Investing in cutting edge healthcare stocks requires considerable knowledge, skill and fortitude. However, this pales into insignificance in comparison to the talent and expertise required by the company itself. Luckily Oncimmune (ONC) has this in spades.
Since the pandemic, Oncimmune has emerged as a leading global immunodiagnostics group, helping many of the world’s biggest biopharma groups target, discover and clinically test new oncology, autoimmune and infectious disease drugs (such ImmunoINSIGHTS). It's also commercialising its own super accurate ‘Rule Out’ test (with 90% specificity), which involves a much safer and cheaper blood draw -EarlyCDT - that screens for early stage lung cancer.
Elsewhere, the ImmunoINSIGHTS pipeline is climbing by c. £0.75m a month, reaching £13m in December 2022 against £10m in August 2022. That's been driven by “more and larger projects with repeat customers”, and has generated robust visibility and H1 2023 sales of more than £3.8m.
Likewise, the earlyCDT division is Ebitda positive, and growing revenues thanks to rising demand for Biodesix and Medicare coverage, augmented by two flagship deals with Phillips and Siemens Healthineers. Here, both CT scanner OEMs have decided to incorporate the test’s data into their own patient management platforms to improve the assessment and treatment of indeterminate pulmonary nodules, in turn enabling doctors to reduce the number of patients that have needless biopsies where an identified tumour is in fact non-cancerous.
Oncimmune remains on track to hit its year-end FY 2023 guidance for turnover to almost double to £7.5m (from £3.8m in the fifteen month to August 2022), and be broadly EBITDA neutral as well as operating cashflow positive.
There's still lots on the company's 'to do' list, though. The last piece of the jigsaw is to decrease, extend and/or refinance some or all of its £8.6m net debt, excluding IFRS16 leases. That's because Oncimmune is required under the IPF Facility to make total capital repayments of €11.6m, of which, €6.9m is due this calendar year. Consequently the Board are exploring several strategic options, including the potential sale or IPO of some of its assets, alongside discussing with IPF Partners a waiver to cover any possible breach of the covenants.
Granted, this uncertainty may create some short term volatility, as we've seen with the share price today. Yet, Oncimmune is expanding rapidly, operationally in good shape, and underpinned by a treasure trove of valuable medical science, which is being integrated into many of the world’s finest biopharma products. That's been demonstrated by blue-chip endorsements of the quality and utility of its best-in-class science, including its database of 8,000+ immunogenic proteins.
CEO Adam M Hill commented: “ImmunoINSIGHTS is seeing improving growth in H1’23, and has an increasing number of contracts with more partners opting for multi-year Master Service Agreements. Oncimmune continues to perform in line with expectations, and is expecting to be operating cashflow positive in FY23.”