Visitect reaches Kenya and India
FY14 trading was up 2.9% over FY13 at £11.6m. Food intolerance was 18% up, but infectious disease fell by 10% and allergy and autoimmune by 5%. The investment case for Omega Diagnostics Group Plc (ODX.LSE) is based on the Visitect CD4 test for HIV patients and the launch with Immunodiagnostic Systems of the automated allergy iSYS. Visitect has completed a 200-patient pilot field study in Kenya and a trial is running in India (60 to date). A smartphone reader is also being tested. Of the allergy iSYS test launch menu of perhaps 40 tests, eight are complete with 25 in various development stages. Normalised PBT is expected to be £1.1m, higher than our £0.7m forecast.
Visitect in field trials
Although no data have been disclosed, Visitect has completed a pilot 200-sample field trial in Kenya. A smartphone reader was also tested. In India, a trial is underway with 60 samples to date. The non-government organisations (NGOs) running these studies have stated that they are going well. More extensive trials are expected over 2014. Visitect detects the threshold level of immune white cells in patients with HIV to establish if they require anti-retroviral therapy.
FY14 initial results and FY15 outlook
Food intolerance sales were up 18% overall, at £5.2m, a gain of £0.8m. However, allergy sales including autoimmune declined by £200k, a 5% fall, and infectious disease declined further to £2.5m, a drop of £260k, a 10% fall. This left Omega with a sales gain of £330k, up 2.9% over FY13. The adjusted PBT rose to c £1.1m, up from our expected £0.7m. We expect higher development cost capitalisation of up to £1.5m. Allergy iSYS is progressing well with eight of the expected 40 test launch menu now completed. There are 25 more tests in various development stages, with at least seven to be started. A late 2014 launch with significant sales from FY15 looks possible. IDS will sell Allergy iSYS where it has direct sales operations, mostly in developed countries. Elsewhere, Omega will sell via distributors.
Valuation: Visitect orders key to FY16 value
The £2m FY15 Visitect sales target remains unchanged pending more information on NGO evaluation results and order timing. Allergy iSYS could do well in FY16, but our expectations for FY15 sales are now more cautious at £0.2m, down from £0.5m. The ratio of Omega’s current market cap to forecast FY15 sales is about 2.4x with a prospective P/E of about 16x. If Visitect sales develop well, with Omega gaining bulk government and NGO orders and the allergy iSYS launch is successful, this value looks reasonable.
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