Apex Technology Acquisition Corp

Apex Technology Acquisition Corp (NASDAQ: APXT) is a special purpose acquisition corporation, which raised US$350.0 million from its initial public offer. It came into existence for asset acquisition, entering a merger, capital stock exchange, and business reorganization.

Investment Rationale – Speculative Buy at USD 12.97

• From a technical standpoint, 200-day SMA (11.88) seems favourable and indicating an upward trend in the stock.
• On 23 November 2020, Apex, AvePoint, and Merger Subs announced a Business Combination Agreement, which holds significant potential for the Company’s prospects.
• AvePoint reported record growth in operating cash flow in FY20, which stood at US$19.1 million.
• APXT has outperformed the benchmark index by generating a stellar return of around +20.76% over the past six months, while the Nasdaq index has delivered around +16.90% return.

Risk Assessments

• The business will suffer if the Company fails to develop new products, invest in new business lines, and successfully grow the user base.
• AvePoint may not be able to achieve profitability since it has a history of operating losses.
• The Combined entity might face management challenges with increased complexities.

Recent News

11 March 2021: APXT announced the financial results of AvePoint and reported a 31% year-on-year increase in revenues and a 66% increase in subscription revenue, with a GAAP Operating Loss of US$15.4 million.

Financial Highlights for the period ended 31 December 2020 (as on 18 December 2020)

   (Source: Company Website)

• For FY20, APXT reported a net loss of US$4,251,085, which consisted of franchise taxes of US$201,196, and operating costs of US$5,309,612.
• The net cash used in operating activities in FY20 was US$2,419,063.
• As of 31 December 2020, the Company reported US$351,858,320 of cash and marketable securities held in the trust account.
• The Group does not intend to raise additional funds in the near future to manage the operating activities.

Year Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

AvePoint demonstrated a solid finish to FY20 with a record level of cash generation. Therefore, collaboration with AvePoint shall create ample opportunities for the Company. Upon the business combination, Apex will be entitled to hold 17,905,000 shares of Combined Company. Moreover, APXT has substantial cash resources to meet its operating expenses. The Group does not have any long-term debt, operating lease, or long-term liabilities. Stock 52 week High and Low were USD 17.90 and USD 9.13, respectively.

Based on recent developments regarding the consummation of the Business Combination, and robust fundamentals of AvePoint, we have given a “Speculative Buy” stance on Apex Technology Acquisition Corp at the closing price of USD 12.97 (as on 16 March 2021).

Obseva SA

Obseva SA (NASDAQ: OBSV) is a biopharmaceutical entity that focuses on the commercialization and development of therapeutic solutions pertinent to woman's reproductive health and pregnancy.

Investment Rationale – Avoid at USD 3.48

• From a technical standpoint, 20-day (3.83) is not supporting an upside potential.
• The Company does not generate revenue, and thus, it is dependent upon external funding for pursuing growth opportunities.
• The losses have worsened in FY20 against FY19, while the Company had to reduce its research and development expenses.
• The share price return of OBSV has significantly underperformed against the benchmark index over the last 1 year. The stock price of OBSV and NASDAQ in the last 1 year were around -9.14% and +53.08%, respectively.

Risk Assessments

• Unfavourable regulatory developments can create challenges for the commercialization of products.
• The Covid-19 pandemic can result in the delay of contracts, and thus, it can impact the cash flows.

Recent News

10 February 2021: ObsEva announced that it made significant progress across all aspects in FY20. It is targeting New Drug Application (NDA) submission of Yselty® for uterine fibroids in Q2 FY21 and marketing authorization application (MAA) approval in Q4 FY21. It is also planning Phase 3 EDELWEISS 3 readout for Yselty® for endometriosis in Q4 FY21.

Business Update for the year ended 31 December 2020 (as on 5 March 2021)

• OBSV is pursuing partnerships and new indications to maximize pipeline candidates.
• The phase 2b dose-ranging study is scheduled to initiate in Q4 FY21.
• The Company is also exploring a suitable partner for long-term funding.
• As of 31 December 2020, the Company had US$31.2 million of cash and cash equivalents, which shall be sufficient to manage its planned operations until Q2 FY22.

One Year Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company does not generate any revenue yet and reported a net loss of US$83.0 million in FY20. The research and development expenses in FY20 reduced to US$67.5 million from US$88.1 million in FY19. Moreover, the Covid-19 pandemic has created substantial uncertainties for the commercialization of products. Even the economic downturn has created a challenging environment to raise additional funds. Therefore, it is rational to avoid the investment at the current position. Stock 52 week High and Low were USD 6.30 and USD 1.86, respectively.

Based on the limited operating history, absence of revenue, and uncertain market conditions, we have given an “Avoid” stance on Obseva SA at the closing price of USD 3.48 (as on 16 March 2021), while we look to reviewing the regulatory objectives for FY21.

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