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Oncimmune gains on upbeat FY23 results

16:26, 29th February 2024
Paul Hill
PMH Capital

Turning around businesses can be a challenge even at the best of times. However, when combined with an air pocket in customer demand, as has been the case in the life science sector for the past 2 years, then inevitably the process isn't a quick fix.

That said, autoantibody profiling expert Oncimmune (ONCFollow | ONC has made significant strides since the new management team was appointed only 6 months ago.

Today, the firm released FY23 results - saying it had signed 7 new contracts since the 1st Sept'23, enhanced its sales team, and was targeting FY24 revenues of £3.0m, up 150% LFL vs. £1.2m last year, 75% of which has already "been secured, with the majority of samples received or expected imminently."

Elsewhere, costs are being tightly controlled, with FY'24 overheads anticipated to decline LFL from £5m - combined with c. 70% gross margins for IMMUNOinsights, I suspect ONC should be able to reach EBIT breakeven on turnover of c. £7m.

Clearly, there’s still plenty of work to do though. Not least scaling its IPR rich platform, fine tuning the commercial proposition, and importantly winning more Biopharma contracts.

Here the revised strategy is to:

1.   Increase the TAM by also targeting Contract Research Organisations who are focused on drug discovery, pre-clinical, and patient trial/testing.

2.   Leverage ONC's unique skills and medical science across new areas, such as adverse event prognostics in immuno-oncology therapeutics and companion diagnostics, alongside exploring new indications in Central Nervous System disorders and diabetes.

3.   Expand client work beyond price-per-sample to more strategic partnership models (e.g. royalties), similar to the deal ONC has with Freenome, as well as co-development projects with upfront project and milestone success fees with a pricing model based on the value being delivered by Oncimmune.

Moreover, none of this should involve a great deal of upfront capital.

CEO Martin Gouldstone commenting: "Whilst FY'23 has seen significant changes to the operations & management of Oncimmune, I remain encouraged & optimistic about the business outlook for FY'24 and beyond. During my first 6 months as CEO - I, together with the rest of the senior management team, have carried out a root & branch review of the operations & financials of the business and have formulated a focused strategy to see the Group reach revenues in its ImmunoINSIGHTS business not previously achieved. I have been pleased to see some of the strategy beginning to bear fruit and look forward to being able to report on more positive progress in the coming months."

In terms of numbers, there are presently no published broker forecasts or valuations available. Nonetheless, according to today’s RNS, there should be sufficient funds available for the next 12 months (net debt £2.1m Aug'23).

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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