Bell Potter have increased their val by 50% based on this announcement to 60 cents.
BP's analysts seem to be behind the eight ball.
PHARMACEUTICALS AND BIOTECHNOLOGY
Microba Life Sciences (MAP)
California Dreaming
Distribution agreement with Luminary Health Centers Inc.:MAP has this morning announced that a distribution agreement has been executed with Luminary Health Centers Inc. to distribute a microbiome test powered by Microba’s testing technology to consumers in the United States – particularly in California. The initial 12 month phase of the agreement has a value of USD $458,000 to Microba, with subsequent stages that are likely to provide for potential greater financial commitments subject to agreement between the parties. This agreement gives MAP deeper access into the US market, with Sonic and Genova focussed on the pathology markets, while Luminary have well established consumer-focussed, holistic health clinics. This deal is not dissimilar to MAP’s previous partnership with Midnight Health in Australia, and we consider this an important market for MAP to tap into with its gut health tests - in parallel with the mainstream diagnostic and pathology markets.
MAP has also announced positive preclinical data in an animal model of melanoma.MAP’s microbial therapeutic candidate elicited a significant reduction in tumour volume in mice treated with an immune checkpoint inhibitor (ICI). This early data provides confidence to further investigate a program of work towards enabling a clinical study (or studies) aimed at improving ICI outcomes in oncology patients.
Microba (MAP) released its Q2FY2023 report, highlighting a good financial position,particularly in light of the $17.8m investment in the company by Sonic Healthcare (who acquired a 19.9% stake in Microba and entered into a global commercial partnership spanning 7 major regions). The company reported cash receipts totalling $1.6m representing 43% growth on the pcp, received a $2.6m R&D Tax Incentive from the Government and ended the quarter with $42.0m cash.
Investment view: valuation to $0.60, maintain Buy (Spec.)
The execution of this deal with Luminary has locked in revenue for the next 12 months, appearing in FY23 and FY24 in our updated model. The follow-on from this is an immediate increase to our valuation to $0.60 p/s (previously $0.40 p/s). This represents a 44.5% premium to the current share price. We therefore maintain our Buy (Spec.) recommendation
