Hepion Pharmaceuticals Inc

Hepion Pharmaceuticals Inc (NASDAQ: HEPA) is engaged in the development of drug therapy related to the treatment of chronic liver diseases.

Investment Highlights – Speculative Buy at USD 1.58

• The Company had announced positive top-line results from Phase 2a ‘AMBITION’ NASH clinical trial.
• HEPA had shown a significant reduction in net loss during Q1 FY21 as compared to Q1 FY20.
• The Company had increased the cash balance from USD 40.7 million as of 31 December 2020 to USD 115.4 million as of 31 March 2021.
• From a technical standpoint, the stock is hovering around the lower Bollinger band, indicating an upside potential in the stock price.
• Moreover, the 14-day RSI (~34.78) is inching towards the oversold zone and supporting the upside potential in the stock price.

Key Risks

• The Company is still in the development stage and has not generated any revenue yet.
• The rise in interest rates may make it difficult for HEPA to obtain funds, and it might cause a delay in the clinical trials.
• HEPA had incurred substantial losses and negative cash flows from operations since its inception.

Recent News

Russell Microcap® Index: On 09 June 2021, HEPA updated that it would join the Russell Microcap® Index effective from 28 June 2021.

Q1 FY21 Financial Highlights for the three months period ended 31 March 2021 (as of 14 May 2021)

 (Source: Company Result)

• The net loss per share had shown significant improvements from negative USD 0.97 during Q1 FY20 to negative USD 0.12 per share for Q1 FY21.
• HEPA had not generated any revenue yet.
• The Company had cash & cash equivalents of USD 115.40 million as of 31 March 2021.
  

One Year Share Price Chart

 (Source: Refinitiv; Analysis done by Kalkine Group)

Conclusion

The lead drug candidate, CRV431, had achieved positive results for the Phase 2a ‘AMBITION’ NASH clinical trial. Moreover, the drug aimed to reduce liver fibrosis and cancerous tumours. The Company would require raising additional capital in future years to continue the development and commercialization of current product candidates. The stock made a 52-week High and Low of USD 4.83 and USD 1.45, respectively.

Considering the impressive top-line results for CRV431 and an increase in the cash balance during Q1 FY21, we have given a "Speculative Buy" stance on Hepion Pharmaceuticals Inc at the closing market price of USD 1.58 (as on 20 July 2021).

GTT Communications Inc

GTT Communications Inc (OTC: GTTN) is engaged in providing cloud networking services to multinational companies and government customers around United States, Europe, and other international markets.

Investment Highlights – Avoid at USD 0.71

• Recently, NYSE had suspended trading in GTT Communications and delisted the stock as it did not meet the stringent listing requirements.
• The Company had not released FY20 financial results yet. Moreover, the latest financial results available was of Q1 FY20 encapsulating three months period ended on 31 March 2020.
• GTTN has been consistently reporting net loss for the last three years (FY17 to FY19).
• The stock is highly volatile as it had shown a sharp drop of around 90% in the last one year.
• From a technical standpoint, the stock price is trading lower than the 20-days exponential moving average of USD 1.37, making it difficult for the stock price to show an upside potential.

Key Risks

• The lack of recent financial data had created doubts regarding the earning potential of GTTN.
• GTTN may face several operational headwinds due to the uncertainty of the magnitude and duration of the impacts of the COVID-19 pandemic.
• Restrictive regulations or adverse government policies could hurt the financial results and growth prospects.
  

Q1 FY20 Financial Highlights for the three months period ended 31 March 2020 (as of 08 May 2020)

 (Source: Company Result)

• During Q1 FY20, GTTN had shown a reduction in total revenue to USD 424.7 million as compared to USD 450.2 million at the end of Q1 FY19.
• GTTN had widened the net loss from negative USD 27.3 million during Q1 FY19 to a negative USD 83.3 million during Q1 FY20.
• The Company had incurred a capital expenditure of USD 22.0 million during Q1 FY20.

One Year Share Price Chart

 (Source: Refinitiv; Analysis done by Kalkine Group)

Conclusion

The Company had not disclosed financial results for Q2 FY20, Q3 FY20, Q4 FY20 and FY20, as it had identified certain errors in FY19 results. Thus, the lack of latest financial data would create doubts regarding the growth prospects of the Company. Meanwhile, the top-line revenue and bottom-line profitability had witnessed a downtrend during Q1 FY20. The stock made a 52-week High and Low of USD 7.41 and USD 0.65, respectively.

Considering the lack of recent financial data and delisting from NYSE, we have given an "Avoid" stance on GTT Communications Inc at the closing market price of USD 0.71 (as on 20 July 2021), while we will re-evaluate our stance after analysing the FY20 results.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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