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Kalkine IPO Report

Virax Biolabs Group Limited

Jul 19, 2022

The Offer

Company Overview

An international pioneering biotechnology company, Virax Cayman specializes in the marketing, sales, and distribution of medical technologies, personal protective equipment, and diagnostic test kits for the treatment of viral infections. The company has a specific focus on immunology.

Key Highlights

Primary Offering: The company is issuing 1,350,000 shares at USD 5.00. The corporate assessments for the net proceeds from this offering, assuming an initial public offering at USD 5.00 per share and full execution of the underwriters' option to acquire further shares, will be around USD 7,037,725. Additional 7% underwriter warrants are also granted; these warrants have a cashless exercise clause and are exercisable for three years after the date of issuance.

Use of proceeds:

Dividend policy: The firm did not declare any dividends for the fiscal years ending March 31, 2021, and 2020. The firm also aims to keep all available money and any future revenues to fund the growth and expansion of its business and does not anticipate declaring or paying dividends in the near future.

Sector Analysis

  • In the market for in-vitro diagnostics (IVD), VRAX is a competitor. In most cases, IVD tests are carried out at point-of-care (POC) facilities, clinic laboratories, or independent research labs. The IVD market was estimated by Netscribes to be worth about USD 75.0 billion (FY2021E). In the following five years, it might increase at a CAGR of about 5.2 percent (2020–2025), which would be modest growth rates.

  • The IVD sector is constantly growing and is anticipated to go through profitable expansion rates due to driving considerations like the aging worldwide residents, an increase in intensity in the incidence of multifaceted infectious ailments, an upsurge in mindfulness among the universal built-up inhabitants, etc.  However, there are still barriers in some areas, particularly in third-world nations, which restrain the expansion of the IVD business, improper compensation systems, and patient resistance to receiving frequent healthcare consultations.
  • Five major companies control more than half of the IVD market, as seen in the pie chart below. Roche is now dominating the worldwide IVD market in part because of its wide product range and high level of automation, even if the IVD industry is consolidating as a result of major ongoing M&A efforts.

Financial Highlights (Expressed in USD):

  • Increasing revenues: The company reported revenue of USD 123,820 for FY21, which was 23.97% higher than the revenue of USD 99,876 reported in FY20.
  • Decline in Operating losses: During FY21, the company’s operating losses were USD 644,538 compared to USD 651,244 in FY20, mainly because of reduction in general and administration expenses and partially offset by increase in Sales and marketing and R&D expenses.
  • Narrowing Bottom line losses: The net loss for the company has decreased in FY21 to USD 676,616 from USD 739,464 in FY20. The main reason for this decrease is the reduction in general and administration costs.

Key Management Highlights

Risk Associated (High

Investment in the IPO of “VRAX” is exposed to a variety of risks such as:

  • Operational and profitability risk: Due to the company's short history of operations, operational losses were reported for the three years ended March 31, 2020, the six months ended September 30, 2021, respectively. Going forward It is possible that VRAX faces challenges to turn profitable or won't be able to maintain adequate profitability margins.
  • Trial failure risks: The business's attempts to create the T-Cell In-Vitro Diagnostic Test could not be effective, and it might not produce the insights the company anticipates in any way or by the timeframe required for VRAX to develop or market any new diagnostic solutions. Additionally, VRAX is now working on a brand-new COVID-19 test called Virax Immune that looks for T-cell immune responses to the SARS-Cov2-virus.
  • Volatility in the Broader market: Over the last six months markets are quite volatile because of series of macro event took place ranging from Russia-Ukraine standoff, supply chain disruption, multiyear high inflation across the globe, rising energy prices, COVID led lockdown in China and others. These macro events could continue to have a weigh on the broader market sentiment.


VRAX reported decent financial performance in FY21 with surge in the topline and narrowing losses on a YoY basis. However, given the variety of uncertainties hovering over the global financial markets, a listing gain on a loss-making company could be challenging. However, the industry in which VRAX operates is growing decently and expected to grow moderately in the coming years.

Hence, Virax Biolabs Group Limited (VRAX) IPO looks "Neutral” at the current price and in the present market scenario, given the risks associated.


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