Revive Therapeutics Ltd (CSE: RVV) is a life sciences company focused on the research and development of therapeutics for infectious diseases and rare disorders, and it is prioritizing drug development efforts to take advantage of several regulatory incentives awarded by the U.S. Food and Drug Administration (“FDA”) such as Orphan Drug, Fast Track, Breakthrough Therapy and Rare Pediatric Disease designations.

Key Highlights

• Update on Clinical Trial for Bucillamine: The Company recently gave an update on its FDA Phase 3 clinical study to examine the safety and effectiveness of Bucillamine, an oral medication with anti-inflammatory and antiviral effects, in patients with mild to moderate COVID-19.
• Degrading financials: The Company's net loss for the three and six months ended December 31, 2021, was CAD 4.0 million and CAD 8.9 million, respectively, compared to a net loss of CAD 2.4 million and CAD 6.9 million for the three and six months ended December 31, 2020. Furthermore, the Company had no income in each of the periods shown.
• Elevated cash used in operating activities: The firm reported increased cash used in operations in H1 2022, at CAD 7.4 million, compared to CAD 2.1 million in pcp. Furthermore, its working capital was CAD 8.4 million on December 31, 2021, down from CAD 16.1 million on June 30, 2021. Cash balance also decreased to CAD 9.2 million from CAD 16.5 million. The decline in working capital as well as cash and cash equivalents is mostly attributable to operational costs incurred in H1 2022.
• Trading near the upper band of the Bollinger Bands: Recently, the stock witnessed a healthy rally on the daily price chart and has moved near the upper band of the Bollinger band, indicating the stock is perhaps overbought and due for a price correction or a consolidation.

Source: REFINITIV, Analysis by Kalkine Group 

Stock recommendation

Recently, FDA has allowed the Company to proceed with a randomized, double-blind, placebo-controlled confirmatory Phase 3 clinical trial protocol to evaluate the safety and efficacy of Bucillamine in patients with mild-moderate COVID-19. This news gave a solid jump to its share price, as a result the share price started trading near its upper band of the Bollinger band, indicating the stock is perhaps overbought and due for a price correction or a consolidation.

Furthermore, it reported multifold increases in operational expenditures, resulting in a comprehensive loss of CAD 4.0 million and CAD 8.9 million for the three- and six-months ending December 31, 2021, both of which are excessive when compared to pcp. In addition, because of rising operational expenditures, its working capital and cash balance have plunged.

As a result of the stock's thin financials, no revenue visibility in a near term, we recommend a "Avoid" rating on RVV at the last closing price of CAD 0.38 on April 22, 2022. Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.