Coherus BioSciences Inc.

CHRS Details

Coherus BioSciences Inc. (NASDAQ: CHRS) is a biotherapeutics company concentrated on the biosimilar and immuno-oncology market in the United States. The company is currently involved in commercializing UDENYCA, a long-acting granulocyte colony-stimulating factor, in the United States. The company’s product pipeline consists of four drugs namely, CHS-1420 (an adalimumab (Humira) biosimilar), ranibizumab (Lucentis) biosimilar, a bevacizumab (Avastin) biosimilar, and toripalimab, an anti-PD-1 antibody. As of May 25, 2021, the company's market capitalization stood at USD 999.18 million.

Toripalimab to be Showcased at 2021 ASCO Annual Meeting: On April 29, 2021, the company and Shanghai Junshi Biosciences Co., Ltd. announced that a late-breaking abstract detailing the clinical data of toripalimab in first-line treatment for recurrent or metastatic nasopharyngeal carcinoma (NPC), will be featured at American Society of Clinical Oncology (ASCO) 2021 in the plenary session on June 06, 2021. CHRS and Junshi Biosciences had previously entered into a partnership for the development and commercialization of toripalimab in the US and Canada.

Adalimumab Biosimilar Accepted by FDA for Review: On February 17, 2021, CHRS announced that the U.S. Food and Drug Administration (FDA) has agreed to evaluate the Biologics License Application (BLA) for CHS-1420, adalimumab (Humira) biosimilar product, and has set a Biosimilar User Fee Act action date for December 2021. If approved, CHRS plans to launch the adalimumab biosimilar on or after July 01, 2023.

CHRS Product Pipeline (Source: Investor Presentation, February 2021)

Q1FY21 Results: The company reported a 28.53% decline in net product revenue to USD 83.03 million in Q1FY21 as compared to USD 116.18 million in Q1FY20. Net loss during Q1FY21 was USD 172.95 million, compared to a net income of USD 35.57 million in Q1FY20, primarily driven by a USD 145.0 million upfront payment to Junshi Biosciences for U.S. and Canada rights to toripalimab and one-time charges associated with the termination of the CHS-2020 biosimilar program as part of the strategic realignment of R&D resources toward immuno-oncology. The company's net cash from operations was only USD 1.37 million in Q1FY21 vs USD 13.48 million in Q1FY20.

Key Risks: As several of the bigger and more experienced players in the industry have a substantial advantage in the R&D of biosimilar products, the company's potential revenue growth in the future could be impacted.

Outlook: In its Q1FY21 Report, the company stated that it expects the revenue from UDENYCA and market penetration to rise in H2FY21, assuming the COVID-19 pandemic recedes, and treatment patterns normalize. CHRS expects full-year R&D and SG&A expenditures of USD 370 million to USD 400 million, except the USD 145 million upfront payment provided to Junshi Biosciences in the first quarter.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Data Source: REFINITIV, Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CHRS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CHRS has declined by 32.62% in the past 9 months and has currently breached the previous 52-week low of USD 13.15 (52-week range of USD 13.15 to USD 22.22). We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 15.65. On the technical chart, the next support level is USD10.86. Considering the correction current trading levels, strong product pipeline, and decent financials, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 12.95, down by 1.82% as of May 25, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

Aptorum Group Limited

APM Details

Aptorum Group Limited (NASDAQ: APM) is a biopharmaceutical company dedicated to discovering, developing, and commercializing medicines to treat oncology and infectious diseases. The company is also undertaking therapeutic projects in neurology, gastroenterology, metabolic disorders, women’s health, and other diseases. The company operates in two segments, namely, 1) Therapeutic segment includes developing drug molecules and treating human diseases that require unmet medical needs, and 2) Non-Therapeutics segment includes molecular-based rapid pathogen identification and detection diagnostics (RPIDD) based technology projects, natural supplements (NativusWell), and AML Clinic. However, the company currently does not have any drug candidates that any regulatory authority in any country has approved. The company currently generates its revenues from AML Clinic operations in Central, Hong Kong. As of May 25, 2021, the company’s market capitalization stood at USD 89.13 million.

APM Product Pipeline (Source: Company Website)

Positive Phase 1 Clinical trial for ALS-4 and progress of SACT-1: On May 24, 2021, the company announced the ongoing improvement of its phase 1 clinical trial for ALS-4 (a first-in-class anti-virulence approach based small molecule targeting Staphylococcus aureus) and advancement in its ongoing Pre-IND preparation for SACT-1 (a repurposed small molecule targeting neuroblastoma), under which the Pre-IND meeting with the US FDA has been completed.

FY20 Results: The company reported a 70.32% increase in healthcare services revenue to USD 911.5 thousand in FY20 (ending December 31, 2020) compared to USD 535.16 thousand in FY19 (ending December 31, 2019). The company derives its healthcare services income from its AML Clinic situated in Central, Hong Kong. The company increased its R&D (research and development) expenses to USD 11.58 million in FY20 compared to USD 6.93 million in FY19.

Key Risks: The company currently has no approved products for commercial distribution. Many of the company’s products are in various stages of R&D and are prone to the risks of failure. Further, if regulatory authorities reject the commercialization of any drug candidate, then the company’s operational and financial state of affairs could be seriously affected.

APM Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: APM has declined by 28.21% in the past three months and is currently leaning towards the lower band of the 52-week range of USD 1.16 to USD 14.23. The stock is currently trading below the 200 DMA levels. On the technical chart, the closest support level is USD 2.40. The target price of USD 2.92 represents a P/E of 17.23x on LTM EPS of USD 0.17. Considering the significant decline in the stock price in the past three months, new drug applications, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 2.62, down by 6.43% as of May 25, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.