proactive investors

Allied Healthcare Group (ASX: AHZ) has delivered a strong performance across the group during financial year 2013, with revenue climbing 15% to $7.4 million.

The loss for the full year across the consolidated group was $2.4M, down from $10M the previous year.

During the year, the company raised $4.6 million through a placement and shareholder purchase plan.

The is is highlighted by the recent marketing approval in Europe for the company’s lead regenerative tissue product CardioCel® for the repair and treatment of heart defects should see increased revenue through its sales division of CardioCel® in the coming financial year.


Regenerative Medicine Division

AHZ said that the past year for the regenerative medicine division was exceptional as the team achieved a number of meaningful milestones, culminating in the recent announcement of European approval for the groups lead regenerative tissue product CardioCel®. CardioCel® is a regenerative cardiovascular tissue patch used to treat and repair cardiovascular defects, including treating congenital heart disease and reconstructing heart valves.

Other highlights for the past year include:

- Approvals at key centres for early access to CardioCel® in Australia for cardiac surgeons under the Authorised Prescriber Scheme and Investigator Initiated Studies.

- Over the past year, 6 surgeons in Australia have been approved for early access to CardioCel® for the repair and treatment of congenital heart disease. This is strong validation for both the importance of CardioCel® in the future treatment of congenital heart disease and other cardiac defects and the benefits that CardioCel® offers surgeons in treating these defects.

- During the year, the Company also announced positive results in the comparative study with ADAPT® prepared tissue in pelvic floor reconstructions and hernia repair. This data was important as it showed that ADAPT® prepared tissue is superior to existing products and has the strength equal to that of synthetic materials and shows the ability for Allied to grow a portfolio of regenerative tissue products from this platform technology.

- As recently announced, Allied’s regenerative medicine division was awarded a $1.9M grant from Commercialisation Australia to prepare and launch CardioCel® into the global markets. This award and project has been supported with assistance from the Australian Government through Commercialisation Australia.

This grant is further validation of the quality of the program as well as the importance that CardioCel® offers patients and the late stage of development of the product.

Therefore, the past 12 months for the regenerative medicine division has been very productive as the Company moves towards marketing approvals of the first regenerative product CardioCel® and building out the portfolio of regenerative tissue products.

Coridon investment


Over the past 12 months, Allied Healthcare has increased its investment into its vaccines subsidiary Coridon, the company created to hold Professor Ian Frazer’s DNA vaccine intellectual property and technology. At the end of the year, Allied owned a 50.1% stake in these programs.

Next Generation Vaccines

The activities with the DNA vaccine team remain focused on infectious diseases (HSV vaccine) and oncology programs (HPV vaccine).

During the year, pre-clinical results for the HPV therapy showed that it prevented HPV infection and related cancer disease progression; and getting the HSV-2 program into the first clinical trial.

The interim results for the Phase 1 study are due at the end of the 2013.

It is undertaking additional pre-clinical studies with the HPV program and the Herpes program receives interim clinical results.


Analysis

Even with the share price of AHZ quadrupling since the start of 2013, Proactive Investors forecasts that the company's stock will get another boost on the back of the strong financial performance during FY13.

With the interim results for the Phase 1 study due at the end of the 2013 provides a strong catalyst for futher share price growth.

Proactive Investors identified the potential of AHZ close to a year ago, and in November 2012 published: "The current share price of $0.025 appears to significantly undervalue the company given growth from CardioCel® and any breakthrough from Coridon with its vaccines."

In April 2013, Proactive Investors said it believes Allied’s current market cap. of $31 million against a share price of A$0.03 undervalues the company based on meeting milestones over the next 12 months.