SkinBioTherapeutics PLC

SkinBioTherapeutics PLC (LON: SBTX) is an FTSE AIM All-Share listed life science entity focused on skin health.

Investment Rationale – SELL at GBX 31.95

• Commercialization Worries: It can fail to achieve the expected growth from AxisBiotix-Ps™ in the short term given the macroeconomic instabilities, subdued consumer confidence, and operational challenges arising from the Omicron variant.
• Weak Fundamentals: SBTX is still not a stable commercial entity and doesn’t report any revenue. Therefore, it continued to report operational losses in FY21.
• Technical Indicators: From a technical standpoint, the MACD line has given a bearish crossover against the signal line and hovering below the centreline.
• Underperformance Against Index: SBTX’s stock price has fallen around 48% in the past six months and showing significant underperformance against the FTSE AIM All-Share index.

Key Risks

• Liquidity Risk: The Company has not reported profit yet, and thus, can face liquidity risk. Moreover, macroeconomic instabilities can cause credit risk and delay the launch of new products.
• Pandemic Induced Disruption: The resurgence in the Omicron variant of coronavirus can limit the Company’s ability to formulate, innovate, launch, and commercialize new products.

Financial Highlights (for the year to 30 June 2021, as of 30 November 2021)

(Source: Company Website)

• Product Launch: The launch of AxisBiotix-Ps™ was launched 12-month earlier, and thus, early sales were commenced in the UK and US.
• Liquidity: The Group ended the year with a cash balance of £4.6 million (FY20: £2.2 million).

Share Price Chart

 (Data Source: REFINITIV, analysis done by Kalkine Group)

Valuation Methodology: EV/Sales Approach (FY22) (Illustrative)

Conclusion

SBTX is trading as a penny stock with a history of operating losses. Although it has boosted liquidity with the recent fundraising, the near-term growth prospects seem gloomy as the market acceptance of the recently launched product (AxisBiotix-Ps™) is yet to be tested. Moreover, there is a significant commercialization risk and thus, the stock has shown a massive downtrend in the past six months. Therefore, it is prudent to liquidate the position as per the risk-return profile of investors. The stock made a 52-week high and low of GBX 88.00 and GBX 28.50, respectively.

Based on the weak fundamentals, continued losses, significant downtrend, and unfavorable valuation conducted above, we have given a “SELL” recommendation on SkinBioTherapeutics PLC at the current market price of GBX 31.95 (as of 21 January 2022, at 9:05 AM GMT).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.