Aptorum Group Limited

APM Details

Aptorum Group Limited (NASDAQ: APM) is a clinical-stage biopharmaceutical business focused on developing and commercializing therapeutic assets to treat disorders with unmet medical needs, notably in cancer (including orphan oncology indications) and other infectious diseases. The company's sole source of income was the provision of healthcare services in Hong Kong. As of October 25, 2021, APM's market capitalization stood at USD 88.35 million.

Latest News:

• Receipt of FDA Approval: On September 15, 2021, APM reported that the US Food and Drug Administration (FDA) approved its Investigational New Drug (IND) application to begin clinical studies of SACT-1, a repurposed minor molecule medication for the treatment of neuroblastoma that is taken orally.

H1FY21 Results:

• Rise in Sales: The company reported an increase of 94.88% in revenues to USD 0.64 million in H1FY21 (ended June 30, 2021) compared to USD 0.33 million in H1FY20 due to a rise in the number of patients being treated during the period.
• Significant Increase in Losses: Due to losses on marketable securities investments, APM's net loss increased to USD 17.10 million in H1FY21 compared to USD 6.99 million in H1FY20.
• Decent Balance Sheet: As of June 30, 2021, the company had a cash balance (including marketable securities) of USD 20.64 million with total debt (including finance lease liabilities) of USD 1.31 million.

Key Risks:

• Commercialization Risk: There are currently no authorized items for commercial distribution by the firm. Many of the company's products are still in the R&D stage and are vulnerable to failure. Furthermore, if regulatory authorities reject any medication candidate for commercialization, the company's operational and financial situation may be severely harmed.

Outlook:

• APM anticipates being able to meet its operational and capital expenditure requirements for at least the next 12 months using existing cash and restricted funds, as well as an undrawn line of credit facility from related parties.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

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

APM Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

APM stock price has fallen 27.86% in the past nine months and is trading close to the lower end of the 52-week range of USD 2.00 to USD 4.94. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 40.76. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 2.00.

Considering the company's uncertain growth prospects, doubtful revenue-generating capabilities, increase in losses, current valuation, and associated risks, we recommend a "Sell" rating on the stock at the closing price of USD 2.46, down 0.81% as of October 25, 2021.

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

* All forecasted figures and industry information have been taken from REFINITIV.