Sesen Bio Inc

Sesen Bio Inc (NASDAQ-GM: SESN) is a US-listed late-stage clinical Company. The Company is focused on developing medicines through fusion protein.

Investment Highlights – Sesen Bio Inc – Expensive at USD 2.32

• The Company generated revenue for the first time in the financial year 2020, while remained in the development stage and has shown an increase in the operating expenses.
• As per valuation metrics, EV/Sales multiple of the Sesen Bio Inc is currently higher as compared to the corresponding multiple of the Biotechnology & Medical Research industry, reflecting overstretched valuations.
• In the last one month, the Company delivered a negative return of ~18.88% and delivered lower returns compared to the benchmark Index.
• From the technical standpoint, shares were trading below the short-term support level of 20-day (USD 2.77) simple moving average price, which reflects a downtrend in the stock.

Key Risks

• The covid-19 outbreak has resulted in disruptions in clinical trials which will have a negative impact on the Company’s performance.
• Any failure to meet the quality and comply with regulatory laws could lead to increased cost and even recall or suspension of products.

Financial Highlights – FY2020 (31 December 2020) (released on 15 March 2021)

(Source: Annual Report, Company Website)

• For the financial year 2020, driven by higher license revenues, the revenue increased to $11,236 thousand.
• Due to higher revenue, the operating loss and the loss of the period declined in the financial year 2020.
• The cash balance as on 31 December 2020 increased to $52,389 thousand (31 December 2019: $418,121 thousand).

One Year Share Price Chart

(Source: Refinitiv, Thomson Reuters)

Conclusion

The Company has shown an improvement in financial performance in the financial year 2020. The Company is in the development stage and hence rely on grants and cash balances to carry on all the business activities. SESN generated revenue for the first time in 2020, while have not made any product sales from the date of inception. The Bottom-line performance has improved, while profitability remained in the negative zone. Sesen Bio operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and reducing its costs to preserve cash. The stock made a 52-week low and high of USD 0.51 and USD 3.57, respectively.

Based on the factors as highlighted above, we believe the stock of Sesen Bio Inc is “Expensive” at the closing price of USD 2.32 (as on 12 April 2021), with support from few catalysts needs to be evaluated at a later stage such as benefits of started commercial product sales.

VistaGen Therapeutics Inc

VistaGen Therapeutics Inc (NASDAQ-CM: VTGN) is a biopharmaceutical Company at a clinical-stage. The Company is engaged in the development and commercialization of products for diseases and disorders related to CNS (central nervous system).

Investment Highlights - VistaGen Therapeutics Inc – Avoid at USD 2.08

• Despite the improved financial performance in Q3 and 9M FY2021, the Company needs to manage operating expenses more effectively unless it will further hamper profitability in the near future.
• As per valuation metrics, Price/Book Value multiple of the VistaGen Therapeutics Inc is currently higher as compared to the corresponding multiple of the Biotechnology & Medical Research industry, reflecting overstretched valuations.
• In the last three months, the Company delivered a negative return of ~7.56% and delivered lower returns compared to the benchmark Index.
• From the technical standpoint, shares were trading below the short-term support level of 20-day (USD 2.19) simple moving average price, which reflects a downtrend in the stock.

Key Risks

• Failure in cybersecurity and a critical data breach could hamper the operation as well as the reputation of the company.
• The Company’s operations are impacted by risks related to market trends, political change and change in the regulatory authority.

Financial Highlights – Q3 and 9M FY2021 (31 December 2020) (released on 11 February 2021)

(Source: Quarterly Report, Company Website)

• In the third quarter and the nine months period of the financial year 2021, driven by higher sublicense revenues, the revenue increased to $313,600 and $647,600, respectively.
• Driven by higher revenue and lower operating expenses, the operating loss and the loss of the period declined in the Q3 and 9M of the financial year 2021.
• The cash balance as on 31 December 2020 increased to $104,331,100 (31 March 2019: $1,355,100).

One Year Share Price Chart

(Source: Refinitiv, Thomson Reuters)

Conclusion

The Company has shown an increase in financial performance in the third quarter and nine months period of the financial year 2021. The Company generated revenue for the first time in FY2021. The Bottom-line performance has improved, while profitability remained in the negative zone. VTGN is in the development stage and hence rely on grants and cash balances to carry on all the business activities. The Company’s operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and reducing its costs to preserve cash. The stock made a 52-week low and high of USD 0.35 and USD 3.18, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on VistaGen Therapeutics Inc at the closing price of USD 2.08 (as on 12 April 2021), and with support from few catalysts needs to be evaluated at a later stage such as new contract signed and focus on executing business objectives.