RE: Broker note29 Aug 2019 13:53
Hemogenyx operates in an area of intense focus for industry. Therefore, we compiled a peer group of ex-UK development-stage companies which operate within similar treatment areas to Hemogenyx (i.e. treatment of blood cancers or alternate therapies for bone marrow transplants). The median-market capitalisation of the peer-group is £129.1m, over 10-fold higher than that of Hemogenyx (Table 1).
We then compared Hemogenyx to several AIM or LSE standard-listed drug developers at a preclinical stage (Table 2). As is demonstrated, Hemogenyx’s current market capitalisation is half that of the peer-group median of c.£17.2m. Given that the Company has multiple assets, each with collaboration agreements, we believe that this price discrepancy is unjustified and that Hemogenyx shares consequently have considerable upside potential.
Finally, we note that the two investments by Orgenesis into the Immugenyx and Hemogenyx-Cell subsidiaries are on pre-money valuations of US$8m and US$12m respectively. The combined value of these two subsidiaries is c.20% higher than the current market capitalisation of Hemogenyx. Note this US$20m valuation does not include the CDX Ab platform, the Group’s leading technology, over which Hemogenyx is in advanced discussions with a potential partner.
We feel these points highlight the undervalued nature of this stock.