MGC Pharma could quadruple

Canaccord Genuity Capital Markets has a 4c target price on MGC Pharma (ASX:MXC), compared to the current share price of 1c.

MGC Pharma is a European biotech that specialises in the development of plant-derived medicines, which has recently had some positive announcements.

Last week, the company announced that one of its flagship products ArtemiC, a natural anti-inflammatory and nutritional supplement, had gained the status of over-the-counter (OTC) product in the US by being included in the FDA’s National Drug Code Database (NDC).

Gaining the OTC status allows ArtemiC to be sold without a prescription in conventional American pharmacies, providing the company with a huge opportunity in the biggest pharmaceutical market in the world.

Following the approval, the company’s US partner AMC Pharma wasted no time negotiating shelf space for ArtemiC with some of the largest US pharmacy networks and independent pharmacies.

In addition, AMC has also submitted a purchase order for US$2 million of ArtemiC for immediate production and delivery in two installments over Q3 and Q4.

Looking ahead, Canaccord also sees other tailwinds in MXC including the possibility of generating higher margins.

In 2022, MGC delivered a US$1m order of ArtemiC to AMC, but it was fulfilled by using its facility in Slovenia which had limited economy of scale.

The company’s new facility in Malta however is expected to receive the EU-GMP certification in the first half of this year, and Canaccord says it’s therefore plausible to assume that the latest order from AMC could have significantly higher margins.

In addition, Canaccord believes that MGC Pharma could integrate both pharma and tech in the clinical trial process through its recent 40% acquisition of ZAM App.

ZAM app is an AI (artificial intelligence) platform for clinical data collection and patient/doctor support.

Earlier this month, MGC announced that it had enrolled the first patient successfully on the ZAM App, and that crucial data would be collected from an observational study monitoring the effects of CannEpil for epilepsy treatment.

“We are updating our forecast to reflect the new improved purchase orders flow, but we’re not making any changes to our target price. We also remain Speculative Buyers,” said the note from Canaccord.


Huge uplift predicted for Mesoblast

Barclay Pearce Capital (BPC) has increased its target price on Mesoblast (ASX:MSB) from $1.44 to $1.72 (versus current share price of $0.92).

Mesoblast is a biotech which engages in the development of the mesenchymal lineage adult stem cell technology platform.

Its medicines target the cardiovascular diseases, spine orthopaedic disorders, oncology and hematology, immune-mediated, and inflammatory diseases.

BCP sees strong tailwinds for Mesoblast, underpinned by the biotech’s solid pipeline.

Earlier this month, the US FDA accepted Mesoblast’s resubmission of its biological licence application for remestemcel-L in the treatment of children with steroid-refractory acute graft versus host disease (SR-aGVHD).

The FDA said it considered the resubmission to be a complete response, and has now set a Prescription Drug User Fee Act (PDUFA) goal date of August 2, 2023.

Other programs in Mesoblast’s pipeline include Rexlemestrocel-L, which has been approved by the FDA for chronic back pain, with the pivotal Stage 3 trial expected to commence mid this year.

Mesoblast has also recently published its DREAM-HF Phase 3 trial results in the peer-reviewed journal for cardiovascular medicine, the Journal of the American College of Cardiology (JACC).

The results of this study in 537 patients showed that Mesoblast’s mesenchymal precursor cell therapy (MPCs; rexlemestrocel-L) strengthened heart function at 12 months, as measured by left ventricular ejection fraction (LVEF).

“We are updating our price target from $1.44 to $1.72 and maintaining our Buy recommendation. The price target is underpinned by our valuation,” said the recent note from BPC.


Can Viva Leisure double?

BPC has meanwhile increased its target share price on Viva Leisure (ASX:VVA) from $1.95 to $2.39 (versus current share price of $1.20), retaining its Buy recommendation.

Viva Leisure operates health clubs in health and leisure industries.

It offers customers with membership options and a range of facilities from big box to boutique fitness. The firm’s brands include Club Lime, Ladies Only, Psyclelife, Aquatics, Hiit Republic, Swim School, Gymmy and Studio.

In the last half results, Viva almost doubled its revenue from $34m in half-year FY22 to $67.4m. Its bottom line NPAT also increased also increased to $4.2m, up $11.4m from a $7.2m loss in HY22.

BPC believes Viva will be able to maximise its free cash flow generation from the scale Viva has built over the past three years.

According to the broker, Viva can also capitalise on its self-funded organic rollout by undertaking more acquisitions. For example, the company will be able to take advantage of the brand recognition of Club Lime as locations increase above 100 centres.

“We are updating our 12-month target price from $1.95 to $2.39, and retaining a Buy recommendation. The price target is underpinned by our valuation,” said the BPC note.

Now read: Once shunned, Viva Leisure and these ASX stocks are making a comeback post-Covid


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