BELLUS Health Inc.

Clinical Development of BLU-5937: BELLUS Health Inc. (TSX: BLU) is a clinical-stage bio-pharmaceutical development company, advancing novel therapeutics for conditions with a high unmet medical need. As on 23 June 2020, the market capitalization of the company stood at CAD855 million.

Quarterly Performance (For the Period Ended 31 March 2020): During the quarter, the company was focused on advancing the clinical development of a treatment option - BLU-5937, which can be effective for the individuals suffering from a chronic cough. It completed patient dosing in the Phase-2 RELIEF trial of BLU-5937 and is on track to report the top-line data in the Second Half of FY20. In the same time span, the company had cash and cash equivalents and short-term investments of USD78.06 million as compared to USD89.98 million at 31 December 2019. During the quarter, net loss of the company increased to USD10.13 million from USD3.6 million in the pcp.

Quarterly Financial Highlights (Source: Company Reports)

Key Risks: Factors that may affect the ability to expand and develop its project pipeline include the impact of general economic conditions, general conditions in the pharmaceutical industry and the impact of the COVID-19 pandemic on the Company’s operations. It is also exposed to the risk of third-party reliance to conduct pre-clinical studies and clinical trials for BLU-5937 where the actual results may vary from the forecasted results.

Stock Recommendation: During the first quarter, the company received the FDA approval for the application for BLU-5937 for the treatment of chronic pruritus associated with atopic dermatitis. As per TSX, the stock of BLU is moving towards its 52-weeks’ high level of CAD16.69 but holds the potential for growth. The stock of BLU gave a return of 43.83% on the YTD basis and a return of 20.19% in the past three months. During the quarter, Return on Equity of the company witnessed an improvement over the previous quarter. In the same time span, current ratio of the company was 15.47x, higher than the industry median of 7.02x. This indicates that the company has good amount of liquidity to pay-off its current liabilities using its current assets. Considering the current trading levels, attractive returns on YTD basis and improvement in fundamentals, we recommend a ‘Hold’ rating on the stock at the closing market price of CAD 14.2, up by 0.6378% on 23 June 2020.

BLU Daily Technical Chart (Source: Refinitiv, Thomson Reuter)

Trillium Therapeutics Inc.

Update on the Phase I Dose Escalation Study of Its CD47 Blocker TTI-622: Trillium Therapeutics Inc. (TSX: TRIL) is a Canadian clinical stage immuno-oncology company which is engaged in developing therapies for the treatment of cancer. As on 23 June 2020, the market capitalization of the company stood at CAD969.87 million. The company has announced data from an ongoing phase 1 dose escalation study of TTI-622 in patients with advanced relapsed or refractory lymphoma. The study shows tolerability, consistent with the red blood cell-sparing property associated with this molecule. Both drug exposure and target engagement have shown dose response relationships.

Quarterly Performance (For the Period Ended 31 March 2020): The company made a strong start to FY20 with cash and cash equivalents of USD135.1 million, as compared to USD22.7 million at 31 December 2020. This was mainly due to proceeds from the underwritten public offering completed in January 2020 and exercise of warrants. During the quarter, net loss of the company increased to USD70.1 million from USD8 million in the pcp. This was mainly due to the revaluation losses on the warrant liability and deferred share unit liability.

Quarterly Financial Highlights (Source: Company Reports)

Key Risks: The company is exposed to unknown risk factors that could cause Trillium's actual results, performance, or achievements to be materially different from any future results. The performance of the company is dependent on the results of its clinical trials. If in case the trial is not a success, the financial performance is going to be materially impacted.

Stock Recommendation: Despite the challenges from the global pandemic, the company continues to execute on its key strategic objectives. The stock of TRIL gave a return of 169.47% in the past three months and a return of 42.86% in the last one month. The stock is currently trading close to its 52-week high of CAD13.08. During the quarter ended March 2020, current ratio of the company witnessed an improvement over the previous half and stood at 6.06x, up from 1.72x. On a Trailing Twelve Month Basis (TTM), the stock is trading at a price to book value multiple of 9x, higher than the industry median (Healthcare) of 2.8x and thus, seems to be overvalued. Considering the current trading levels, key risks, and increasing net losses, we suggest investors to keep an eye on the business activities and have a watch stance on the stock at the closing market price of CAD11.73, down by 8.3594% on 23 June 2020.

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

Disclaimer

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