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Research: Healthcare
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.
Written by
InMed Pharmaceuticals |
Health and wellness product launches |
Q322 results update |
Pharma and biotech |
31 May 2022 |
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Business description
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InMed Pharmaceuticals is a research client of Edison Investment Research Limited |
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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 |
EBITDA* |
PBT* |
EPS* |
P/revenue |
Net cash/(debt) |
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
|
|
Research: Financials
Attica Bank reported a loss of €105.0m in FY21 (FY20: €306.4m), which included a €55.4m write-down from loan securitisation in Q421. Loan impairments remain high and were 1.6% of loans in FY21, while the cost income ratio was 147% (FY20: 100%). More positively, income trends were good (Q421 total revenue and interest income rose 104% and 53% q-o-q respectively). The various capital actions taken by management (including share issues and securitisations) have improved the balance sheet, which had a CET1 of 8.3% (4.9% fully loaded) versus 3.1% (-0.4%) at the end of FY20. Non-performing exposure (NPE) remains high at 33.6% (FY20: 41.7%). Despite improvements, Attica needs further capital actions to gain the scale needed for it to be profitable. We suspended forecasts in July 2021 until further clarity on the outcome of these capital actions.