Hepion Pharmaceuticals Inc.

Hepion Pharmaceuticals Inc. (NASDAQ: HEPA), formerly ContraVir Pharmaceuticals, Inc., is a clinical-stage biopharmaceutical company. The company focuses on the development of targeted therapies for liver disease arising from non-alcoholic steatohepatitis (NASH) and chronic hepatitis virus infection. It's lead oral drug candidate, CRV431, reduces liver fibrosis and hepatocellular carcinoma tumour burden in experimental models of NASH.

Key highlights 

• Raising Funds: To further enhance the liquidity and to carry the clinical research work without any interruption, the company announced the pricing of its underwritten public offering of 44,200,000 shares of its common stock at a public offering price of USD 2.00 per share, for gross proceeds of USD 88.4 million. The offering is expected to close on February 18, 2021.

• FDA Clearance of "IND" Application for CRV431 for COVID-19: Recently, the company announced that the US Food and Drug Administration ("FDA") had accepted its investigational new drug (IND) application for CRV431, a novel cyclophilin inhibitor for the treatment of COVID-19. Although the Company's focus and lead indication remain squarely on the treatment of NASH, this IND may provide them opportunities to seek collaboration partnerships to support the initiation of Phase 2 studies of CRV431 for COVID-19 and to explore sources of non-dilutive external funding for their COVID-19 program.

• Proprietary Artificial Intelligence Program: The company has created a proprietary AI platform called, “AI-POWR” to optimize the outcomes of their current clinical programs and to potentially identify novel indications for CRV 431 and possibly identify new targets and new drug molecules to broaden its pipeline. It is anticipated that applying this proprietary platform to their drug development program would ultimately save time, resources and money.

• Liquidity: The company ended the quarter with cash and cash equivalents of USD 13.7 million. Furthermore, on November 30, 2020, they raised USD 34.5 million, through issuance of 23 million common shares in a public offering. 

Financial overview of Q3 2020

Source: Company

• In Q3 2020, the company’s Research and development expenses increased to USD 3.8 million, against USD 0.8 million in the previous corresponding period. The increase was primarily due to the rise of costs related to drug supply and various ongoing studies.
• G&A expenses stood at USD 2.4 million in the reported quarter, against USD 1 million in pcp. 
• The company posted a loss from operations of USD 6.23 million in Q3 2020, against USD 1.9 million in Q3 2019.
• Net loss in Q3 2020 stood at USD 6.2 million, against USD 1.8 million in pcp. The rise in net loss was primarily a result of the higher operating expenses discussed above.

Risks associated with investment

The company is a clinical-stage biopharmaceutical company, any delays in completing its clinical trials will increase costs, slow down their product development, timeliness and approval process and would further delay its ability to generate revenue. 

Stock recommendation

The Company is focused on the development of targeted therapies for liver disease arising from non-alcoholic steatohepatitis (NASH) and chronic hepatitis virus infection. They have already completed phase 1 clinical programme for NASH, while phase 2 will be completed by Q2 2021. Recently, the company announced that FDA has accepted its investigational new drug (IND) application for CRV431, a novel cyclophilin inhibitor for the treatment of COVID-19, which is a key positive. Furthermore, it is anticipated by the management that applying proprietary platform of Artificial Intelligence to their drug development program will ultimately save time, resources and money. On the valuations front, the stock is trading at TTM P/BV multiple of 5.5 as against the Industry (Biotechnology and Medical Research) mean P/BV multiple of 16.3. Therefore, based on the facts above, valuation, and risks involved, we recommend "Speculative Buy" rating on the stock at the closing price of USD 2.20 on February 17, 2021.

Source: Refinitiv (Thomson Reuters)

Washington Prime Group Inc

Washington Prime Group Inc. (NYSE: WPG) is a retail REIT and a recognized leader in the ownership, management, acquisition, and development of retail properties. The Company combines a national real estate portfolio with its expertise across the entire shopping center sector to increase cash flow through rigorous management of assets and provide new opportunities to retailers looking for growth throughout the U.S.

Key Highlights

• The group would miss USD 23.2 million interest payment on its series-2024 senior notes: Washington Prime Group Inc. stated to the Securities and Exchange Commission that it would miss a USD 23.2 million interest payment on its series-2024 senior notes while it continues negotiations with its lenders. In the meantime, it has engaged Kirkland & Ellis LLP as legal counsel and Guggenheim Securities LLC as investment banker in negotiations. This led to a free fall in the stock and plummeted approximately 47% in the past two trading session. 

• Widening losses: The company reported higher losses in the three months ended to September 30, 2020 of USD 43.755 million against losses of USD 4.421 million reported a year before period, led by ~22% reduction in rental revenue to USD 120.138 million against USD 154.611 million reported a year before period. Total revenue plummeted ~23% on a YoY basis. 

• A Bearish Trend Reversal: WPG shares have registered a strong bearish reversal trend on the daily price chart, with stocks plunged approximately 47% in the past two trading session and traded significantly below the crucial long-term as well as short-term support levels of 200-day and 50-day SMAs. Also, the stock is trading below all the immediate, short-term as well as long-term support levels, a long-term bearish indicator.

Technical Price Chart (as on February 17^th, 2021). Source: Refinitiv (Thomson Reuters)

Financial Highlights: Q3FY20

Source: Company Filing

• In the Q3FY20, the company has collected 87% rental income and associated charges adjusted for the applicable impact of COVID-19 lease.
• The group’s rental revenue during the third quarter of FY20 plunged by ~22% to US$ 120,138k and Net losses widened significantly by 22% to US$ 43,755k against losses of US$4,421k reported a year before period.
• At the end of Q3FY20, the company cash position stood at US$112 million.
• Fund from Operation significantly plummeted to US$ 16,621k against US$ 100,914k reported a year before.

Risk: The company is significantly exposed to credit default risk and a lower occupancy rate.

Stock Recommendation: Given the default from the company’s end on its series-2024 senior notes which led a free fall in the stock price, and steep bearish technical indicators on daily, weekly and monthly price chart, we recommend an “Avoid” rating at the closing price of US$ 6.35 on February 17, 2021.

Source: Refinitiv

Bionano Genomics, Inc.

Bionano Genomics, Inc. (NASDAQ: BNGO) is a genome analysis company, which offers tools and services based on its Saphyr system to scientists and clinicians conducting genetic research and patient testing. The group also provides diagnostic testing for those with autism spectrum disorder (ASD) and other neurodevelopmental disabilities through its Lineagen business. 

Key Updates:

• Saphyr system to be piloted in a renowned diagnostic center: On February 09, 2021, the group reported installation of its Saphyr system to the University of Network’s Laboratory Program, located in Toronto. The above diagnostic center is one of the largest laboratories in Canada, which performs more than 25 million tests per year.
• Underwriting of Common Stock amounting to USD 200 million: On January 20, 2021, the group announced underwritten public offering of 33,333,350 shares of its common stock at a price consideration of USD 6.00 per share. 

Q3FY20 Financial Highlights:

• BNGO announced its quarterly results, wherein the group posted a total revenue of USD 2.196 million, as compared to USD 3.313 million in the previous corresponding period (pcp). The decline was due to a lower income from product revenue, partially offset by a higher income from service and other revenue.
• Total cost of revenue stood at USD 1.460 million, significantly lower than USD 2.375 million in pcp.
• The group witnessed higher research and development expense and a significant increase in selling, general and administrative costs, which led to a higher total operating expense (USD 10.963 million versus USD 6.623 million in pcp).
• Loss from operations stood higher at USD 10.227 million versus a loss of USD 5.685 million in pcp.
• The group reported its net loss of USD 10.792 million, as compared to a loss of USD 6.398 million in pcp.
• Cash and cash equivalent stood at USD 18.867 million, while total assets were recorded at USD 41.396 million.

Q3FY20 Income Statement Highlights (Source: Company Reports)

Risks: The group is battling with higher selling and administrative expenses, which has led to higher net losses, and continuation of the above trend would lead to higher accumulated deficit.

Stock Recommendation:

The stock of BNGO soared ~2724% and ~3670% in the last three months and nine months, respectively due to rising awareness for genetic sequencing and other genomics technologies, due to rising threat from mutations disease. Moreover, the group has raised funds for its future expansion projects, which is a key positive. However, the group’s recent financial performance is not encouraging. Moreover, on the valuation front, the stock of BNGO is available at a EV to Sales multiple of 144.7x on next twelve months (NTM) basis, which is significantly higher compared to the industry (Healthcare) median of 8.5x. Hence, we recommend an ‘Avoid’ rating on the stock at the closing price of USD 14.54 on February 17, 2021.

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

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