A Make or Break Year for Allied Healthcare Group

A simplified diagram of HSV replication

A simplified diagram of HSV replication (Photo credit: Wikipedia)

Could be about to break-out from its trading range

Could be about to break-out from its trading range

Allied Healthcare Group is the stock chosen for chart analysis this week-end, as one of the stocks in my share-portfolio.

It came to my attention a few weeks ago as a minnow biotech stock with potential to transform over the next few years into a significant player in the Healthcare Sector.

A brief outline

Company floated on ASX in June 2011 as merger between unlisted public group Allied Medical Limited, and the listed biotech stock bioMD

There are three divisions:

  • A sales and marketing division providing medical devices and products for infusion, and cardiology. Annual revenue of about $7 million per annum
  • Tissue engineering technology using the patented ADAPT process on bovine, porcine and kangaroo tissues (pericardium) to produce a product CardioCel for implantation in cardiac surgery.
  • A R&D division, Coridon, to develop revolutionary new vaccines to boost cell mediated immunity against the Human Papilloma Virus (HPV) and the Herpes Simplex Virus (HSV). This work is being undertaken by Professor Ian Frazer, the developer of the Gardasil vaccine to prevent cervical cancer.

Some milestone achievements so far in 2013

  • 20/1/13 – CardioCel shown to be effective for hernia repair and pelvic floor reconstruction
  • 28/01/13 – $4.6m SPP capital raising completed to launch CardioCel. New shares issued at 2c/share.
  • 04/02/13 – $200,000 invested in Coridon. Equity position is 46.8% ownership.
  • 06/02/13 – Research with the CSIRO shows CardioCel to provide a superior medium for the growth of stem cells
  • 13/02/13 – Initial step achieved towards obtaining CE Mark approval to market CardioCel in Europe, with ISO 13485 certification.

Half yearly report: (21/02/13)

  • Increased revenue of $3.7 m from ordinary activities – up 12.9%
  • Loss from ordinary activities after tax $2.222 million – up 15.9% (related to approval for CardioCel)
  • Cash at end of period $1.99 m
  • The Net Tangible Asset Backing for the shares declined from 87 to 81 c/s due to share dilution from the swap merger of the two companies, not decline in the assets.

Further anticipated milestones this year

CardioCel is likely to gain approval for clinical use:

  • In Europe with CE Mark approval
  • In Australia via the Authorised Prescriber Scheme.
  • In the US, a FDA 510K marketing approval submission in 2H 2013

Further positive results anticipated in pre-clinical trials of the DNA vaccine against Human Papilloma Virus (HPV) for cervical cancer.

2H 2013 is targeted for Phase 1 study of the DNA vaccine for Herpes simplex Virus 2 in a project with the University of Washington.

Professor Ian Frazer has also been associated with a project to develop a DNA vaccine against the Epstein Barr Virus together with the University of Ohio.

Some Technical Analysis considerations (weekly chart)

  • High of $0.095 on Feb 11 2011
  • Low of $0.015 the week of 20/07/12
  • In a trading range since August 2012 between 21 and 26 cents.
  • Tentative break-out week of Feb 15 2013 to high of 29 c

Possible targets for the share-price this year

Technical analysis is less reliable than usual as a predictive tool on speculative shares.

The catalyst for price movement in this sector is the flow of news about the company.

However since there has been an extended decline in the share price as noted above, the Fibonacci retracement levels can be used as targets to follow price recovery in the coming months.

  • The 38.2% retracement level following a break-out is $0.0456.
  • The  50% retracement level is at $0.055.

With the share-price wavering at only 2.6c/s, this year could well prove to be a make or break year for the company.

Disclaimer

This post is to provide background information only about this stock, and should not be relied on in making investment decisions. See Disclaimer above.

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Categories: Chart Analyses, Health and well-being, Trading opinion

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