ZNT listed in December 2016 and has delivered a shareholder return of 19% in its first year. Additional highlights from 2017 include the completion of 2 major acquisitions which have provided the company with a national footprint of allied healthcare providers. In addition the company recently completed a $30m capital raise to provide funding for a series of bolt on acquisitions across allied health, general practice and home care. We expect these acquisitions will add $3m to $4m in additional EBITDA on a full year pro rata basis.

The key aspects of the business model which differentiate Zenitas from healthcare role ups of the past are:     

  • the large components of self pay – particularly in allied health which is generally not covered by Medicare; 
  • the absence of key man risk – the business does not employ medical specialists upon whom the entire practice revenue relies; and 
  • the company allows allied health care professionals to retain a meaningful equity stake in the business, effectively providing important cash incentives for founders.

In FY18 we anticipate EPS growth (before the impact of the previously mentioned acquisitions) of 17%. ZNT is currently trading on a PE ratio of ~14x (based on the share price of $1.18).

Speculative Buy, PT $1.52  


Viralytics (VLA)

Viralytics remains an outstanding prospect in the field of immunotherapy for the treatment of various cancers.  

The key clinical highlights from 2017 included:

  • First results from the keynote 200 trial which showed strong recruitment in both lung and bladder cancer patients.  64 of 80 patients are now recruited. Of the patients to reach the first evaluation point:
  • 5 of 6 bladder patients have shown responses;
  • 3 of 6 non small cell lung cancer patients have responded including one patient with a near complete response.

Success in the keynote 200 trial would transform the company from being merely able to address late stage melanoma into a vastly different proposition. Pending the results of this trial, Cavatak may potentially be combined with checkpoint inhibitors to treat a vastly expanded group of cancers and therefore increasing its potential value.

Investigators will be watching for this key data as results emerge during the course of 2018. Cavatak has achieved outstanding results in late stage melanoma patients who have shown long duration of response that are suggestive of an improvement in overall survival. Should these results be repeated in the keynote 200 trial, the likelihood of a substantial offer for VLA increases significantly. 

VLA remains well capitalised with cash of ~$30m and an exceptionally supportive shareholder base amongst US based institutions as well as local institutional investors.

Speculative Buy


Please sign in to comment on this wire.