Higher sales on stronger financial footing

Cellmid marks higher sales on stronger financial footing
Wednesday, October 28, 2015 by Proactive Investors

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Cellmid has reported large increases in cash holdings and sales

Cellmid (ASX:CDY) is reporting record cash receipts from customers of over $1 million for 1Q2016. Compared with the same period last year receipts have been up 320% ($244K in 1Q2015).

Strong sales have also exceeded internal projections reaching $713K for the quarter (up from $180K same period last year). This is especially pleasing as the pharmacy distribution, a precursor to sales, is rapidly growing towards the target 2,000 stores in Australia.

The biotech company has also reported large increases in cash holdings and sales as distribution, marketing and advertising plans for the company’s évolis hair growth products advance.

Cellmid reported cash at the end of the September quarter of A$4.4 million, representing about a 175% increase over cash and cash equivalents at the end of June of $1.6 million.

This improvement followed a $4 million capital raising early in the quarter, which allowed a commencement of the marketing and advertising plan, including the deployment of sales teams to medical professionals and pharmacies as well as an advertising program with multiple channels.

The cash raising was achieved via an oversubscribed placement of shares priced at $0.03 and laid the foundation for FY2016 sales to significantly exceed the previous year.

Shares in Cellmid last closed at $0.032, representing about a 40% increase since June.


Consumer health division

During 1Q2016 Cellmid started to implement its marketing and advertising plan. Distribution and sales are ahead of internal targets set out during 4Q2015 as follows:

- Pharmacy distribution was planned to reach 1,000 by the end of C2015. This number currently stands at 982 active stores and the company is well on track to outperform. As the number of stockists is increasing, so are the expected sales with the majority of the Australian revenue likely to flow from the last two quarters of the 2016 financial year.

- Stocking of the extended 6 SKU évolis® product range is on track with approximately 300 stores active and another 200 expected to be ordering by the end of C2015.

- Sales visits to general practitioners by the 18 member contract team continued during the quarter with close to 6,000 new individual calls. The positive feedback from doctors, pharmacies, and the subsequent sell-through, continued during the quarter.

- A pharmacy sales team started in mid-October to coincide with the advertising campaign. This is expected to result in not only new pharmacy doors opening but also thorough coverage of the existing stores. One of the key objectives of the team is to ensure that stock levels are adequate for all products on shelves.

- National advertising campaign commenced in September as planned and early indicators show that both brand awareness and sales are increasing. For the first time évolis® products have measurable market share amongst topical hair loss treatments.

- Product development of the consolidated évolis® branded salon range has been completed during the quarter with 13 SKU’s ready for manufacture and launch in 4Q2016. This is expected to contribute to the FY2016 revenue.

Cellmid’s Japanese sales are above target for the quarter and reflect the substantially improved sales channels. Andeprong® Scientist is yet to be launched by Natural Garden, while QVC sales continue to outperform expectations with some major sales timeslots in the coming months.


Midkiine division

Cellmid is also pursuing a first-in-class antibodies program, including development of the drug CAB102, which formal tests have demonstrated to be a groundbreaking method of targeting midkine. Midkine is a protein that is emerging as an important new target for drug development in the treatment of a number of diseases.

Earlier this year, the company entered into a research and development loan agreement to receive A$1 million for the program.

Cellmid continued to work on all of its midkine portfolio related initiatives during the September quarter as follows:

- The company commenced its preclinical collaboration with Complutense University of Madrid, Spain to explore therapeutic opportunities for CAB102, as co-therapy with existing drugs, in glioblastoma.

- The appointment of Dr Bryce Vissel as Chairman of the Scientific Advisory Board triggered fresh activities around the midkine portfolio, including opening negotiations for new collaborations.

- Assay development for the planned human clinical studies has continued during the quarter following the results of the single dose toxicity studies.

- The company’s CAB102 antibody is currently in stability testing prior to multidose toxicity studies.

- Midkine diagnostic collaborations continue to deliver new data in cancer and kidney disease supporting existing collaborations and new license opportunities.


Analysis

A dramatic 320% year-on-year increase in sales receipts and strong investor support in the form of the oversubscribed $4 million placement have signalled important progress in Cellmid’s business development strategy in recent weeks.

The company’s évolis® products demonstrated significant potential during the past quarter in acquiring a measurable market share amongst topical hair loss treatments for the first time.

Sales in FY2016 are expected to grow further given that in Australia, the company has yet to ship products to 70% of its planned distribution while its GP sales force only started in May.

Cellmid is the first and still the only company globally with an FGF5 inhibitor hair loss product. FGF5 inhibition represents the only novel science in topical hair loss treatments for 30 years.

The midkine business has also showed increased promise, with new momentum on the back of the appointment of Dr Bryce Vissel as Chairman of the Scientific Advisory Board.

Vissel’s outstanding scientific and clinical experience has allowed for important progress with some of the company’s collaborations, including a recent brain cancer collaboration with Complutense University.

Cellmid holds the largest and most comprehensive portfolio of intellectual property related to midkine and midkine antagonists globally.