Admedus’s ADAPT products gaining market traction.

Australian small-cap healthcare stock Admedus now has a calendar year reporting season, and on the 28th February 2018 it accordingly announced its financial results for the second half of 2017, covering the period 30 June to 31 December 2017.

Admedus has gained significant kudos for funding through its Immunotherapy Division the highly acclaimed continuing research of Professor Ian Frazer, leader of the team which produced the cervical cancer vaccine Gardasil. His ambitious project  is the development of therapeutic vaccines based on boosting the cellular immunity of the body, to eradicate both Herpes Simplex Virus (HSV) II responsible for genital herpes, and the Human Papilloma Virus (HPV), the causative agent of cervical and some other cancers.

His work at the University of Queensland however, is unlikely to reward shareholders in the short-term, but if successful, and I understand preliminary work is promising, the eventual benefits to society could be enormous. It might prove to be a break-through in the management of intractable virus infections, and the treatment of some cancers.

Admedus has a buoyant medical infusion business which contributed $7.5 million in revenue for the six month period, up 41% on the previous corresponding period (pcp), but it is to the performance of its core enterprise, the manufacture and marketing of an increasing range of medical implant products based on its patented ADAPT technology, that shareholders must look for growth in profitability.

The advantage of Admedus’s ADAPT products from xenograft materials such as  bovine, porcine and kangaroo tissues, lies in their ability to be custom made for a wide-range of cardio-vascular defects, and in retaining strength, inertness and durability after implantation. This is largely achieved by creating a tissue scaffold into which the recipients own tissue cells can grow, thus eliminating the foreign body responses, calcification, and mechanical failure which may result from other implant materials.

Adapt products have the potential to claim market share from existing cardio-vascular implants, whilst additional sales growth is likely to come as the product range expands, and more countries grant approval for their use.

In the six month report period the revenue from Adapt product sales was $3.6 million, predominantly from Europe and from Emerging Market regions. The North American sales force has been restructured in 2017, and this region could become a strong driver of revenue growth in 2018.

The chart below, courtesy of Incredible Charts, is a daily chart of price and volume action for Admedus over the past 3 months. It shows a lukewarm immediate response by the market to the financial results released on 28th February 2018.

AHZ 2h 2017 results

At present the share-price of Admedus is hovering around its historic low levels. Readers who are impressed by its growth potential are urged to first seek advice from their stock-broker or financial adviser.

I acknowledge that I have an over-weight position in Admedus shares, taken as a result of my past medical experiences.

Categories: Company review

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