Currency in USD
Last close As at 26/05/2023
USD2.03
▲ −0.02 (−1.07%)
Market capitalisation
USD129m
Research: Healthcare
Incannex Healthcare has announced a fund-raise of A$13m (US$8.7m) in gross proceeds through a private placement to a healthcare-focused group of institutional investors. It will issue 63.4m new shares of common stock at A$0.205/share (a c 10.9% discount to the 2 December closing price). Proceeds of the raise will primarily be used to develop Incannex’s clinical pipeline (including assets acquired as part of APIRx acquisition). After the private placement, Incannex is expected to have a pro-forma cash position of around A$45m (US$30.6m) that, according to management, should be adequate to fund its operations into CY25. As a result of rolling our model forward, including newly issued shares and updating the cash position, we value Incannex at US$736.6m or US$11.7 per ADR.
Incannex Healthcare |
Expanding base with A$13m private placement |
Financing update |
Pharma and biotech |
7 December 2022 |
Share price performance
Business description
Next events
Analysts
Incannex Healthcare is a research client of Edison Investment Research Limited |
Incannex Healthcare has announced a fund-raise of A$13m (US$8.7m) in gross proceeds through a private placement to a healthcare-focused group of institutional investors. It will issue 63.4m new shares of common stock at A$0.205/share (a c 10.9% discount to the 2 December closing price). Proceeds of the raise will primarily be used to develop Incannex’s clinical pipeline (including assets acquired as part of APIRx acquisition). After the private placement, Incannex is expected to have a pro-forma cash position of around A$45m (US$30.6m) that, according to management, should be adequate to fund its operations into CY25. As a result of rolling our model forward, including newly issued shares and updating the cash position, we value Incannex at US$736.6m or US$11.7 per ADR.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/21 |
2.0 |
(8.2) |
(0.83) |
0.0 |
N/A |
N/A |
06/22 |
0.8 |
(14.9) |
(1.25) |
0.0 |
N/A |
N/A |
06/23e |
0.0 |
(20.6) |
(1.35) |
0.0 |
N/A |
N/A |
06/24e |
0.0 |
(33.4) |
(2.12) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Attached options may extend cash runway
As part of the placement, subscribers will also be offered an equivalent number (63.4m) of new options, exercisable at A$0.285 per option. If fully exercised, these options may raise a further A$18.1m in proceeds. With the A$13.0m in gross proceeds from the current financing, excluding the effect of the attached options, we now expect Incannex will require A$55m in additional funding (from A$70m previously) before reaching profitability in FY26 with the launch of IHL-42X.
Busy clinical pipeline continues momentum
Although we had not anticipated any immediate financing requirements, Incannex’s raise comes at a crucial stage for the company with the upcoming investigational new drug (IND) application filing with the FDA in Q1 CY23 to initiate a pivotal Phase II/III study of its lead asset, IHL-42X. Incannex is looking to progress development of the assets from the APIRx pharmaceuticals acquisition, having recently announced it will start manufacturing its addiction treatments (CannQuit-N and CannQuit-O) and skin therapeutics (ReneCann) for use in upcoming clinical trials.
Valuation: US$736.6m or US$11.7 per ADR
We value Incannex at US$736.6m or US$11.7 per ADR (US$714.7m or US$11.74 per ADR previously). Our valuation has been affected by rolling our model forward three months and including the newly issued shares; however, our underlying long-term assumptions remain unchanged. Based on the company’s burn rate and our projections, we estimate the pro forma net cash position of A$45.0m at December 2022 provides a cash runway into CY25.
Exhibit 1: Financial summary
Accounts: IFRS, Yr end: June 30, AUD$:000s |
|
|
2020 |
2021 |
2022 |
2023e |
2024e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
822 |
1,973 |
789 |
77 |
79 |
Cost of sales |
|
|
(450) |
(912) |
(6) |
(6) |
(6) |
Gross profit |
|
|
372 |
1,061 |
782 |
71 |
72 |
Total operating expenses |
|
|
(4,301) |
(9,225) |
(15,686) |
(20,678) |
(33,482) |
Research and development expenses |
|
|
(2,111) |
(4,750) |
(5,372) |
(9,848) |
(21,600) |
SG&A |
|
|
(864) |
(1,236) |
(3,027) |
(3,399) |
(4,157) |
Operating income (reported) |
|
|
(3,929) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Finance income/(expense) |
|
|
0 |
0 |
0 |
0 |
0 |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
0 |
Net loss from discontinued operations |
|
|
(768) |
0 |
0 |
0 |
0 |
Profit before tax (reported) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Profit before tax (normalised) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Income tax expense (includes exceptionals) |
|
|
0 |
0 |
0 |
0 |
0 |
Net income (reported) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Net income (normalised) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Basic average number of shares, m |
|
|
684.0 |
978.0 |
1,191.2 |
1,525.0 |
1,574.0 |
Basic EPS (cents per share) |
|
|
(0.69) |
(0.83) |
(1.25) |
(1.35) |
(2.12) |
Adjusted EPS (cents per share) |
|
|
(0.69) |
(0.83) |
(1.25) |
(1.35) |
(2.12) |
Dividend per share (cents per share) |
|
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
Tangible assets |
|
|
0 |
0 |
0 |
0 |
0 |
Intangible assets |
|
|
0 |
0 |
0 |
0 |
0 |
Right-of-use assets |
|
|
0 |
0 |
0 |
0 |
0 |
Other non-current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents |
|
|
3,603 |
9,124 |
37,501 |
29,126 |
20,764 |
Current tax receivables |
|
|
0 |
0 |
0 |
0 |
0 |
Trade and other receivables |
|
|
413 |
169 |
295 |
292 |
307 |
Inventory |
|
|
183 |
0 |
0 |
0 |
0 |
Other current assets |
|
|
36 |
36 |
84 |
84 |
84 |
Total current assets |
|
|
4,236 |
9,329 |
37,880 |
29,502 |
21,155 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
Non-current lease liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Accounts payable |
|
|
955 |
755 |
2,011 |
1,240 |
1,302 |
Illustrative debt |
|
|
0 |
0 |
0 |
0 |
25,000 |
Current lease obligations |
|
|
0 |
0 |
0 |
0 |
0 |
Other current liabilities |
|
|
117 |
0 |
0 |
0 |
0 |
Total current liabilities |
|
|
1,072 |
755 |
2,011 |
1,240 |
26,302 |
Equity attributable to company |
|
|
3,164 |
8,574 |
35,869 |
28,262 |
(5,147) |
|
|
|
0 |
0 |
0 |
0 |
0 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Operating income |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Depreciation and amortisation |
|
|
37 |
0 |
0 |
0 |
0 |
Share based payments |
|
|
565 |
1,172 |
1,465 |
0 |
0 |
Other adjustments |
|
|
97 |
91 |
(594) |
0 |
0 |
Movements in working capital |
|
|
91 |
(10) |
1,226 |
(768) |
47 |
Cash from operations (CFO) |
|
|
(3,907) |
(6,910) |
(12,807) |
(21,375) |
(33,362) |
Capex |
|
|
13 |
0 |
0 |
0 |
0 |
Acquisitions & disposals net |
|
|
0 |
29 |
0 |
0 |
0 |
Other investing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
13 |
29 |
0 |
0 |
0 |
Capital changes |
|
|
7,469 |
12,401 |
41,185 |
13,000 |
0 |
Debt changes |
|
|
(65) |
0 |
0 |
0 |
25,000 |
Other financing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
7,404 |
12,401 |
41,185 |
13,000 |
25,000 |
Cash and equivalents at beginning of period |
|
|
93 |
3,603 |
9,124 |
37,501 |
29,126 |
Increase/(decrease) in cash and equivalents |
|
|
3,510 |
5,520 |
28,377 |
(8,375) |
(8,362) |
Effect of FX on cash and equivalents |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents at end of period |
|
|
3,603 |
9,124 |
37,501 |
29,126 |
20,764 |
Net (debt)/cash |
|
|
3,603 |
9,124 |
37,501 |
29,126 |
20,764 |
Source: Incannex Healthcare, Edison Investment Research
|
|
Research: TMT
4iG reported growth in pro forma EBITDA for Q322 and 9M22, despite the effect of cost inflation, new Hungarian supplementary telecom taxes and supply chain challenges, resulting in a pro forma EBITDA margin of 23.7% for 9M22 (9M21: 21.8%). During Q322, the company concentrated on integrating recent acquisitions and developing an organisational structure to support the group’s growth. Work continues on the Vodafone Hungary acquisition, which, when complete, will cement 4iG’s position as the number two telecom operator in Hungary.
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