Ampio Pharmaceuticals Inc

Ampio Pharmaceuticals Inc (NYSE: AMPE) is a biopharmaceutical company involved in the treatment of inflammatory conditions through its immunology-based therapies.

On 4 August 2021, the Company will provide a corporate business update.

Investment Highlights – Speculative Buy at USD 1.43

• The Company is well-positioned to develop the first novel biologic for Osteoarthritis.
• AMPE has recently announced strong, positive results in the Phase I trial of its multi-centre AP-019. It could reduce all-cause mortality in COVID-19 respiratory distress by 78%.
• On the liquidity front, AMPE has a higher current ratio than the industry median of 3.10x since H2 FY2020.
• On the leverage front, AMPE has a lower debt/equity ratio than the industry median of 0.47x since FY2020.
• From a technical standpoint, 14-day RSI at about 25.69 is at the oversold zone, implying a potential uptick in the stock price in the near term.

Key Risks

• AMPE operates in an industry with strict regulations. Any changes in regulations could lead to significant costs for the Company.
• Any delay or failure in clinical trials could hamper the prospects of future revenue generation.
• The Company is a loss-making one. Hence, there could be liquidity issues if it could not arrange external funding in time.

Q1 FY2021 Financial Highlights (for three months ended 31 March 2021, as of 5 May 2021)

   (Source: Company Website)

• The Company does not generate any revenue as of Q1 FY2021.
• The Company had less research and development expenses YoY in Q1 FY2021, with a decline of around USD 2 million. It was caused by fewer clinical trials due to the Covid-19 pandemic.
• Due to the reduction in clinical trials as well as a fall in sponsor related expenses, net loss was down ~29.2% YoY in Q1 FY2021.
• Due to significant cash used in operating activities, cash position in Q1 FY2021 was down ~8.9% QoQ.

One Year Share Price Chart

(Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

The Company has a strong prospect in developing critical therapies for prevalent inflammatory conditions. It had several successful clinical trials related to Osteoarthritis. It has also started the Phase II trial of its multi-centre AP-019, which could reduce Covid-19 induced mortality rates significantly after the success of its Phase I trial recently. Meanwhile, the stock made a 52-week low and high of USD 0.62 and USD 2.98, respectively.

Based on the better liquidity and leverage position of the Company than the industry, its reduced losses, and decent progress made in clinical trials, we have given a “Speculative Buy” recommendation on Ampio Pharmaceuticals Inc at the current market price of USD 1.43 (as of 15 July 2021 at 11.05 AM ET).

Document Security Systems Inc

Document Security Systems Inc (NYSE: DSS) provides brand protection technology to financial institutions and governments and protects them from fraud and costly counterfeiting.

Investment Highlights – Speculative Buy at USD 1.52

• Recently, Impact Biomedical Inc., a wholly-owned subsidiary of DSS, provided updates on its key research projects. It strives to position itself as a global leader in the future of biotechnology.
• DSS launched Liquid Value Asset Management Limited to capitalise on algorithmic trading opportunities.
• The Company added Ivy Brook Medical Center to its American Medical REIT Portfolio and now owns 99% of it.
• On the liquidity front, DSS has a higher current ratio than the industry median of 1.38x since FY2020.
• On the leverage front, DSS has a lower debt/equity ratio than the industry median of 0.67x since FY2020.
• From a technical standpoint, 14-day RSI at about 24.79 is sustaining at the oversold zone. Hence, there could be a potential uptick in the stock price in the near term.
  

Key Risks

• The Company makes losses as of Q1 FY2021. Hence, there could be stress on its liquidity.
• Any delay in the key research projects could lead to significant cost overruns, affecting the margins of DSS.
• Any breach in DSS’s technology could lead to reputational loss as well as loss of customers.

Q1 FY2021 Financial Highlights (for three months ended 31 March 2021, as of 14 May 2021)

(Source: Company Website)

• Driven by a ~21.4% YoY rise in the sale of printed products, overall revenue in Q1 FY2021 surged ~17.1% YoY.
• However, there was a ~59.1% YoY rise in operating costs in Q1 FY2021 due to increased manufacturing costs and employee expenses.
• This significant rise in operating costs, as well as substantial loss on investments, resulted in net loss surging ~104.1% YoY in Q1 FY2021.
• However, driven by the issuance of equity, the cash position rose to ~USD 52.1 million in Q1 FY2021 from ~USD 5.2 million in FY2020.

One Year Share Price Chart

(Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

The Company is undertaking key research projects. Moreover, it is diversifying its portfolio and trying to capitalise on new opportunities. Its recent equity offering has significantly improved its liquidity position, which could be used in further key initiatives. Meanwhile, the stock made a 52-week low and high of USD 1.50 and USD 10.55, respectively.

Based on the decent revenue growth, the better liquidity and leverage position of the Company than the industry and its recent key initiatives, we have given a "Speculative Buy" stance on Document Security Systems Inc at the current market price of USD 1.52 (as of 15 July 2021 at 11.25 AM ET).

*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.