OptiNose, Inc.

OptiNose, Inc. (NASDAQ: OPTN) is a pharmaceutical company, which is focused on the development and marketing of products for patients treated by ear, nose and throat (ENT) and allergy specialists.

Key Highlights:

• Rising Total-Debt: The company reported a surge in total debt to USD 125.202 million, from USD 74.531 million in FY19, which remains a key concern. Moreover, the total stockholder’s equity shrank to USD 6.788 million, from USD 61.583 million in FY19 as accumulated deficit continue to mount. Moreover, interest expense during FY20 stood at USD 12.6 million, higher than USD 7.3 million in FY19.

• Commercialization of XHANCE: The group has introduced XHANCE within the ENT and allergy specialty segments and is targeting 15,000 physicians to treat ~3.5 million targeted patients. The company has a sales force of ~100 territory managers, who are expected to cater to 10,000 ENT and allergy specialists. Moreover, the company indulged in a co-promotion agreement with kaléo, which started from October 2020. With the above collaboration, the product is expected to promote across an audience of ~6,000 prescribers, about half of these are present outside the boundary of ~10,000 healthcare professionals.

Q4FY20 Financial Highlights:

• OPTN announced its quarterly result, wherein the company reported total revenues of USD 16.347 million, higher than USD 11.081 million in the previous corresponding period (pcp). The increase was driven by higher net product revenue (USD 15.597 million v/s USD 11.081 million in pcp).
• Total costs and expenses stood higher at USD 36.799 million, from USD 34.002 million in pcp, due to an increase in the cost of product sales, higher Research and development expense and a surge in Selling, general and administrative costs. Loss from operations reduced to USD 20.452 million, from a loss of USD 22.921 million in pcp.
• The group reported its net loss at USD 23.864 million v/s a net loss of USD 24.996 million in pcp.
• Cash and cash equivalents were recorded at USD 144.156 million, while total assets were recorded at USD 188.813 million.

Q4FY20 Income Statement Highlights (Source: Company Report)

Risks: The company might face a liquidity crunch due to constant losses, which have resulted in a higher accumulated shareholder’s deficit. Moreover, the success of XHANCE would depend upon the acceptability by several physicians and doctors.

Stock Recommendation:

The group is focusing on expanding its product across international territory in the coming days. The company is expecting a net revenue from XHANCE of more than USD 80 million in FY21. T The company expects its operating expenses for FY21 to be in the range of USD 137 million – USD 142 million, higher than USD 128.816 million in FY20. The company is struggling with rising input costs, a higher deficit and a negative cash flow, which have taken a toll on the company’s overall performance. Hence, we prefer to remain on the sideline. Considering the aforesaid facts, we suggest an ‘Avoid’ recommendation on the stock at the closing price of USD 3.55 on March 23, 2021.

One-Year Price Chart (as on March 23, 2021). Source: Refinitiv (Thomson Reuters)

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