Zynerba Pharmaceuticals, Inc.

 

ZYNE Details
 
Sneak Peak in 1QFY20 Operational Highlights: Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) is a clinical-stage specialty pharmaceutical company with focus on the development of transdermal cannabinoid therapies used for rare and near-rare neuropsychiatric disorders.  ZYNE announced its quarterly results for the period ended 31 March 2020, wherein the company reported a net loss from operations amounting to $12.3 million, higher than the net loss of $9.1 million in Q1FY19. Diluted net loss per share for the quarter stood at $0.53. Net loss for the quarter included $1.7 million in foreign currency losses. Research and development expenses stood at $6.9 million as compared to $6.3 million in the previous corresponding quarter. General and administrative expenses stood at $3.9 million as compared to $3.2 million in 1QFY19.  The company reported $60.6 million in cash and cash equivalents as on 31 March 2020. Notably, the company does not generate any revenue as it has no marketed products and collaborations.
 

1QFY20 Income Statement Highlights (Source: Company Reports)
 
Outlook & COVID-19 Impact:  The company took necessary steps to ensure the safety and well-being of patients and caregivers, curtail risk of supply disruption, and achieve its growth strategies.CONNECT-FX, a pivotal study, has been evaluating Zygel for doctoring patients with Fragile X syndrome (FXS). The company expects top-line numbers from CONNECT-FX trail in the 2QFY20. The company also expects a new drug application (“NDA”) with FDA in the 2HFY20. Further, the company also stated that phase 2 open label trial of Zygel in 22q is ongoing and data is expected in the third quarter of 2020.Also, the company expects top-line information from phase 2 BRIGHT trials of Zygel in Autism Spectrum Disorder (ASD) in 2QFY20.
 
Stock Recommendation: The stock of ZYNE closed at $4.155 with a market capitalization of ~$97.98 million. The stock is trading at the lower band of its 52-week trading range of $2.55 to $16.47. The stock of the company has run up 6.27% in the last one month but corrected 15.72% in the last three months. As per the Management, the current cash and cash equivalents are enough to fund operations and capital obligations through the second half of FY21. For the clinical advancement purposes and to commercially develop its product line, ZYNE might seek additional financing in the coming years. On the valuation front, the stock is trading at a P/BV multiple of 1.6x as compared to the industry mean of 5x on TTM (Trailing Twelve Months) basis. Considering the aforesaid facts, we give a “Speculative Buy” on the stock at the closing price of $4.155, down 6.63% as on 12 May 2020.

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

BioCryst Pharmaceuticals, Inc.

 

BCRX Details
 
1QFY20 Key Highlights for the Period Ended 31 March 2020:BioCryst Pharmaceuticals, Inc. (NASDAQ: BCRX) is engaged in the development of advanced therapeutics to treat cardiovascular diseases, cancer, autoimmune illnesses, and viral infections through the use of crystallography and structure-based drug design. During 1QFY20, the company reported total revenues of $4.8 million, up from $5.9 million in the year-ago period. The decrease in revenues was due to reduced peramivir product sales and lower royalty revenues. Research and development (R&D) expenses stood at $29.9 million, up from $27.5 million reported in the year-ago period, on the back of higher spending on the complement-mediated diseases program and other preclinical development initiatives. Selling, general and administrative (SG&A) expenses increased from $6.2 million reported in the year-ago period to $15.9 million. Net loss for the quarter stood at $37.6 million as compared to a net loss of $31.1 million, reported in the year-ago period. 
 
Other Recent Update: On May 5, 2020, the company stated that the United States Patent and Trademark Office delivered a notice of grant for a new composition of matter patent. The said approval covers patent protection for berotralstat in the U.S. market for a time span of four years through October 2039.
 

Revenues Highlight (Source: Company Reports)
 
Balance Sheet Position: At the end of 31 March 2020, cash and investments stood at $113.1 million, indicating a rise from $136.2 million at the end of December 31, 2019. Total assets at the end of the period amounted to $136.6 million. During the quarter, cash used in operations amounted to $23.1 million.
 
What to Expect: For FY20, the company expects net cash used in operating activities to be between $125 to $150 million. BCRX further expects operating expenses to be between $135 to $160 million, which eliminates equity-based compensation expense. Further, the company expects the approval of oral, once daily berotralstat in Japan in the second half of 2020. The company is getting an optimistic response from HAE patients as well as physicians about the availability of oral medicines to treat and cure their disease.
 
Stock Recommendation: The stock of BCRX closed at $5.41 with a market capitalization of $834.5 million. The stock made a 52-week low and high of $1.38 and $8.08 and is currently trading at the upper band of the range. The stock of the company has run up 91.36% in the last three months and 167.63% in the last one month. The company remains on track for the ongoing commercial launch arrangements in the United States, Europe and Japan. The company does not expect postponements due to COVID-19 outbreak.Notably, the company’s debt to equity ratio stood at 21.99x in 1QFY20. On the valuation front, the stock is trading at an EV/Sales multiple of 19.6x as compared to the industry median of 18.2x on TTM (Trailing Twelve Months) basis. Considering the latest results, valuation on TTM basis, and current trading levels, we have a watch stance on the stock at the closing price of $5.41, down 2.35% as on 12 May 2020.
 
 
BCRX Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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