Date of inclusion: 16 April 2021
Share price on inclusion in Marc & Stuart’s Top Picks: $2.55
52-week range: A$1.16 / A$3.45
Risk Level: High


The gold standard in diagnostic functional lung imaging technology

Cyclopharm is a supplier of radiopharmaceuticals, that is, radioisotopes used in medical diagnosis. Its core product is Technegas, which is an ultra-fine dispersion of Technetium-labelled carbon. Technegas is inhaled by a patient to allow easy diagnosis of pulmonary embolisms (blood clots in the lungs). The big advantage of the product is a much lower radiation dose and fewer breaths compared to other products. Technegas is already for sale in 60 countries, including China, Russia and the EU. Cyclopharm earned A$14.5m in revenue in FY20, almost exclusively from Technegas, although the loss before tax was $5.8m because of the investment in US clinical development of the product.

Awaiting FDA approval

At the moment the only major healthcare market in which Technegas is not approved is the US market. However, Cyclopharm has filed for FDA approval and the Agency plans to complete the full review by 26 June 2022. Originally, the approval was expected to be granted by 26 June 2021, but the FDA provided Cyclopharm an exact list of items and recommendations that need to be addressed over the next 12-months. Management expects this process to take nine months. Cyclopharm expects that US approval could potentially quadruple its existing Technegas business, since America has half the world’s nuclear medicine departments.

The market opportunity is huge

Around the world some 3 million pulmonary embolisms are identified every year and 30% of these embolisms are fatal if left untreated. This makes Technegas a vital part of healthcare globally. Approximately 1,600 Technegas generators have been sold globally since the product first became available in 1986. The size of the US market alone is worth USD180m.

Cyclopharma is cashed up.

The company raised $30m in January 2021 at $2.60 per share. These funds will support a strong US launch once FDA approval is obtained.

Key risks:

  • A delay in US FDA approval of Technegas.
  • Delays in US sales due to Covid-19.


Disclosure: Stocks Down Under staff and/or director(s) own Cyclopharm shares.


Update 28 June 2021: FDA provides CRL to Cyclopharm


What happened to Cyclopharm on Monday?

We are big fans of Cyclopharm. The company produces Technegas, an ultra-fine dispersion of a radioactive carbon used to image the functioning of a patient’s lungs. The United States FDA had previously announced it was set to provide a Complete Response Letter (CRL) to Cyclopharm on its application for Technegas’ use in the United States. Due to the fact that Technegas had extremely strong support among radiologists in the US and was approved in over 60 countries already, we thought it was highly likely that the FDA would approve its use.

However, the CRL provided to Cyclopharm on 26 June 2021 stated “The USFDA has determined it is unable to approve the NDA for Technegas in its present form and has provided a definitive list of items and recommendations for outstanding elements to be addressed within a 12-month period.”

The market sold off CYC, which presents a big buying opportunity

This is obviously extremely disappointing news and the market reacted by selling off the stock 36.5% on Monday. However, we think this is a sharp overreaction and presents a strong buying opportunity. We believe Cyclopharm has the best product on the market and we would remind our readers that the FDA hasn’t declined the New Drug Application. Instead, they gave Cyclopharm a list of specific steps to take in order to achieve approval over the next 12 months. CYC believes the process to meet all the required changes will take approximately nine months.

In the meantime, the company will continue to sell Technegas in more than 60 countries, servicing over 4.4m patients. With COVID-19 making an unfortunate comeback, we believe CYC is set to achieve strong revenue growth in the next 9 months, even without the gold mine that is the US. For investors, we believe the wait for US approval will be worthwhile because the US market is worth USD180m annually. Keep in mind we may see a small cap raise to bridge the gap to FDA approval.


Update 24 August 2021: Half year 2021 results released

Great results, still waiting on the FDA

Cyclopharm posted strong first half 2021 results on 23 August 2021, with revenue jumping 47% year-over-year. The company posted a net loss after tax of $3.9m, an improvement of 30% compared to last year’s net loss after tax of $5.6m.

However, the result is actually a lot stronger than it seems at first glance, as costs directly related to the US FDA approval process were $1.2m. Since we strongly believe the approval process will be completed by end of 2HY22, we believe a more accurate picture of Cyclopharm’s overall results would be to exclude this cost. This leaves us with an adjusted net loss after tax of $2.7m, an improvement of 17.9% year-over-year.

Nutshell it for me

As avid readers of Stocks Down Under’s Cyclopharm coverage will know, we are extremely bullish on the company. While this is largely due to our belief that the delay in Cyclopharm receiving US FDA approval is only temporary, we have repeatedly expressed bullish sentiment on the company’s operations across the 60 other countries where Technegas has already received approval.

It is important to note that while US FDA approval, if and when received, may triple the company’s business almost overnight, we believe Cyclopharm will still be able to achieve profitability without FDA approval, although that will likely take a few years longer. So yes, access to the US market is the holy grail for CYC, but the rest of the world will still provide growth impetus.


Read the most recent article on CYC here