Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they're material to our investing thesis.
What: Shares of diversified healthcare business ADEMEDUS FPO (ASX: AHZ) dropped more than 10% to 11 cents today. This is because it announced completion of a capital raising to local and international funds and sophisticated investors for $8 million at 10 cents per share. Retail shareholders on the register at May 9 have the opportunity to invest at the same price via a Share Purchase Plan.
So what: The company is raising funds for three main activities.
- To increase its global sales force charged with growing sales of its key, CardioCel, heart defect product. With the product now being sold in the U.S and European Union the company wants to accelerate the rollout and marketing effort to grow revenues.
- To fund development of additional applications for CardioCel in the repair and reconstruction of cardiovascular defects and diseases.
- To fund Phase II studies into a therapeutic vaccine for treatment of the Herpes Simplex Virus (HSV-2) and Human Papillomavirus (HPV).
Now what: Management remains optimistic about the sales potential of its CardioCel product and chief operating officer, Dr. Julian Chick said: "Currently we are in 8 centres in Europe and have the initial sales in the U.S., with a goal of being in 15 key centres within 12 months. This will provide a platform to expand into other cardiovascular centres globally".
The next 12 to 36 months look exciting for Admedus investors with potential for its CardioCel product to take-off and generate some serious revenues. The therapeutic vaccines remain in the early stages, but dangle an additional carrot to long-term investors, who should look to purchase as close as possible to the 10 cent placement price.
Companies like Admedus are high risk in nature and should only comprise a very small part of your portfolio. Those looking for safer growth potential should consider established healthcare businesses like CSL Limited (ASX: CSL) or Cochlear Limited (ASX: COH).
