Stocks’ Details 

Vir Biotechnology Inc. 

VIR and GSK Expands Globally: Vir Biotechnology, Inc. (NASDAQ: VIR) is a clinical-stage immunology company, which is focused on merging immunologic visions to treat and prevent severe infectious diseases. The company’s expansion pipeline comprises of a product that aims to treat the influenza A, hepatitis B virus, human immunodeficiency virus and tuberculosis. On October 6, 2020, the company along with its partner GlaxoSmithKline stated that they are increasing their COMET-ICE study to phase III, thus assessing their monoclonal antibody candidate VIR-7831 for the initial COVID-19 treatment in patients who are at an elevated possibility of hospitalization.

2QFY20 Key Highlights for the Period Ended 30 June 2020: During the quarter, the company reported total revenues of $67 million, up from $2 million reported in the year-ago period. The increase in revenues was primarily due to a higher grant revenue. Net loss during the period amounted to $31.2 million, as compared to a net loss of $33.9 million reported in the year-ago period. Research and development expenses were $79.7 million, as compared to $29.8 million reported in the year-ago period, owing to ongoing clinical expenses relating to VIR-7831, VIR-3434 and VIR-1111, along with collaboration expenses. General and administrative expenses stood at $16.4 million, up from $8 million reported in the year-ago period. As at 30 June 2020, the company had cash balance of ~$552.4 million.

Key Financial Highlights (Source: Company Reports)

What to Expect: In 4QFY20, VIR expects to begin a Phase 2 clinical trial in the northern hemisphere for VIR-2482. In 2HFY20, VIR intends to begin a Phase 1 clinical trial for VIR-1111, an HIV T cell vaccine based on human cytomegalovirus. Further, VIR & Glaxo also expect to commence a phase 2 trial on VIR-7832, later in 2020

Stock Recommendation: The stock of VIR closed at $40.89 with a market capitalization of ~$5.2 billion. The stock has made a 52-week low and high of $11.65 and $75.00 and is currently trading below the average of 52-weeks’ price band. The stock of the company has run up 36.8% in the last six months. VIR has witnessed a substantial rise in its share price in the last one month (+44.08%), due to its ongoing efforts associated with the development of anti-COVID-19 medicines. On the technical analysis front, the stock price of VIR has a support level of ~$38.2 and a resistance level of ~$42.5.  Considering the latest results, expanding relationship with GlaxoSmithKline, its financial flexibility and upward price movement, we give a “Buy” recommendation on the stock at the closing price of $40.89 per share, down by 1.94% on 9 October 2020. 

Vaxart, Inc 

VXRT in Legal Tussle: Vaxart, Inc (NASDAQ: VXRT) is a clinical-stage company that is engaged in developing and manufacturing of a broad range of oral recombinant vaccines based on its commercial delivery platform. On October 8, 2020, Levi & Korsinsky, LLP issued a class action lawsuit to all the persons or entities who purchased or acquired VXRT’s securities between June 25, 2020 and July 25, 2020. The complaint contends that throughout the period shareholders of VXRT (Defendants) issued substantially false or misleading statements.

VXRT Expands relationship With Kindred Biosciences: On October 7, 2020, Kindred Biosciences, Inc.’s a wholly-owned subsidiary—Centaur Biopharmaceutical Services, expanded an agreement with VXRT for the manufacturing of the latter’s oral vaccine for COVID-19 and other vaccine candidates.

VXRT States FDA Clearance: On September 14, 2020, the company stated that the review of its COVID-19 Investigational New Drug (IND) application has been finalized by the US Food and Drug Administration (FDA), for its Phase 1 clinical trial evaluating its oral COVID-19 vaccine candidate.

2QFY2020 Financial Highlights: During the quarter, the company reported revenue of ~$523,000, as compared to ~$85,000 reported in the year-ago quarter. The increase in the top-line was on the back of the reversal of the reserve for sales returns for Relenza and revenue from the Janssen contract. Net loss for the quarter stood at ~$9 million, as compared to a loss of $5.6 million reported in 2QFY19. Research and development expenses for the quarter came in at $5.1 million, up from $3.7 million reported in the year-ago period. The increase was on the heels of manufacturing expenses associated with the COVID-19 vaccine candidate. General and administrative expenses also increased from $1.4 million reported in 2QFY19 to $3.9 million, due to higher stock-based compensation costs and severance expenses. The company exited the quarter with a cash balance of $44.4 million.

VXRT Highlight (Source: Company Report)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of VXRT closed at $7.29 with a market capitalization of ~$796 million. The stock has made a 52-week low and high of $0.27 and $17.49, respectively. On the year-to-date basis, the stock has provided a return of 225.17% and in the last one-month period, it has provided a return of ~35.5%. On the technical analysis front, the stock price of VXRT has a support level of ~$6.5 and a resistance level of ~$8.5.  We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price with a correction of single digit (in % terms). For the purpose, we have taken peers like Alnylam Pharmaceuticals Inc (NASDAQ: ALNY), Vertex Pharmaceuticals Inc (NASDAQ: VXRT), and Moderna Inc (NASDAQ: MDRN). Hence, considering the past movement in the stock, Valuation and current trading levels, we give an “Expensive” rating on the stock at the current market price of $7.29 per share, up by 0.97% on 9^th October 2020. We further suggest investors to wait for better entry levels.

 

Velodyne Lidar, Inc. 

VLDR Inks Deal With RoboSense: Velodyne Lidar, Inc. (NASDAQ: VLDR) is a lidar technology, which is engaged in offering real-time 3D vision for autonomous systems. VLDR was formerly known as Graf Industrial Corp. On October 8, 2020, VLDR inked a long-term global cross-licensing agreement with RoboSense comprising a wide range of 360° surround-view lidar sensors. This mutually advantageous association includes both existing and future patents of both companies. Velodyne and RoboSense have also decided to terminate all the existing legal proceedings in the U.S and China that occur between the two companies.

2QFY20 Key Highlights: During the quarter, the company reported loss from operation $485,980, as compared to $221,356 reported in the year-ago quarter. Net loss for the quarter stood at ~$417,843, as compared to a profit of $ 355,051 reported in 2QFY19. Net cash used from operating activities for the six months ended June 30, 2020, stood at $755,575. The company exited the quarter with a cash balance of $382,747.

VLDR Highlight (Source: Company Report)

 

Stock Recommendation: The stock of VLDR closed at $16.92 with a market capitalization of ~$2.9 billion. The stock made a 52-week low and high of $9.87 and $32.5 and is currently trading at the lower band of the range. In the last one month, the stock went down by ~41.5% but went up by 66.5% in the last six months period. Notably, in the last one year, the stock went up 67.9%. The company is set to report its 3QFY20 results on November 5, 2020. On the technical analysis front, the stock price of VLDR has an immediate support level of ~$15.2 and a resistance level of ~$17.2. Thus, in light of past movement in the stock, nil revenue and loss-making business, we advise investors to avoid the stock at the current market price of $16.92 per share, up by 1.32% on 9th October 2020, and wait for catalysts to drive the stock. 

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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