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Admedus Receives A$0.22 Price Target From Morgans

Admedus (ASX:AHZ) has received a A$0.22 price target from Morgans, which is more than double the last traded price of A$0.088.

The following is an extract from the report.

Heart of the matter

AHZ is building a diversified healthcare company including; sales and distribution, regenerative medicines, biomanufacturing and vaccines.

The 1FY15 net loss was higher than our forecast but in line with recently released quarterly cashflow reports.

Catalysts include updates on growing CardioCel® sales and progress on the vaccine programs.

Positive newsflow for CardioCel®

CardioCel®, a prosthetic heart tissue used during surgery for patients with Congenital Heart Disease (NYSE:CHD).

Unlike typical prosthetic tissues which encounter problems lie cytotoxicity, calcification, and tissue degeneration, CardioCel® eliminates these issues.

As a result of these advantages, CardioCel® has increased in usage from one centre, to 45 centres globally.

Over 225 Australian patients have been treated via access under the Authorised Prescriber Scheme. More importantly, last year CardioCel® received the European CE mark approval and 510(NYSE:K) clearance with the FDA as well as a licensing approval in Canada.

The first patients to receive CardioCel® treatment six years ago show no signs of calcification to date.

Continuing Immunotherapy Program

AHZ is currently undertaking two immunotherapy trials. The first of the trials, a therapeutic vaccine for Herpes Simplex Virus (HSV-2) showed promising results following a phase I trial in 2014 hitting the primary endpoint showing that the treatment is safe.

AHZ aims to begin a phase II trial in 2015. The second trial, a therapeutic treatment for HPV is currently progressing towards a phase Ib trial. This study is undertaken in collaboration with Prof Ian Frazer, and we expect to hear updates on these trials over the coming quarters.

Investment outlook

AHZ posted a 1HFY15 result of a net loss of A$11.4m which was higher than our forecast of $4.1m, and largely attributable to increasing costs associated with the launch of CardioCel® and an increasing ownership of the vaccine business which now sees us consolidating the trial and op costs.

We have increased our FY15 loss to better reflect the current cost base and reduced our FY16 and FY17 forecasts.

As a result our price target has decreased slightly to $0.22 (from A$0.23). Catalysts include updates on the vaccine trial and CardioCel® growth.

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