IBEX Technologies Inc. (IBT.V) manufactures and market enzymes for biomedical use internationally. Clients include manufacturers of medical devices, quality control labs and academic research institutions.
The company offers high purity enzymes for in-vitro diagnostics and ELISA kits for osteoarthritis research. In addition, IBT.V also provides lyophilization services, custom fermentation services, and has a few patents.
Coverage was initiated on November 2018 with a note June 2019 April 2020 and November 2020. Below is an update.
News Releases
Dec. 9 - Reports Results for the First Quarter Ended October 31, 2020
“Looking forward, we expect the full year fiscal sales to be somewhat lower than last year, and consequently we anticipate that Fiscal 2021 EBITDA will not reach the same level as FY2020”. - IBT.V's CEO.
We do not foresee Fiscal 2021 to be as profitable as Fiscal 2020 as customers who may have advanced purchases in Fiscal 2020 to protect against supply-chain interruptions may reduce some of their inventory in our Fiscal 2021.
Mar. 17 - Report Results for the Second Quarter and the Six Months Ended January 31, 2021
“We are pleased that sales increased versus the previous quarter and vs. same quarter year ago, however we believe that much of this traces to COVID-19 related changes in purchasing patterns,” - IBEX President & CEO.
Looking forward, we expect some softening in revenues over the next few quarters as customers adjust inventories and thus full fiscal year sales may be lower than last year.
“We are also pleased to report that we have advanced our diamine oxidase (DiaMaze®) research project into development. DiaMaze® will be marketed as a nutraceutical for persons suffering from histamine intolerance." - IBT.V's CEO.
June 17 - Report Results for the Third Quarter and the Nine Months Ended April 30, 2021
"We expect further softening in revenues next quarter as customers adjust inventories and thus full fiscal year sales are likely to be lower than last year." - IBT.V's CEO.
June 28 - Appoints Christine Charette to Board of Directors: Managing Partner & Founder of Scienta Advisors and Investments; she is on the Board of GlycoNet, where she serves as Chair of the Finance and Audit Committee and as a member of the Commercialization Committee. She is also on the Board of NanoMedicines Innovation Network.
Summary
During the period, IBT.V valuation climbed to a 52 week high of $0.41 cents then returned to $0.30 cents of late.
FY 20-21 earnings to date explains this movement. In Q1 and Q2 20-21, IBT.V performed significantly better than corresponding quarters in FY 19-20. However, Q3 20-21 marked a shift with lower revenues and net earnings YOY.
However, IBT.V's had communicated the expectations that FY 20-21 earnings would be lower since Q1.
We do not foresee Fiscal 2021 to be as profitable as Fiscal 2020 as customers who may have advanced purchases in Fiscal 2020 to protect against supply-chain interruptions may reduce some of their inventory in our Fiscal 2021.
Another factor cited by IBT.V in the MD&A as a factor on revenue is the resumptions of cardiovascular surgeries.
A further uncertainty is that there has been a significant postponement of cardiovascular surgeries during calendar 2020 and into 2021 and it is not clear when, or if, many of those who postponed surgery will in fact get treated. A large portion of IBEX sales derive from tests used during or after cardiovascular surgery
Nonetheless, comparing FY 20-21 YTD (9 months) with FY 19-20 shows that IBT.V is still slightly ahead in revenue and net earnings. Now given the recent increase in the delta variant, will this eventually interfere with IBT.V's guidance?
A recent study claimed that Covid-19 has led to more patient death and fewer heart surgeries:
A “perfect” inverse relationship existed between the number of COVID cases in a region and the volume of adult cardiac surgery—as the COVID cases surged, heart procedures substantially decreased.
A limitation of the study is the timeline (ended June 2020) but a key insight addressed the idea of "pent up" demand:
Vivek Rao, MD (University of Toronto, Canada), said he performed a similar analysis in Ontario, Canada, that observed similar patterns. “While we all expected a flood of patients to return as we returned to normal activity in the fall of 2020, this did not occur,” he said. “In fact, right through to November 2020, we never quite achieved our prepandemic volume. Which begs the question: what happened to those hundreds if not thousands of patients that didn't seek cardiac surgery during the height of the first wave of the pandemic? The sad fact is many of those simply died while waiting hospital care.”
Hence, it may be that cardiovascular surgeries may not resume as anticipated and that the progression of the delta variant may drive more of the demand for IBEX.V's product in the near future. Indeed, its hard to tell!
Otherwise, IBT.V continues to work on a number of new heparinase containing clinical devices with the likes of Haemonetics, Abbott Point of Care, TEM, Medtronics and Siemens. However, no timeline or specific revenue expectations have been cited for those. Similarly, the progression of the diamine oxidase (DiaMaze®) research project into the development phase is still early as the market introduction is not anticipated prior 2023 (MD&A).
Note that the working capital of the company continues to increase ($4.21M). This along with the recent introduction of a new board member (Christine Charette) may signal that IBT.V could become active with Mergers & Acquisitions, or at least may have become a more attractive target.
Biopharma and medical devices chalked up 201 deals in the first half of 2021, double the M&A transactions seen in life sciences during the same period a year ago, PwC found. The value of those deals jumped 410% over the same period in 2020 to $123.3 billion, leading PwC to predict that M&A would continue growing in the second half. - FiercePharma
In our last note we noted that IBT.V could be at an inflection point... Perhaps there is still more to come.
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