Diffusion Pharmaceuticals Inc

Diffusion Pharmaceuticals Inc (NASDAQ: DFFN) is an innovative biopharmaceutical Company focused on the treatment of acute shortage of oxygen. Moreover, the lead product candidate is not commercialized yet.

Investment Highlights – Diffusion Pharmaceuticals Inc – Hold at USD 0.79

• The Company had completed Phase 1b study for the leading drug candidate trans sodium crocetinate (TSC) related to the treatment of Covid-19 patients, and the results were encouraging.
• DFFN had sufficient cash to fund three short-term Oxygenation Trials in the United States during 2021.
• The Company does not have any long-term debt on the balance sheet.
• From a technical standpoint, 20-day EMA (USD 0.74) supports the upside potential in the stock price.

Key Risks

• The consensus forecast indicated that the Company would report losses for the next four years.
• Changes in government policies and regulations could affect the overall business of the Company.
• The Company is in the development stage and has not reported any revenue yet.

Q1 FY21 Financial Highlights (for three months ended 31 March 2021, as of 10 May 2021)

(Source: Company result)

• The Company had widened the net loss from negative USD 2.56 million during Q1 FY20 to negative USD 4.64 million for Q1 FY21.
• The Company’s TCOM and COVID trials resulted in the growth of R&D expenses to USD 2.92 million for Q1 FY21.
• DFFN had cash & cash equivalents of USD 46.60 million as of 31 March 2021, while it had USD 18.5 million as of 31 December 2020.

One Year Share Price Chart

 (Analysis done by Kalkine Group)

Conclusion

The Company had strengthened the balance sheet by completing a fund-raising activity of USD 34.5 million in February 2021. Moreover, DFFN believed that it would be able to fund the operations till 2023 with existing cash & cash equivalents as of 31 March 2021. Furthermore, the Company had managed to complete several key milestones during the first quarter of 2021. The Company anticipates the completion of the DLCO Trial and Induced Hypoxia Trial during H2 FY21. The stock made a 52-week low and high of USD 0.595 and USD 1.850, respectively.

Based on the impressive development pipeline and adequate liquidity to fund operations till 2023, we have given a "Hold" stance on Diffusion Pharmaceuticals Inc at the current market price of USD 0.79 (as of 24 June 2021 at 09:38 AM ET), while we will suggest fresh buying once we identify further growth catalysts for the Company.

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