Stocks’ Details

Inovio Pharmaceuticals, Inc.

Advancing COVID-19 Vaccine: Inovio Pharmaceuticals, Inc. (NASDAQ: INO) is a biotechnology company, focused on designing DNA medicines to treat/cure diseases associated with HPV, cancer, and infectious diseases. Notably, the company is advancing with its DNA vaccine INO-4800 to combat the ongoing COVID-19 pandemic. In the recently released preclinical study data of INO-4800, it was found that the vaccination with INO-4800 generated robust binding and neutralizing antibody as well as T cell responses in mice and guinea pigs. The vaccination also generated antibodies that neutralized both the earlier strain of the virus as well as the mutant variant (D614G) that has emerged with greater infectivity, and now accounts for more than 80% of newly circulating virus. The findings support the safety profile and immune ability of INO-4800.

June Quarter Highlights: For the June 2020 quarter, the company reported total revenue of $267,000 and total operating expenses of $33.4 million. The Research and development (R&D) expenses for the quarter stood at $22.4 million. This includes expenditure on drug manufacturing expenses related to the company’s COVID-19 and VGX-3100 clinical trials. During the quarter, the company incurred a net loss of $128.7 million. At the end of the quarter, the company had cash and short-term investments of $371.7 million.

June 2020 Quarter Results (Source: Company Reports)

What to Expect: The company is focused on starting its Phase 2/3 COVID-19 clinical study in the U.S. in September 2020. It also intends to expand the manufacturing capacity to produce at least 100 million doses of INO-4800 in 2021 via its growing global coalition of partners and funders. In the month of September 2020, the company is going to present at three investor conferences, including H.C. Wainwright 22nd Annual Global Investment Conference, Cantor Global Healthcare Conference, and Oppenheimer Fall Healthcare Life Sciences & MedTech Summit.

Key Risks: The company’s future performance is dependent on its ability to develop and secure the United States and foreign regulatory approvals for its product candidates. If the company fails to do so, it will have a significant impact on its future revenues.  Further, the company’s substantial indebtedness could limit the cash flow available for its operations and could expose it to risks that could adversely affect the company’s business, financial condition, and results of operations.

Stock Recommendation: The stock of INO has provided a return of 336.98% in the last one year but the stock has corrected by 24.99% in the last three months. The stock made a 52-week low and high of $1.92 and $33.79 and is currently trading at the lower band of its 52-week trading range. On the technical analysis front, the stock has an immediate support level of ~$8.8 and resistance of ~$11.8. On a TTM basis, the stock has a Price to Book Value multiple of 8.6x, higher than the industry median (Biotechnology & Medical Research) of 3.0x. Considering the price movement in the last one year, company’s limited sources of revenue, developments around the planned Phase 2/3 COVID-19 clinical study in the U.S., and valuation on TTM basis, we suggest investors to avoid the stock at the closing price of $9.57, down by 2.84% on 4 September 2020.

Chiasma, Inc.

Commercial Launch of MYCAPSSA®: Chiasma, Inc. (NASDAQ: CHMA) is a commercial-stage biopharmaceutical company focused on developing and commercializing oral therapies to improve the lives of patients with serious chronic diseases. On 31 August 2020, the company announced the commercial launch and availability of its MYCAPSSA® (octreotide) capsules in the United States for patients with acromegaly, a hormonal disorder that develops when a patient’s pituitary gland produces too much growth hormone. In order to support the launch, the company has trained its sales team and plans to expand its customer-facing team as the commercial launch progresses.

June 2020 Quarter Update: One of the major highlights of June 2020 quarter was the approval from FDA for the company’s MYCAPSSA capsules. For the quarter, the company reported general and administrative expenses of $10.7 million, including the expenditure of $5.6 million on pre-commercial activities. Due to the manufacturing of octreotide capsules and costs associated with the company’s disease state registry, scientific literature publications and increased regulatory costs, the company’s research and development expenses in June quarter increased to $9.7 million, compared to $5.5 million in pcp. During the quarter, the company raised around $75 million of net proceeds through an over-subscribed equity financing. At the end of the June quarter, the company had cash, cash equivalents, marketable securities, and restricted cash of $87.1 million.

June 2020 Quarter Results (Source: Company Reports)

Focus Areas: The company is focused on advancing MYCAPSSA as a preferred treatment option for patients with acromegaly treated with octreotide and lanreotide injectables. Looking ahead, the company expects to report top-line MPOWERED™ Phase 3 clinical trial results in the fourth quarter.

Key Risks: The company is exposed to the risks related to the reliance on third parties to manufacture active pharmaceutical ingredients and commercial octreotide capsules. Further, the company is also exposed to the risk related to the ongoing COVID-19 pandemic as it may impact the company’s expected development, manufacturing, and commercialization timelines for MYCAPSSA. 

Valuation Methodology: Price to Sales Based Market Multiple Valuation (Illustrative)

Price to Sales Based Market Multiple Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures have been taken from Thomson Reuters, NTM – Next Twelve Months

Stock Recommendation: Over the last six months, the stock of CHMA has provided a return of 13.78%. On the technical analysis front, the stock has an immediate support level of ~$4.3 and a resistance of ~$6.8. We have valued the stock using the Price/Sales based market multiple valuation method and arrived at a target price of low double-digit upside (in percentage terms). For the purpose, we have taken peers like Novan Inc (NASDAQ: NOVN), Eagle Pharmaceuticals Inc (NASDAQ: EGRX) and Strongbridge Biopharma plc (NASDAQ: SBBP). Considering the commercial launch of MYCAPSSA® (octreotide) capsules in the United States and recently completed $75 million equity raising, we believe that the stock might see further upside in the coming times. Hence, we give a “Hold” recommendation on the stock at the closing price of $5.20, down by 0.19% on 4 September 2020.

Trevena, Inc.

Favorable Benefit-risk profile for OLINVYK: Trevena, Inc. (NASDAQ: TRVN) is a biopharmaceutical company focused on developing medicines for patients with central nervous system (CNS) disorders. The company’s OLINVYK™ (oliceridine) injection is a new chemical entity approved by the FDA in August 2020. The company recently announced two publications of the respiratory safety data from the OLINVYK development program, highlighting improved respiratory safety profile for OLINVYK compared to IV morphine. In the clinical study, it was found that OLINVYK has a higher probability of providing analgesia than producing respiratory depression, while morphine had a higher probability of producing respiratory depression than providing analgesia. On 20 August 2020, the company announced that it has received a $3 million milestone payment from its partner in China for the U.S. approval of OLINVYK.

June 2020 Quarter Update: For the June 2020 quarter, the company reported total operating expenses of ~$6.26 million, comprising general and administrative expenses of $3.3 million and research and development expenses of ~$2.96 million. For the quarter, the company incurred a net loss of $6.2 million. At the end of the quarter, the company had cash, cash equivalents and restricted cash of $56 million.

June Quarter results (Source: Company Reports)

What to Expect: The company recently initiated a proof-of-concept study for TRV027 in COVID-19 patients. The top-line data from the study is expected in Q1 2021. In the month of September, the company is planning to participate in several conferences, including H.C. Wainwright: 22nd Annual Global Investment Conference, Cantor Fitzgerald Virtual Global Healthcare Conference, and Oppenheimer Fall Healthcare Life Sciences & MedTech Summit. The company intends to release its Q3 results on 2 November 2020.

Key Risks and Challenges: The company is exposed to the challenges and risks related to the completion of its nonclinical testing and clinical trials of its product candidates, identifying additional product candidates, potentially entering into collaboration and license agreements, and obtaining regulatory approval for product candidates.

Stock Recommendation: Over the past six months, the stock of TRVN has provided a return of 130.46%, however in the last one month, it has corrected by 35.74%. On the technical analysis front, the stock has an immediate support level of ~$1.47 and a resistance of ~$2.09. The stock is currently trading below the average of its 52-week trading range of $0.46 - $3.68, offering a decent opportunity for accumulation. Considering the favorable benefit-risk profile for OLINVYK, the recently received US FDA approval, and the $3 million milestone payment from a Chinese partner, we believe that the stock is set to experience further upside in the coming times. Hence, we give a “Speculative Buy” recommendation on the stock at the closing price of $1.69, up by 1.2% on 4 September 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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