By Jason Fittler
ACL has developed a propriety technology for large scale and cost effective synthesis of carbohydrates. They use this product in major surgery to thin the blood.
At present they are currently waiting for FDA approval for the product. This was due out before Christmas but like any new medical product the timing of FDA approval is always variable.
ACL is confident of receiving approval to the extent that they already have in place a marketing and distribution program which will begin immediately once the product is approved.
ACL recently completed an A$15.5m rights issue, which has removed any funding concerns.
The company’s underlying monthly burn rate is approximately A$500,000 per month. Our F valuation has increased to A$0.98 (from A$0.89). We have set our price target at the same level as our valuation of A$0.98 (was A$0.89).
The downside risk to our target price relates to the timing of the FDA approval for fondaparinux.
Like all small medical research companies this news will re-rate the company and we can expect to see the price move, we have already seen the price start to push up in expectation of the news.
This is a speculative buy for those who have the appetite for risk.
We have seen investors successfully trade other companies like this such as Chemgenex in 2009, if you are looking for a quick trade take a look at ACL.
PS. For more information on Alchemia (ACL) please call us on 07 4771 4577.