Stocks’ Details

Moderna Inc.

Completed First Planned Interim Analysis for its COVID-19 Vaccine: Moderna Inc. (NASDAQ: MRNA) is a biotechnology company, focused on designing and manufacturing transformative medicines based on messenger ribonucleic acid (mRNA). On 11 November 2020, the company announced that it has completed case accrual for the first interim analysis of the Phase 3 COVE study of its COVID-19 vaccine candidate, mRNA-1273. Also, MRNA revealed interim data for the growth cohort of its ongoing Phase 1 study of the company's mRNA personalised cancer vaccine (PCV) mRNA-4157 in sequence with Merck's Keytruda®1 at The Society for Immunotherapy of Cancer's Annual Meeting (SITC 2020).

3QFY20 Financial Highlights: The company reported revenue of $157.9 million in 3Q FY20 as compared to ~$17 million in 3Q FY19, driven by increased grant revenue, mainly from BARDA agreement related to development COVID-19 vaccine candidate - mRNA-1273. The net cash provided by operating activities stood at $762.7 million for the nine months ended September 30, 2020, against negative $359.9 million in the prior corresponding period, due to increased deferred revenue deposits of $1.17 billion received via supply agreements for the delivery of COVID-19 vaccine to different governments all over the world. In the same time span, research and development expenses for the period increased from $119.6 million and came in at $344.5 million, due to increased expenditure on mRNA-1273 clinical development. The net loss widened to $233.6 million from $123.2 million in the pcp.

Key Financial Highlights (Source: Company Reports)

Outlook:  The company is expecting to purchase plant and property & equipment in a range of $0.1 billion to $0.3 billion in FY20, driven by $1.2 billion received from customer deposits.

Stock Recommendation: The stock of the Company went up by 25.26% in the past one month and is currently trading close to its 52-week high level of $103.2. The Company has a market capitalization of ~$35.17 billion. On a technical analysis front, the stock has a support level of ~$83.91 and a resistance level of ~$95.59. On a TTM basis, the stock of MRNA is trading at a price to book value multiple of 13.3x, higher than the industry median (Biotechnology & medical research) of 3.4x. Considering the above-mentioned factors, high returns in the last month, current trading levels and higher valuation on TTM basis, we suggest investors to wait for a better entry-level and give an ‘Expensive’ rating on the stock at the closing price of $88.89, down by 4.57% on 18 November 2020.

Aurora Cannabis Inc.

Raising $150 million Through Public Offering:  Aurora Cannabis Inc. (NYSE: ACB) is an Edmonton, Alberta based cannabis-based company, focused on production, distribution, and sale of cannabis in Canada and internationally. The market capitalization of the company stood at ~$1.13 Bn as on 18 November 2020. On 11 November 2020, the Company announced that it has proposed secondary share issue. Aurora is focused on selling its 20,000,000 Units of its stocks at a price of $7.50 per share in order to raise gross proceeds of $150 million. Each unit of stock is comprised of one common stock and one and a half share purchase of warrant.

Q1FY21 Financial results: The company reported revenues of $67.8 million in 1QFY21, down from $68.72 million as compared to 4QFY20. Consumer cannabis net revenue during the period came in at $34.3 million, down 3% sequentially. However, ACB's consumer cannabis extract net revenue went up by $3.6 million quarter over quarter owing to higher focus on high-growth extract segments. In the same period, the company reported adjusted EBITDA loss of $57.9 million against a loss of $29.6 million in Q4 FY20, due to the inclusion of payments relating to restructuring costs. Capital expenditures declined to $13.2 million in Q1 FY21 from $16.4 million in Q4 FY20. Also, the SG&A expenses were down by $19.6 million from the prior quarter and came in at $46.9 million in Q1 FY21, aided by aurora's business transformation plan. The Company exited the period with cash and cash equivalents of ~$133.68 million.

Key Financial Highlights (Source: Company Reports)

Outlook: The company is prioritising on delivering highest quality products, better allocation to spend in sales and marketing division, and refocus on strategy on its leading premium and ultra-premium brands, in order to achieve growth of profitable market share. Furthermore, the Group is taking necessary steps to improve its liquidity and strengthen its balance sheet and sets a goal to achieve a positive adjusted EBITDA in Q2 FY21.

Stock recommendation: The stock of ACB have corrected 44.94% in the past six months and a 49.04% in the last one month. The stock is inclined towards its 52-week low level of $3.71. For Q1 FY21, the stock’s operating margin stood at -133.4%, against the industry median of 8.9%. Considering the recent volatility in the stock prices, lack of financial stability and weak financial performance in Q1 FY21, we give an ‘Avoid’ rating on the stock at the closing price of $7.02, down by 2.5% on 18 November 2020.

InterPrivate Acquisition Corp.

IPV Agreed for a Merger with AEVA: InterPrivate Acquisition Corp. (NYSE: IPV) is a special purpose acquisition company, focused on the merger, stock purchase, asset acquisition, capital stock exchange, reorganisation, or similar business combination. On 2 November 2020, the company announced that it has entered into a definitive agreement for a business combination with a technology solution provider on silicon photonics - Aeva Inc. Under the transaction, Aeva Inc will receive ~$363 million in gross proceeds, resulting in a total pro forma equity value of approximately $2.1 billion. After completion of the transaction, the new company will change its name to Aeva, Inc and will trade on Nasdaq under identifier as “AEVA”. The transaction is expected to close by Q1 2021.

June 2020 Quarter Results: During the June 2020 quarter, IPV incurred a net loss of $205k and net other income of ~$52k. At the end of the quarter, the cash and cash equivalent stood at 576.32k. Total assets by the end of the period increased to $243.89 million from ~$106k at the end of 31 December 2019, due to increased marketable securities held at trust account. The total liabilities increased to $479.80 k at the end of 30 June 2020 from $81.8k at the end 31 December 2019. 

June Quarter balance sheet (Source: Company Reports)

Outlook: After the completion of the transaction, Aeva will fully use 100 % of the net proceed for the acceleration of its growth and commercialisation of its products.

Stock recommendation: The stock of IPV has provided a return of 1.81% in the past one month. The stock is currently trading close to its 52-weeks high price of $10.27. On the technical analysis front, the stock has an immediate support level of ~$10.06 and resistance of ~$10.15. While taking any investment decision, investors should ponder the risks and obstacles the new entity might face being an initial-stage company with restricted operational history. Considering the company’s current trading levels, limited financial information, and associated key risks, we suggest investors to “Avoid” the stock at the closing price of $10.08, down by 0.2% on 18 November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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