Selecta Biosciences Inc.

Selecta Biosciences Inc. (NASDAQ: SELB) is a clinical-stage biopharmaceutical company, which uses its ImmTOR immune tolerance platform, which is designed to give rise to antigen-specific immunity, mitigating unwanted immune responses.

Key Updates:

• Decline in cash balance: In FY21, the company reported a reduction in cash and cash equivalents at USD 114.0 million, as compared to USD 138.6 million in FY20. This remains a key concern and might hinder the company’s liquidity.

• Highly leveraged balance sheet: The company’s D/E ratio stands higher at 1.14x in FY21, as compared to the industry median of zero. This might hinder the company’s overall financial flexibility. Additionally, the investors of SELB are prone to higher balance sheet risk as the company reported its long-term debt to total capital of 40.9% in FY21, as compared to the industry median of 0.1%.

• Collaboration with Ginkgo Bioworks: Recently, the company collaborated with Ginkgo Bioworks, a leading horizontal platform for cell programming and would develop tolerogenic therapies that selectively mitigate unwanted immune responses. The group is focused to develop safer and more effective next-generation gene therapy viral capsids. 

Stock recommendation:

Despite a higher income in FY21, the company ended with net loss due to rise in input costs. Continuation of the above trend remains a key concern for the group as it might lead to higher accumulated deficit for the firm. The stock derailed ~53% and ~63% in the last three months and six months, respectively, which indicates higher selling pressure. Moreover, the stock closed below its 50-days and 100-days simple moving averages, indicating a bearish pattern. The stock is available at a higher valuation of price to book value of 8.1x on TTM basis, as compared to the industry (Healthcare) median of 1.8x. Hence, considering the aforesaid facts, we give a ‘Watch’ stance on the stock of SELB at the closing price of USD 1.50 on March 16, 2022.

1-Year Technical Price Chart (as on March 16, 2022). Source: REFINITIV, Analysis by Kalkine Group.

Technical Analysis Summary

Note: Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.