Arcturus Therapeutics Holdings Inc

Arcturus Therapeutics Holdings Inc (NASDAQ: ARCT) is the leading RNA medicines company engaged in the development of infectious disease vaccines and focused towards the liver and rare respiratory diseases.      

Investment Highlights - Arcturus Therapeutics Holdings Inc – Speculative Buy at USD 62.89

• The Company is well-positioned to fund its operations for more than two years, with a current cash balance of USD 307.1 million as of 30 September 2020.
• The Company had executed the Definitive Supply Agreement of USD 275 million with the Israeli Ministry of Health.
• The Company had received an allowance from the US FDA and approval from the Singapore Health Sciences Authority to proceed with the Phase 2 clinical study for its Covid-19 vaccine ARCT-021.
• From a technical standpoint, the Company is trading at a 14-day RSI of 43.78, which indicates further upside potential in the stock.

Key Risks

• The Company is exposed to investment risk towards developing innovative products.
• The Company is exposed to compliance risk.
• The risk of lockdowns and restrictions may persist for an uncertain duration of time impacting the earnings of the Company.

Recent Developments

On 04 January 2021, the Company updated that it had received approval from U.S. FDA for the Phase 2 study of its Covid-19 vaccine ARCT-021 subject to review of data from Phase1/2 study.

On 30 December 2020, the Company announced that it had selected ARCT-032 as a development candidate for progressive hereditary disease, Cystic Fibrosis (CF).

On 28 December 2020, the Company had received the allowance from Singapore Health Sciences Authority to proceed with the Phase 2 clinical study for its vaccine ARCT-021.

Financial Highlights (for Q3 FY20 ended on 30 September 2020 as on 09 November 2020)

(Source: Company result)

• The Company had reported USD 2.3 million of revenue during Q3 FY20 compared to USD 3.3 million during Q3 FY19 due to decline of USD 0.8 million in revenue related to reimbursement of CureVac.
• Arcturus had reported a net loss of negative USD 21.0 million in Q3 FY20 compared to negative USD 7.43 million during Q3 FY19.
• The Company had reported operating expense of USD 23.27 million during Q3 FY20.
• Regarding the financial position, the Company had cash and cash equivalents of USD 307.1 million as of 30 September 2020, while it was USD 71.5 million as of 31 December 2019.

One Year Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company had strong financial position reflected by the sufficient cash to fund operations for more than two years. The Company had anticipated interim Phase 2 data of Covid-19 vaccine candidate ARCT-021 by early 2021 and proceed with Phase 3 study in Q2 FY21 as it had received approval from the regulatory authority of Singapore and allowance from US FDA. The Company had selected ARCT-032 for its CF Lung disease. The Company had executed an agreement regarding USD 45 million recourse loan facility and USD 175 million in vaccine purchases with Singapore. On the technical front, the Company is trading at a 14-day RSI of 43.78, indicating an upside potential in the stock price. The stock made a 52-week low and high of USD 8.51 and USD 129.71, respectively.

Based on its various vaccine developments mentioned above, we have given the "Speculative Buy" stance on Arcturus Therapeutics Holdings Inc at the closing market price of USD 62.89 (as on 12 January 2021).

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