Trillium Therapeutics Inc.

Exuberant Price Appreciation, Upside capped: Trillium Therapeutics Inc. (TSX: TRIL) is a clinical-stage company developing therapies for the treatment of cancer.

Recent Updates:

• The company announced that it is not experiencing any disruption on the supply side and has enough drug to complete ongoing trials of TTI-621 and TTI.
• The company announced that clinical sites are putting enrollments on hold due to the COVID-19 outbreak, which could result in a slump in its enrollment of new patients.
• The Group is continuously assessing its liquidity position in order to sail through the financial crisis. The company had ~US$ 135 million in cash and investments as of March 31, 2020. Moreover, it raised US$ 117 million through public stock offering in January.

FY19 Financial Highlights: For the period ended December 31, 2020, TRIL reported a higher net loss of US$ 41.62 million, as compared to US$ 32.87 million in FY18.The Company witnessed a rise in net finance costs, which came in at US$ 6.15 million, as compared to a net finance income of US$ 3.51 million in the previous financial period. General and administrative expenses were higher at US$ 5.44 million, increased from US$2.78 million in the previous financial year. Cash and marketable securities stood at US$ 22.67 million, significantly lower than US$ 33.39 million due to a decline in working capital followed by a decrease in cash used in operations and higher costs due to clinical trial related payments and higher manufacturing costs. The Company exited the year with total assets of US$ 25.41 million.

Stock Recommendation: The stock of TRIL soared more than six-times during the past one year. TRIL is a clinical-stage company operating in developing cancer therapies. We believe the segment is uniquely placed, and any positive response from USFDA can give a significant boost to its business. The stock witnessed immense buying which drove it higher. However, the expected slump in the enrolment activities is likely to remain a drag. Notably, the company expects clinical trials to continue, but the supply chain risk has increased drastically following the COVID-19 outbreak. Hence, considering the up move in the stock and increased supply chain risk, we recommend a ‘Watch’ stance on the stock at the closing market price of CAD 6.56 as on April 28, 2020.

TRIL One-Year Daily Price Chart (Source: Thomson Reuters)

Sabina Gold & Silver Corp.

Temporary Halt in Drilling Activities to Slowdown Operations: Sabina Gold & Silver Corp. (TSX: SBB) is an emerging precious metals company with district scale, advanced, high-grade gold assets in Nunavut, Canada. Sabina Gold & Silver Corp fully owns Back River Gold Project. 

On account of the current COVID 19 disaster, the Company has stopped its drilling activities at Back River project on a temporary basis.

FY19 Income Statement Highlights: For the period ended December 31, 2020, SBB posted a loss from operating activities of CAD 11.42 million, stood higher than CAD 7.76 million. The increase was majorly driven by inclusion of write-down of mineral properties expense amounting to CAD 5.74 million and higher depreciation expense, partially offset by lower administration and general expense and lower share-based payments. Net loss for the year has expanded to CAD 8.09 million from CAD 6.18 million in FY18.The Company reported net cash used in investing activities at CAD 33.16 million, as compared to CAD 61.07 million in FY18. Cash and cash equivalents stood at CAD 21.23 million as on December 31, 2020.

FY19 Income Statement Highlights (Source: Company Reports)

Stock Recommendation: The stock of SBB generated an exuberant return of ~92% in the last one year. To weather the current COVID 19 crisis, the Company has deferred its spring drilling program at the Back-River project and halted its other development activities in order to pump liquidity to mitigate the near-term challenges. The Company is operating on drilling programs and yet to report its exploration process. The recent shut down of the drilling activities has put a halt of the company’s operation on a temporary basis. The company’s projects are well funded, and the current halt is unlikely to put any issues with existing permits. The stock got an increasing response from the investors in the recent past, on the hope of positive result from the Gold drilling projects. However, we believe the stock has appreciated considerably in the recent past, implying that the positives are priced in. Hence, we recommend a ‘Watch’ rating on the stock at the closing market price of CAD 1.98 as on April 28, 2020.

SBB One-Year Daily Price Chart (Source: Thomson Reuters)

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