Trevena, Inc.

TRVN Details

TRVN gets FDA Approval for OLINVYK™ Injection: Trevena, Inc. (NASDAQ: TRVN) is a biopharmaceutical company, which primarily focuses on detecting and developing therapeutics for G protein coupled receptors. On August 10, 2020, the company stated that the FDA has accepted its new drug application for OLINVYK™ seeking approval for intravenous (“IV”) opioid analgesic for management of acute pain. A decision is expected in 90 days post which the drugs will be commercially available in the fourth quarter of 2020. The company had $54.8 million of cash balance as at 30 June 2020, which seems to be sufficient to fund its operations in 2021.

TRVN Gets Approval for the Oliceridine Clinical Expansion in China: On June 3, 2020, the company stated that TRVN’s partner in China has been authorized by the Chinese National Medical Products Administration (NMPA) to commence clinical trials for IV oliceridine. Notably, the company has inked a licensing agreement with Jiangsu Nhwa for the development and commercialization of oliceridine in China. The move is in line with the company’s objective to obtain future milestone payments, along with 10% royalty on net sales of oliceridine in China.

1QFY20 Key Financial Highlights: TRVN announced its quarterly results for the period ended 31 March 2020, wherein the company reported a net loss from operations amounting to $5.7 million, as compared to the net loss of $5.2 million in Q1FY19. Diluted net loss per share for the quarter stood at $0.06. Research and development expenses stood at $2.2 million, almost flat year over year. General and administrative expenses stood at $3.6 million as compared to $3.1 million in 1QFY19. The company reported $28.1 million in cash and cash equivalents as on 31 March 2020. Notably, the company does not generate any revenue as it has no marketed products and collaborations.

1QFY20 Income Statement Highlights (Source: Company Reports)

Key Risks: On the flip side, the company has been carrying the burden of operational inefficiency for the past few quarters. Increasing R&D and G&A expenses related to the TRV250 acute migraine study and actions to help the NDA resubmission for oliceridine are likely to reduce operating margins. Also, the company is exposed to risks relating to foreign operations that are required to be addressed from time to time. The company also faces stiff competition from peers which adds to the woes. However, the company is taking necessary steps to ensure the safety and well-being of patients and caregivers, curtail the risk of supply disruption, and achieve its growth strategies.

Stock Recommendation: The stock of TRVN closed at $3.13 with a market capitalization of ~$335.5 million. The stock is trading at the upper band of its 52-week trading range of $0.46 to $3.68. The stock of the company went up by 95.63% and 234.22% in the last one month and three months, respectively. As per the management, the current cash and cash equivalents are enough to fund operations and capital obligations throughout FY21. The company is set to report its 2QFY20 results on 12 August 2020. On the valuation front, the stock is trading at a P/BV multiple of 6.1x as compared to the industry median of 3x on TTM (Trailing Twelve Months) basis and thus, seems overvalued. Considering the aforesaid facts, current trading levels, and valuation on TTM basis, we suggest investors to wait for better entry levels along with the announcement of 2QFY20 results and have a watch stance on the stock at the closing price of $3.13, up 31.51% on 10 August 2020.

TRVN Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

NIO Inc.

NIO Details

Delivery Updates for July 2020: NIO Inc. (NYSE: NIO) is engaged in designing, manufacturing, and selling smart and connected premium electric vehicles. The company offers electric cars under brand names such as EP9, ES8, and EVE. In July 2020, NIO delivered 3,553 vehicles, soaring 322.1% from the prior corresponding period. Its premium ES6 and ES8 brands are boosting NIO’s growth possibilities. As of July 31, 2020, collective deliveries of the ES8 and the ES6 reached 49,615 vehicles, of which 17,702 were delivered in 2020. The company opines that it remains on track to grow its production capacity in order to aid higher deliveries in 3QFY20.

Other Recent Updates: On 29 June 2020, the company stated that the investors have completed the cash infusion commitments for the first two installments of their investments in NIO China. Cash infusion from investors and the company’s expanding efforts to boost its sales network are key catalysts.

2QFY20 Key Highlights: During the quarter, the company reported an adjusted net loss per share of $0.15. High demand for the company’s ES8 and ES6 model led to enhanced results. Notably, total deliveries in the second quarter stood at 10,331 units, as compared to 3,838 units reported in the previous quarter. Total revenues increased by 146.5% year over year to $526.4 million. The company reported a gross margin of 8.4%, as compared to a negative gross margin of 33.4% reported in the year-ago quarter. The company exited the period with a cash balance of $1.6 billion as of 30 June 2020. The company believes that it possesses sufficient funds to support its continued operations and developments in the next twelve months.

Key Operating Results (Source: Company Reports)

Outlook: For Q3FY20, NIO expects total revenues to be in the range of $572.9 million and $596.2 million, suggesting an increase of 120.4% to 129.3% on pcp.

Key Risks: Although increasing deliveries are likely to have bolstered NIO’s revenues, it also rose R&D and SG&A expenditure, which may dampen operating margins, going forward. Further, competition from peers and foreign currency fluctuations add to the woes.

Stock Recommendation: The stock of NIO is quoting at $14.21 with a market capitalisation of ~$16.83 billion. The stock is trading higher than the average of its 52-week trading range of $1.19 to $16.44. The stock of NIO gave a return of 276.92% in the last three months. On the valuation front, the stock is trading at an EV/Sales multiple of 11.4x as compared to the industry mean (Consumer Cyclicals) of 4.2x on TTM (Trailing Twelve Months) basis and thus, seems overvalued. Hence, given the current trading levels, valuation on TTM basis and price movement, we suggest investors to wait for better entry levels and give a watch stance on the stock at the closing price of $14.21, up 5.89% on 10 August 2020.

NIO Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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