Soft H1, but on track to achieve mid-term targets

Ikonisys reported soft H1 21 results. However, the firm has recently hired a new sales director in the US, who should help in expediting commercialisation plans. Add on top the aggressive vaccination rate in the US and intact potential for oncology markets, our positive stock recommendation is reinforced.

Ikonisys released soft H1 21 results. Sales were down 24% to €239k due to a lower number of tests due to COVID-19. H1 sales largely comprised maintenance contracts with respect to the first-generation instrument. Although the group reported a €109k operating loss (vs. €153k profit in H1 20), net losses narrowed to €113k (vs. €764k in H1 20) – with the IPO-driven restructuring resulting in negligible interest expenses (€4k vs. €917k in H1 20).

Ikonisys will publish its next set of results on 22 April 2022.

On track to achieve mid-term targets

Despite soft half-year results, the firm is now tapping the US markets at a faster pace, with the recent hiring of a new sales director in the region. According to management, the firm is on track with respect to the commercialisation of Ikoniscope20 (lynchpin offering) in the US and Europe by building a stronger sales force and enhancing its relationship/partnership with existing and potential clinical, academic and private laboratories. Remember, the Ikoniscope20 platform is capable of detecting rare cells with high reliability and, given its strong technological features, it positions the firm to be able to tap the promising market of circulating tumour cells analysis through liquid biopsy. Interestingly, the firm’s R&D efforts towards the integration of advanced AI technologies in the platform, which is expected to hit the markets in FY23, could be an added advantage.

Recovery in MedTechs

With the gradually reversing pandemic effect, recently, even Elekta and Philips have witnessed a rebound in their respective order books. Considering the aggressive vaccination in the US (c.58% of US population are already fully-vaccinated) – which is also Ikonisys’ major near-term growth catalyst, business should gather momentum in the following quarters. Fortunately, the expected rebound in the oncology/cancer markets – also reflecting in the recent revival of share price sentiment for oncology-heavy big pharmas – is an added shot in the arm. Although, near-term issues such as the shortage of electronic components and increased shipping disruption could a pose a threat.

Given that the commercial uptick of Ikoniscope20 is yet to gather momentum, our assumption of medium-term net losses should be maintained. However, considering the sacrosanct potential of focus markets and Ikonisys gradually managing to get its commercialisation strategy on track, the stock recommendation should be maintained.

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