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 notes on June 2019, April 2020, November 2020 and August 2021.
News Releases
Nov. 11 - Reports Results for the Year Ended July 31, 2021
"IBEX had another very good year, with EBITDA reaching a record level. The strong financial performance resulted from near-record revenues and a reduction in expenses, due mainly to the closure of the Iowa production facility. The increase in revenues was driven by strong sales of heparinase-based products.
We were particularly pleased by the strong fourth quarter sales which may be an indicator of a return to more normal purchasing patterns by our customers in the hemostasis diagnostics market segment". - IBEX President & CEO.
Dec. 15 - Reports Results for the First Quarter Ended October 31, 2021
“We are pleased with the continued growth driven by strong sales of heparinase-based products and with the continued strengthening of the Company’s balance sheet. We foresee the trend to continue for the balance of the fiscal year."
- IBEX President & CEO.
Dec. 23 - Announces Stock Option Grant to Directors and Employees: a total of 0.45M common shares (at an exercise price of $0.48 cents) to its directors and an officer of the Company. These options will expire on December 22, 2031.
Jan. 21 - Livestream Annual Meeting on February 16, 2022.
Feb. 17 - Announces Results of Annual Meeting:
Mar. 16 -Reports Results for the Second Quarter and the Six Months Ended January 31, 2022:
“We are pleased with the continued growth driven by strong sales of heparinase-based products and with the continued strengthening of the Company’s balance sheet. We foresee the trend to continue for the balance of the fiscal year."
- IBEX President & CEO.
Summary
During the period, IBEX's (IBT.V) valuation fluctuated between $0.265 cents and $0.60 cents. The financial performance in FY 20-21 and YTD FY 21-22 are responsible for the recent ascend in the stock price.
Despite flat FY20-21 revenues from FY19-20, IBEX ended FY20-21 with 20% more Cash and Equivalent ($4.3M). In addition, the revenue performance in the last two quarters (Q1 21-22, Q2 21-22) are a departure from historical results!
Hence, YTD revenues for FY21-22 are 46% ($3.47M) ahead of last year (FY 20-21, $2.47M). More importantly, Cash and Equivalent at the end of Q2 FY21-22 is at $6.2M which is 40% more than Q4 20-21. In the Q2 FY 21-22 earnings release:
“We are pleased with the continued growth driven by strong sales of heparinase-based products and with the continued strengthening of the Company’s balance sheet. We foresee the trend to continue for the balance of the fiscal year."
- IBEX President & CEO.
In the corresponding MD&A, earning performance was attributed: "... to a combination of COVID driven increases in the use of heparinase I, and changes in quarterly purchasing patterns on the part of several of our major customers."
Given the size of the revenue increase, this explanation is at best elusive. For instance, the cited rise in heparinase demand for usage for Covid-19 related conditions could be further quantified in relation to its baseline historical revenues in tandem with the "changes in purchasing pattern" of its major customer.
Going back to previous MD&A, IBEX mentioned the resumptions of cardiovascular surgeries as a possible tailwind.
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
Perhaps that an uptake in cardiovascular surgeries is also responsible for the recent increase in revenue? Hence, IBEX could provide more details quantifying these segments and their proportion of the incremental revenues.
In short
Year to date, IBEX (IBT.V) delivered strong revenues and continues to build its cash position (>$6M) with no debt.
IBT.V reports working on a number of new heparinase containing clinical devices with the likes of Haemonetics, Abbott Point of Care, TEM, Medtronics and Siemens. These project(s) may drive additional revenue in Fiscal 2022.
With diamine oxidase (DiaMaze), IBEX reported that the project is progressing but still in development phase.
DiaMaze is an enzyme targeted to persons suffering from histamine intolerance and will be marketed as a nutraceutical.
Market introduction is not anticipated prior 2023. Additionaly, IBEX cautioned that a number of suppliers for which the project relies on have been slower in providing deliverable due to COVID-19 constraints.
Despite an excellent performance, the extent of the ongoing demand surge of heparinase is unknown. Thus far, for "the balance of the fiscal year" is cited. As for DiaMaze, a presentation (22;00) estimated $3-5M in revenue annually.
Questions now are: i) how long will this surge in heparinase demand last? And ii) how much will new heparinase based clinical devices contribute to the business going forward in addition to DiaMaze ($3-5M)? In this context, how IBEX deploy its growing capital going forward will be key, especially with regards to M&A and/or partnership activities.
At this point, valuation seems to be limited by the absence of revenue guidance and a clear investor presentation.
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