Alexium a growth story unfolding as fiscal 2021 approaches

By Trevor Hoey. Published at Apr 30, 2020, in Technology

Alexium International Group Ltd (ASX:AJX) released its March quarter result on Thursday which included a promising business update for the three month period.

Of course, this comes only days after the company signed a Supply and Evaluation Agreement with a major flame retardant chemical company as a strategic business partner for the market launch of Alexiflam® NF.

This along with a supply agreement signed with Soft-Tex International, Inc., has seen the company make a stellar start to the June quarter.

However, harking back to the March quarter, it is important to note that the group came into the new calendar year well poised with a strong management team and a revitalised capital structure to drive the commercialisation of its flame retardant and thermal management products.

These same strengths also prepared the company for the unprecedented impact of COVID-19 on the global economy.

Management emphasised that it has been focused on maintaining operations while looking after the health and safety of its employees, and this will continue to be the focus until the pandemic subsides.

In discussing the recent developments against the COVID-19 backdrop, Alexium chief executive Bob Brookins said, “Despite these challenges, significant progress has been made this quarter.

‘’Two key milestones have been satisfied with the signing of an exclusive supply agreement with Soft-Tex and the supply/evaluation agreement for the commercialisation of Alexiflam® NF.

‘’Both partners will be an important contributor to Alexium’s success, and the team looks forward to working with them.

‘’The company’s liquidity remains strong after the successful $22.3 million capital raise which was completed in January 2020.

‘’This positions Alexium well to manage the near future of the COVID-19 pandemic as we continue to grow the company.”

Alexium’s resilience has been reflected in the group’s share price over the last five weeks or so with it more than doubling from 2.8 cents to 6.3 cents, just shy of its three month high.

Soft-Tex agreement represents a major milestone

Casting an eye to the future and bearing in mind that the new fiscal year is now only two months away, it is worth examining the significance of the Soft-Tex agreement.

In mid-April, Alexium announced the signing of a supply agreement with Soft-Tex International, Inc., to exclusively purchase Alexicool® products for bedding systems based on Soft-Tex’s Reactex® technology for top-of-bed and mattress applications.

Terms of exclusivity apply to both current and future PCM-based products from Soft-Tex International.

The agreement has an initial two-year term and may be automatically renewed.

The agreement specifies the provisions for the commercial relationship, including pricing, supply capabilities, and Alexium’s analytical support for Soft-Tex commercial efforts.

It is important to understand that this transaction was far more than a one-off supply agreement as it established a key strategic partner for Alexium, cemented its position in an established supply chain, and represented a key milestone for the first two growth pillars management had flagged at the half-year mark.

Consequently, Alexium continues to be a news-driven story with the potential for significant share price upside.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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