Stocks’ Details

Alterity Therapeutics Limited

US FDA provides Development Path for ATH434: Alterity Therapeutics Limited (ASX: ATH) is engaged in the development of therapeutic drugs for age-related diseases. As on 1 July 2020, the market capitalization of the company stood at ~$17.64 million. The company has recently announced that it has received guidance from the US Food and Drug Administration (FDA) with respect to the development pathway for ATH434. It is the lead compound for the treatment of Multiple System Atrophy. ATH434 not only crosses the blood brain barrier in humans but that clinically tested doses achieved concentrations in the brain that were comparable to or exceeded those associated with efficacy in animal models of disease.

FDA agreed on the non-clinical investigations required to support the Phase 2 study. In addition, the FDA agreed to key aspects of the Company’s Phase 2 study design, including the proposed patient population, safety monitoring plan, and strategy for evaluating drug exposure during the study. The FDA has also urged ATH to utilize data from a natural history study (BioMUSE, or biomarkers of Progression in Multiple System Atrophy) that Alterity has planned with clinical and neuroimaging experts at Vanderbilt University Medical Center in the US.

Quarterly Update: During the quarter ended 31 March 2020, the company continued to explore non-neurological options for the zinc ionophore PBT2, including potential use as an antimicrobial agent. It also stated that it had not been materially impacted by the outbreak of COVID-19. During the quarter, the company used $2.98 million of cash for operating activities and ended the quarter with a cash balance of $10.4 million. 

 
Quarterly Cash Flow Activities (Source: Company Reports)

Key Risks: The company is in the development phase and is not sufficiently advanced with the development of any of its candidate products, to market or generate revenues from their commercial application. The company may not generate sufficient or sustainable revenues to be profitable.

Stock Recommendation: As per ASX, the stock of ATH has given a return of 21.43% in the past three months. On 1 July 2020, the stock witnessed a substantial increase of 870.588%. This was mainly due to the increase in price and trading volume of ATH’s securities on ASX and the company’s Approved Depositary Receipts (ADRs) on NASDAQ Capital Market overnight. Each ADR represents sixty ordinary shares. On a TTM basis, the stock is trading at an EV/Sales multiple of 78.5x, higher than the industry median (Healthcare) of 10.2x and thus seems overvalued at the current juncture. Considering the price movement, decent returns in the past one month and key risks, we suggest investors to book profit and recommend a “Sell” rating on the stock at the current market price of $0.165, up by 870.588% on 1 July 2020. 

PNX Metals Limited

Update on Mineral Resource at Fountain Head: PNX Metals Limited (ASX: PNX) is engaged in a Detailed Feasibility Study (DFS) of its zinc-gold-silver Hayes Creek Project and conducts mineral exploration at its Pine Creek region of the Northern Territory. As on 1 July 2020, the market capitalization of the company stood at ~$25.43 million. The company has stated that it has delivered an increase in contained gold and gained further support for geological understanding and confidence in the mineralization at the Fountain Head gold Project. The company added 18koz of Au, representing a 13% increase in contained gold.

Quarterly Update: During the quarter, the company completed the drilling and has provided support to the Mineral Resource Estimate and increased confidence in the geological model and Project economics. Over the quarter, the company raised $1.6 million via the exercise of options and placement of shares and reported a cash balance of $3 million. During the quarter, it used cash of around $242,000 in operating activities. 


Quarterly Cash Flow Activities (Source: Company Reports)

What to Expect: The Company is assessing low-cost, low-risk and scalable processing options to rapidly monetize and generate early cash flow from the gold resources.

Key Risks: The company is exposed to various key risks including financial, statutory/regulatory, legal, asset management and protection, etc. As a result of COVID-19 crisis, the company had to suspend field-based activities. This may substantially affect the financial performance of the company.

Stock Recommendation: The company is capitalizing on a supportive current and forecast gold price environment and has drilled 59 Reverse Circulation holes to support the geological model. The stock of PNX made a 52-week high of $0.1 as on 01 July 2020. The stock of PNX gave a return of 42.86% in the past one year and a return of 11.11% in the past one month. Considering the aforesaid facts and current trading levels, we give a ‘Sell’ recommendation on the stock at the current market price of $0.01 on 1 July 2020. 

Argent Minerals Limited

Drill Rig Arrives to ARD’s Flagship Kempfield Deposit:  Argent Minerals Limited (ASX: ARD) is engaged in the exploration of silver, lead, zinc, copper, and gold. As on 1 July 2020, the market capitalization of the company stood at ~$16.45 million. The company has started the RC drilling program, which is targeting the highly prospective Au-Cu footwall area and exploration drilling of the existing Ag-Pb-Zn resource in north and east. The drilling program at Kempfield is strategic and is targeting drilling into the four zones, namely- Gold-copper footwall, Higher-grade lead and zinc Henry zone, Lead, zinc and silver zone, and Silver and barite zone.

Update on Quarterly Activities: ARD has recently been awarded $255k from NSW Government funded Frontiers Cooperative Drilling program towards drilling its West Wyalong and Loch Lilly Gold Copper projects. The company has reduced costs by more than $200,000 in the past six months. During the quarter, the company has used $409k in operating activities.


Quarterly Cash Flow Activities (Source: Company Reports)

What to Expect: The company has planned a drilling program of 3000 meters and is targeting the highly prospective Au-Cu footwall area to the west. Argent Minerals Limited is expecting the contract with Strike Drilling to be finalized shortly.

Key Risks: The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risks. Also, the circumstances relating to COVID-19 are changing rapidly. Thus, the financial performance of the company is dependent of the duration and severity of the virus.

Stock Recommendation: The Company is implementing a prudent financial plan designed to preserve the value of the business in the long term. As per ASX, the stock of ARD gave a return of 44.44% in the past six months and a return of 30% in the last one month. The stock is also trading close to its 52-weeks’ high level of $0.031. Considering the current trading levels, attractive returns in the past one month, and softer market conditions due to the severity of the virus, we recommend a “Sell” rating on the stock at a current market price of $0.03, up by 15.385% on 1 July 2020. 

 
Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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