InMed Pharmaceuticals — Health and wellness product launches

InMed Pharmaceuticals (US: INM)

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Research: Healthcare

InMed Pharmaceuticals — Health and wellness product launches

InMed Pharmaceuticals has reported fiscal Q322 results (ending 31 March) benefiting from commercial sales into the health and wellness market. Its product launches of high-value rare cannabinoids contributed to its $0.3m revenues and should provide most sales in the near future. It has also made progress with its pharmaceutical drug development program for treating glaucoma, where it completed the FDA pre-investigational new drug (pIND) meeting for candidate INM-088. We continue to see InMed offering near-term revenue generation combined with the longer-term value of its pharma drug development programs.

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Healthcare

InMed Pharmaceuticals

Health and wellness product launches

Q322 results update

Pharma and biotech

31 May 2022

Price

$0.81

Market cap

$12m

Net cash ($m) at 31 March 2022

5.0

Shares in issue

14.6m

Free float

99%

Code

INM

Primary exchange

NASDAQ

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.5

(20.9)

(74.0)

Rel (local)

7.2

(16.6)

(73.7)

52-week high/low

$3.24

$0.7

Business description

InMed is a biopharmaceutical company focused on manufacturing, developing and commercializing cannabinoids. It commercializes rare cannabinoids to the health and wellness industry with flexibility across several manufacturing approaches. It is also a clinical-stage pharma company developing rare cannabinoid therapeutics.

Next events

FY22 results

TBD

Analysts

Ken Mestemacher, CFA

+44 (0)20 3077 5700

Soo Romanoff

+44 (0)20 3077 5700

InMed Pharmaceuticals is a research client of Edison Investment Research Limited

InMed Pharmaceuticals has reported fiscal Q322 results (ending 31 March) benefiting from commercial sales into the health and wellness market. Its product launches of high-value rare cannabinoids contributed to its $0.3m revenues and should provide most sales in the near future. It has also made progress with its pharmaceutical drug development program for treating glaucoma, where it completed the FDA pre-investigational new drug (pIND) meeting for candidate INM-088. We continue to see InMed offering near-term revenue generation combined with the longer-term value of its pharma drug development programs.

Year end

Revenue
(US$m)

EBITDA*
(US$m)

PBT*
(US$m)

EPS*
(US$)

P/revenue
(x)

Net cash/(debt)
(US$m)

06/20

0.0

(9.0)

(9.0)

(1.73)

NA

5.5

06/21

0.0

(9.8)

(10.3)

(1.53)

NA

7.1

06/22e

1.8

(14.6)

(14.8)

(1.09)

6.5

1.5

06/23e

10.2

(13.2)

(13.8)

(0.96)

1.1

(11.0)

Note: *EBITDA, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Health and wellness starting to bear fruit

Reflecting its move into the health and wellness space, InMed reported Q322 revenues of $0.3m, largely from sales of cannabichromene and cannabicitran (CBT), down slightly from a pro-forma $0.4m in Q321 (assuming BayMedica was acquired on 1 July 2020). InMed reported $5.9m in gross cash and management expects this to be sufficient to fund opex and capex into Q223.

Product launches as catalysts

As noted previously, launches of high-value rare cannabinoids continue to be key catalysts. Inbound demand for rare cannabinoids has increased, and the launches of CBT (January launch), cannabidivarin (April launch) and tetrahydrocannabivarin (THCV, commercial scale production in anticipation of B2B sales) are anticipated to benefit InMed’s revenues and margins as management expects to produce large-scale batches in May to June to meet anticipated demand. Moreover, InMed recently announced its BayMedica subsidiary would supply THCV to Radicle Science’s ‘Radicle Energy Study’ to assess its health effects.

Progress on treating glaucoma (INM-088)

InMed has completed its pIND application discussion with the FDA and reached alignment on the design for the initial Phase I–II clinical trials to gather early data on the safety and efficacy of INM-088 treatment. Management expects to file regulatory applications in H1 CY23 to initiate a human clinical trial.

Valuation: Slight tweaks to forecast, $5.6/share (base)

We adjust our forecasts from those published in our Outlook report for the lower net cash balance ($5.0m) than in Q222 ($10.3m) and the slightly higher share count. Our risk-adjusted per basic share valuations are now $5.6 (base), $15.5 (bull) and $1.1 (bear), down slightly from our prior $6.0 (base), $16.0 (bull) and $1.5 (bear).

Exhibit 1: Financial summary

US$'000s

2020

2021

2022e

2023e

2024e

Year end 30 June

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

PROFIT & LOSS

 

Revenue

 

 

0

0

1,766

10,191

12,078

Cost of Sales

-

-

(1,244)

(7,814)

(8,826)

Gross Profit

0

0

523

2,377

3,252

Research and development

(5,811)

(5,338)

(8,007)

(8,327)

(8,661)

Selling, general & administrative

(3,227)

(4,479)

(7,116)

(7,201)

(7,397)

EBITDA

 

 

(9,038)

(9,817)

(14,601)

(13,151)

(12,805)

Operating Profit (before amort. and excepts.)

 

(9,151)

(9,938)

(14,786)

(13,342)

(13,000)

Intangible Amortisation

-

-

-

-

-

Exceptionals/Other

82

(163)

(26)

(26)

(26)

Operating Profit/(Loss)

 

 

(9,069)

(10,101)

(14,812)

(13,368)

(13,026)

Net Interest and financial expense

130

(344)

17

(474)

(1,504)

Other (change in fair value of warrants)

-

243

-

-

-

Profit Before Tax (norm)

 

 

(9,021)

(10,283)

(14,769)

(13,816)

(14,504)

Profit Before Tax (GAAP)

 

 

(8,939)

(10,203)

(14,795)

(13,842)

(14,530)

Tax

-

-

-

-

-

Deferred tax

-

-

-

-

-

Profit After Tax (norm)

(9,021)

(10,283)

(14,769)

(13,816)

(14,504)

Profit After Tax (GAAP)

 

 

(8,939)

(10,203)

(14,795)

(13,842)

(14,530)

Average Number of Shares Outstanding (m)

5.2

6.7

13.6

14.4

15.0

EPS - normalised (c)

 

 

(172.80)

(153.02)

(108.72)

(95.94)

(96.85)

EPS - GAAP (US$)

 

 

(1.71)

(1.52)

(1.09)

(0.96)

(0.97)

Dividend per share (c)

-

-

-

-

-

Gross Margin (%)

NA

NA

29.6%

23.3%

26.9%

EBITDA Margin (%)

NA

NA

NA

NA

NA

Operating Margin (before GW and except.) (%)

NA

NA

NA

NA

NA

BALANCE SHEET

Fixed Assets

 

 

1,490

1,403

6,721

6,721

6,721

Intangible Assets

1,087

1,062

4,378

4,378

4,378

Tangible Assets

403

327

985

985

985

In Process R&D

0

0

1,249

1,249

1,249

Other

0

15

109

109

109

Current Assets

 

 

6,312

8,378

5,529

4,824

3,330

Stocks

0

0

1,420

1,000

1,000

Debtors

45

12

400

650

900

Cash

5,848

7,410

2,397

1,863

118

Other

419

957

1,312

1,312

1,312

Current Liabilities

 

 

(1,676)

(2,215)

(4,738)

(5,128)

(5,387)

Creditors

(1,607)

(2,135)

(3,500)

(3,850)

(4,100)

Short term borrowings

0

0

(29)

(29)

(29)

Finance lease obligations

(69)

(80)

(400)

(400)

(400)

Other

0

0

(809)

(849)

(858)

Long Term Liabilities

 

 

(248)

(189)

(494)

(12,494)

(24,494)

Long term borrowings

0

0

0

(12,000)

(24,000)

Other long term liabilities

0

0

0

0

0

Finance lease obligations

(248)

(189)

(494)

(494)

(494)

Net Assets

 

 

5,878

7,377

7,019

(6,076)

(19,830)

CASH FLOW

Operating Cash Flow

 

 

(7,375)

(10,151)

(14,890)

(12,457)

(14,682)

Net Interest

0

360

1

512

1,532

Tax

0

0

0

0

0

Capex

(43)

(2)

(175)

(590)

(595)

Acquisitions/disposals

0

0

0

0

0

Equity Financing

(31)

10,855

10,706

0

0

Dividends

0

0

0

0

0

Other

1

0

92

0

0

Net Cash Flow

(7,448)

1,062

(4,267)

(12,535)

(13,745)

Opening net debt/(cash), not incl. leases

 

 

(13,784)

(5,848)

(7,409)

(2,426)

10,109

HP finance leases initiated

0

0

0

0

0

Exchange rate movements

416

(495)

0

0

0

Other

(905)

994

(717)

0

0

Closing net debt/(cash)

 

 

(5,848)

(7,409)

(2,426)

10,109

23,853

Closing net debt/(cash), incl. leases

 

 

(5,531)

(7,140)

(1,532)

11,002

24,747

Source: InMed Pharmaceuticals, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by InMed Pharmaceuticals prepared and issued by Edison, in consideration of a fee payable by InMed Pharmaceuticals. 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.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

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

General disclaimer and copyright

This report has been commissioned by InMed Pharmaceuticals prepared and issued by Edison, in consideration of a fee payable by InMed Pharmaceuticals. 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.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

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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