Brief Overview
iX Biopharma’s FY26 results fell below expectations, with revenue and net loss at 72% and 170% of forecast respectively. The US$40.9mn Wafermine Programme from the US Department of Defense has commenced, with the company recognising S$1.2mn as development services. The analyst expects revenue to triple in FY27e, driven by compounding pharmacy operations, Wafermine sales, and development services.
Investment Positives
The primary investment driver centres on the Wafermine development programme, which is just beginning to gain momentum. Since receiving the Department of Defense award in February, approximately four months of development work have been completed. The analyst expects revenue to climb significantly as more development work for Emergency Use Authorisation (EUA) and Phase 3 trials is undertaken.
The company has secured substantial funding through the US$40.9mn Wafermine Programme, which will finance both Phase 3 and EUA development activities. This programme has already started generating revenue, with S$1.2mn recognised as development services in the current period.
Revenue diversification is expected to strengthen the business model, with three key growth drivers anticipated for FY27e: the compounding pharmacy operations with partner Orion Speciality, Wafermine sales, and continued development services revenue.
The company also benefited from currency movements, with other gains of S$2.1mn resulting from the strengthening of the Australian dollar against the Singapore dollar.
Investment Negatives
Operating expenses were significantly higher than anticipated, presenting a key challenge for the company. The main contributors were a S$2.08mn share performance plan (non-cash) and S$1mn in one-off professional fees related to securing the Department of Defense funding contract. However, excluding these items, operating expenses remained largely stable.
General and administrative expenses increased by 58%, primarily due to the S$2mn performance share plan. Research and development costs also rose by 52% to S$2.5mn.
The transfer of equipment from Australia to the United States resulted in lower medicinal cannabis sales, with approximately S$3mn in lost revenue. Cannabis sales specifically declined by 46% to S$3.5mn, contributing to the overall revenue shortfall.
Outlook
The analyst has incorporated higher upfront costs from US wholesale compounding pharmacy operations and increased performance shares into updated forecasts. Key milestones ahead include the Wafermine EUA submission in 4Q26, EUA approval in 1Q27, EUA production in 2Q27, and Phase 3 trials approval in 2Q27. The US production line is expected to commence in 1Q27, with three additional lines starting in 2Q27.
Recommendation & Target Price
Phillip Securities Research maintains a BUY recommendation with an unchanged DCF SOTP target price of S$1.00.
Frequently Asked Questions
Q: Why did FY26 results fall short of expectations?
A: Revenue and net loss were 72% and 170% of forecast respectively, primarily due to lower medicinal cannabis sales from transferring a machine from Australia to the US, and additional expenses including professional fees and performance share plans that weren't modelled.
Q: What is the Wafermine Programme?
A: It's a US$40.9mn programme funded by the US Department of Defense to finance Phase 3 and EUA development of Wafermine. The company has already recognised S$1.2mn as development services from this programme.
Q: What will drive the expected revenue tripling in FY27e?
A: Three main drivers: compounding pharmacy operations with partner Orion Speciality, Wafermine sales, and development services revenue.
Q: What are the key upcoming milestones?
A: Wafermine EUA submission (4Q26), EUA approval (1Q27), EUA production (2Q27), Phase 3 trials approval (2Q27), and US production line commencement (1Q27) with three additional lines in 2Q27.
Q: Why were operating expenses higher than expected?
A: Due to a S$2.08mn share performance plan (non-cash) and S$1mn one-off professional fees related to securing the DoD funding contract. Excluding these items, operating expenses were largely stable.
Q: How did cannabis sales perform?
A: Cannabis declined 46% to S$3.5mn, with approximately S$3mn in lost medicinal cannabis sales due to transferring a machine from Australia to the US.
Q: What is the analyst's current recommendation?
A: Phillip Securities Research maintains a BUY recommendation with an unchanged DCF SOTP target price of S$1.00.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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