to Halozyme’s Enhanze drug delivery technology (recombinant human hyaluronidase PH20 enzyme) for subcutaneous formulation of four HIV drug targets.

26/03/2020

Evox Therapeutics

Takeda

Preclinical

44

842

Global rights to Evox’s exosome-based targeting and delivery technology.

28/03/2019

StrideBio

Takeda

Preclinical

30

680

Adeno-associated viral (AAV) capsids for delivery of gene therapies for Friedreich's Ataxia and two additional targets.

29/10/2015

Ultragenyx Pharmaceutical

Arcturus Therapeutics

Preclinical

10

1,248

UNA oligomer chemistry (can be used to target any gene) and LUNAR nanoparticle delivery platform to develop RNA therapeutics.

07/09/2015

Starpharma

AstraZeneca

Phase II

2

126 (first)
93 (subsequent products)

DEP drug delivery platform for use with undisclosed AstraZeneca oncology compounds (DEP centres on use of Starpharma’s proprietary dendrimers, with the aim of enhancing the dosing and efficacy characteristics of drugs).

Average

22

623

Source: Edison Investment Research, EvaluatePharma. Note: *There are multiples other deals involving Halozyme and other parties, which licensed rights to Enhanze.


Exhibit 4: Financial summary

Year-end 30 June

A$000s

2019

2020

2021

2022e

2023e

Local GAAP

Local GAAP

Local GAAP

Local GAAP

Local GAAP

PROFIT & LOSS

Sales

5,364

2,848

4,399

2,800

3,960

Other income

2,723

2,965

3,725

5,200

6,400

Total revenues

8,087

5,814

8,125

8,000

10,360

Raw materials and consumables used

(3,064)

(2,805)

(2,940)

(2,587)

(2,441)

Employee benefits expense

(6,465)

(6,666)

(7,935)

(8,332)

(8,748)

Amortisation and depreciation

(147)

(961)

(873)

(873)

(873)

Professional and consulting fees

(1,004)

(1,257)

(1,731)

(1,818)

(1,909)

Operating lease costs

(501)

(199)

(186)

(192)

(189)

Finance costs

(80)

(197)

(139)

(139)

(139)

Selling & marketing expenses

(1,534)

(1,750)

(771)

(809)

(850)

R&D/trial expenses

(1,026)

(1,947)

(2,103)

(2,208)

(2,318)

Other Operating Expenses

(2,440)

(3,520)

(3,850)

(3,742)

(3,844)

Reported PBT

(8,174)

(13,488)

(12,403)

(12,700)

(10,952)

Income tax expense

0

0

0

0

0

Minority Interests

(83)

(89)

(79)

(79)

(79)

Reported net income

(8,091)

(13,399)

(12,324)

(12,621)

(10,873)

Basic average number of shares, m

209.0

225.7

294.8

342.2

342.2

Basic EPS (A$)

(0.04)

(0.06)

(0.04)

(0.04)

(0.03)

Diluted EPS (A$)

(0.04)

(0.06)

(0.04)

(0.04)

(0.03)

BALANCE SHEET

Property, plant and equipment

632

592

483

567

650

Right of use assets

0

2,288

1,601

1,601

1,601

Other non-current assets

483

483

483

483

483

Total non-current assets

1,115

3,364

2,567

2,650

2,733

Cash and equivalents

11,442

9,063

13,435

1,000

1,000

Trade and other receivables

3,814

3,379

3,356

3,356

3,356

Inventories

2,218

1,473

792

792

792

Other current assets

1,616

509

496

496

496

Total current assets

19,090

14,425

18,079

5,645

5,645

Non-current loans and borrowings*

0

0

0

268

11,224

Provisions

173

478

233

233

233

Lease liabilities

0

1,630

989

989

989

Other non-current liabilities

55

0

0

0

0

Total non-current liabilities

228

2,107

1,222

1,490

12,446

Trade and other payables

3,622

3,218

2,991

2,991

2,991

Employee benefits

389

504

516

516

516

Borrowings

972

94

68

68

68

Lease liabilities

0

610

638

638

638

Total current liabilities

4,983

4,426

4,519

4,519

4,519

Equity attributable to company

15,050

11,397

15,144

2,523

(8,349)

CASH FLOW

Net cash used in operating activities

(10,315)

(10,422)

(10,353)

(12,621)

(10,873)

Capex

(340)

(243)

(83)

(83)

(83)

Cash used in investing activities (CFIA)

(340)

(243)

(83)

(83)

(83)

Net proceeds from issue of shares

1,303

10,398

15,449

0

0

Movements in debt

472

(1,513)

(26)

268

10,956

Other financing activities

0

(563)

(612)

0

0

Cash flow from financing activities

1,775

8,321

14,810

268

10,956

Increase/(decrease) in cash and equivalents

(8,889)

(2,379)

4,372

(12,437)

0

Cash and equivalents at beginning of period

20,333

11,444

9,065

13,437

1,000

Cash and equivalents at end of period

11,444

9,065

13,437

1,000

1,000

Net (debt)/cash

10,470

8,969

13,367

665

(10,292)

Source: Medlab accounts, Edison Investment Research. Note: *Long-term debt used instead of equity issue. Estimates do not fully reflect the divestment of the nutraceuticals business, as no pro forma statement is available.


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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Medlab Clinical and prepared and issued by Edison, in consideration of a fee payable by Medlab Clinical. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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