AcelRx Pharmaceuticals, Inc.
ACRX Details
A pharmaceutical entity, AcelRx Pharmaceuticals, Inc (NASDAQ: ACRX) is engaged in the advancement and commercialization of therapies for the medication of pain.
ACRX Inks Deal with Aguettant
- On 14 July 2021, ACRX inked a deal with Laboratoire Aguettant (Aguettant), whereby the latter will attain Aguettant with a license to commercialize Dzuveo in Europe.
- ACRX in exchange will obtain up to ~$55 million in a blend of upfront and sales-based milestone payments at several annual sales levels from Aguettant. It is eligible to revenue share payments varying from 35% to 45% of net sales.
- This apart, ACRX acquired the entitlements to file new drug applications (NDAs) and commercialize two new pre-filled syringe product candidates namely, ready-to-use ephedrine and phenylephrine in the United States.
- With a robust track record in Europe, the move is in-line with ACRX to commercialize product candidates in the US and facilitates it to develop a balancing product portfolio with DSUVIA, while reducing the overall development cost of a new product. DSUVIA is a sublingual tablet for the management of acute pain for patients suffering from opioid analgesic.
1QFY21 Key Findings:
- During the quarter, the company reported net revenues of $0.51 million, up from ~$0.39 million reported in the year-ago period.
- During the quarter, the company issued ~$36.4 million of stock via an underwritten public offering.
- The company had accomplished 432 formulary approvals as of April 2021.
- In April 2021, the American Dental Association (ADA) provided a CDT Code determining a pathway to repayment for DSUVIA for dental and oral surgeons.
Revenue Highlights; Analysis by Kalkine Group
Risk Analysis:
- The company is exposed to the prevailing global uncertainties related to COVID-19 and other geopolitical tensions.
- The company operates in a highly competitive environment, which is subject to ongoing significant changes, new strategic alliances, market pressures, and regulatory and legislative pressures.
- The company is exposed to foreign currency fluctuation risks.
- Further, any failure or acceptance of DSUVIA drug to meet the standards might impact the company’s overall commercial sales.
Outlook: The company remains on track to make robust progress on the commercialization of DSUVIA regardless of the impact from the pandemic. ACRX is looking forward to anticipated data read-outs from investigator-begun studies with numerous prestigious institutions.
Valuation Methodology: EV/Sales based Relative Valuation Method (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of ACRX gave a return of ~-10% in the past one month. The stock is trading lower than the average of the 52-week high and low levels of $2.94 and $1.02, respectively, which indicates a good opportunity for accumulation. We have applied an EV/Sales-based relative valuation (on an illustrative basis) and the target price reflects a rise of low double-digit (in % terms). We have applied a slight premium to peer’s average EV/Sales multiple (NTM trading multiples), considering its new deal with Aguettant, robust track record of success in Europe, and higher revenue base. We have taken peers such as Cara Therapeutics Inc (NASDAQ: CARA), PLx Pharma Inc (NASDAQ: PLXP), Moderna Inc. (NASDAQ: MRNA). Considering a rise in top-line in 1QFY21, commercialization progress, current trading level, valuation, and key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the closing price of $1.25, down by ~0.79% as of 19 July 2021.
ACRX Daily Technical Chart, Data Source: REFINITIV
CACI International, Inc.
CACI Details
CACI Wins $82M Army Contract: CACI International, Inc. (NYSE: CACI) is engaged in offering information technology-based applications and infrastructure to boost communications and secure the consistency of information systems and networks. On 17 June 2021, the company informed the market that it has been awarded an $82-million, four-year contract to support the US Army in cyber and ground electronic warfare missions. Per the deal, CACI’s engineers and technicians in partnership with the U.S. Army, will examine, investigate, and build complicated technology systems and tools to neutralize growing threats.
3QFY21 Key Results Highlights:
- Rise in Bottom-Line: During the quarter, the company reported earnings of $5.28 per share, up 47.1% from the previous corresponding period.
- Increase in Revenues: Revenues for the period came in at $1.55 billion, up ~5.9% on a year over year basis, owing to new business wins, acquired contracts, and on-contract growth.
- Decent Margins: During the quarter, operating income came in at $151.4 million, up 33.2% year over year, owing to higher revenues as well as lower indirect costs. Adjusted EBITDA came in at $183.7 million, up 29.9% year over year.
- Balance Sheet Details: The cash balance at the end of 3QFY21 stood at $105.6 million and the total long-term debt amounted to $1.78 billion.
Operating Income Highlights; Analysis by Kalkine Group
Risk Analysis:
- A highly leveraged balance sheet might weigh on the company’s financial performance, going forward.
- The company is also heavily dependent on U.S. government agencies as its primary customer. Thus, the loss of any of these agencies could adversely impact the company’s revenues and cash flows.
- Additionally, competition from peers, challenges of COVID-19, and the global threat environment add to the woes.
Outlook:
- CACI has reduced its FY2021 revenue guidance and now expects it to be in the ambit of $6 - $6.08 billion, as compared to the previous outlook of $6.05-$6.25 billion, owing to massive impacts of COVID-19 related disruptions.
- CACI expects EPS for FY21 to be in the range of $18 and $18.4, as compared to the previous outlook of $14.47-$15.25.
- The company is set to report fourth quarter and FY2021 results and provide guidance for FY2022 on 11 August 2021.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of CACI gave a positive return of ~24.3% in the past nine months and a positive return of 32.3% in the last one year. The stock is trading close to its 52-week high of $266.96. We have valued the stock using the P/E multiple-based illustrative valuation and have arrived at a target price with a correction of low-single-digit (in % terms). We believe that the company might trade at a slight discount as compared to its peer median, considering a leveraged balance sheet, loss of key customers, stiff competition, and COVID-19 led uncertainties. For the purpose, we have taken peers like Science Applications International Corp (NYSE: SAIC), Leidos Holdings Inc (NYSE: LDOS), ASGN Incorporated (NYSE: ASGN). On the technical analysis front, the stock of CACI has a support level of ~$252.1 and a resistance level of ~$266.1. Considering the current trading levels, steep price movement in the past months, valuation, and leveraged balance sheet, we suggest investors to book profit on the stock and give a ‘Sell’ rating on the stock at the current market price of closing price of $261.02, down 1.19% on 19 July 2021.
CACI Daily Technical Chart, Data Source: REFINITIV
Chiasma, Inc.
CHMA Details
Submission of Application for Authorization: A biopharmaceutical company, Chiasma, Inc. (NASDAQ: CHMA) uses its delivery platform technology to develop and commercialize oral therapies. On June 28, 2021, the company announced that it has proposed a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) requesting the approval for MYCAPSSA® as a protection therapy for adults suffering from acromegaly. MYCAPSSA® is an oral octreotide capsules, and the submission of the authorization request will aid the company to expand the accessibility of MYCAPSSA® to patients outside the U.S.
Amryt Pharma to Buy CHMA
- The company has entered into a merger deal for its acquisition by Amryt Pharma, which is also a biopharmaceutical company.
- The acquisition will aid in unlocking the potential value of CHMA efficiently for both its patients and for its shareholders.
- Per the deal, each share of CHMA common stock will be exchanged for 0.396 Amryt American Depositary Shares (“ADSs”), each indicating 5 Amryt ordinary shares.
Q1FY21 Performance Update:
- The company has reported MYCAPSSA net product revenue of $1.9 million, up a whopping 100% from the previous quarter.
- It reported a net loss of $30.5 million during the given period as compared to loss of $15.4 million reported in the year-ago period.
- The company exited the quarter with cash and equivalents including marketable securities of $115 million, a decrease from a level of $135.4 million as of 31 December 2020.
Cash Balance Highlights; Analysis by Kalkine Group
Key Risks: The company is exposed to changes in the interest rate risk as it has a considerable amount of cash and marketable securities on its balance sheet. It is also prone to the risks related to the development and potential regulatory approval of its product candidates.
Outlook: CHMA plans to continue to grow its MYCAPSSA revenue through building on the U.S. commercial launch. The company’s merger plans are expected to deliver annual cost synergies of ~$50M.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)
Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of CHMA is trading above its average 52-weeks’ levels of $5.74-$2.77. The stock of CHMA gave a positive return of ~43.25% in the past three months. On a technical analysis front, the stock of CHMA has a support level of ~$3.71 and a resistance level of ~$5.10. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price with a correction of low single-digit (in % terms). We believe the company can trade at a slight premium to its peer average EV/Sales (NTM Trading multiple), considering the positive study results and possible commercialization opportunities. For the purpose, have taken peers such as SCYNEXIS Inc (NASDAQ: SCYX), Strongbridge Biopharma plc (NASDAQ: SBBP), Eagle Pharmaceuticals Inc. (NASDAQ: EGRX). Considering the aggravated net loss, uncertain outlook, macroeconomic instabilities, current trading levels, and valuation, we have given an “Expensive” rating on the stock at the closing price of $4.14, down by 5.26% as on July 19, 2021.
CHMA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined:-
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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