Agile Therapeutics, Inc.
Agile Therapeutics, Inc. (NASDAQ: AGRX) is a women's healthcare company that aims to satisfy women's unmet medical requirements. Twirla (levonorgestrel and Ethinyl estradiol) transdermal system, the company's initial product, is non-daily prescription contraception. Twirla is based on Skinfusion, a groundbreaking transdermal patch that delivers medication through the skin.
Why Should Investors Make an Exit?
- Lackluster Financials: AGRX reported revenue first time in 9MFY21 (ended September 30, 2021) to the tune of USD 2.59 million. The company witnessed an increase in net losses to USD 51.54 million during 9MFY21 vs. USD 34.23 million during 9MFY20.
- Stresses Margin Profile: In Q3FY21, AGRX’s reported gross margin was -110.6% vs. the industry median of 65.6% and reported net margin of -1,225.6% in the period under consideration which was lower than the industry median of 15.9% .
- Leveraged Balance Sheet: The company is more exposed to balance sheet risk than its peers, with a Debt/Equity ratio of 1.54x as of September 30, 2021, compared to the industry norm of 0.41x. Furthermore, its long-term debt-to-total-capital ratio was 60.6%, compared to the industry average of 26.4% for the same period. These leveraged financials put the corporation at risk of huge swings due to the slightest adjustment in interest rates.
- Product Concentration Risk: Apart from Twirla, AGRX currently has no commercially marketed products. Product sales have only made a small profit thus far. Excessive reliance too much on a single product could harm the financials.
- Weak Liquidity Profile: The company's current ratio at the end of Q3FY21 is 2.27x, compared to the industry median of 3.05x. This implies relatively lackluster liquidity profile against the industry median.
- Technical weakness: On the daily chart, AGRX prices are sustaining below the downward sloping trend line and facing the resistance of the same. Furthermore, the momentum oscillator RSI (14-period) is trading at ~34.49 level, reversing from the higher levels. However, on the daily chart the prices are trading below the trend-following indicators 21-period and 50- period SMA, which may act as a resistance level for the stock. An important support level for the stock, is placed at USD 0.22 while the key resistance level is placed at USD 0.39.
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.
AGRX's share price has declined 81.70% in the past nine months and is currently leaning towards the lower band of the 52-week range of USD 0.25 to USD 2.47. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 0.24.
Considering the company's highly leveraged balance sheet, lackluster financials, weak liquidity profile, stressed margins, current valuation and associated risks. we recommend a "Sell" rating on the stock at the closing price of USD 0.28, up 1.63% as of March 04, 2022.
Three-Year Technical Price Chart (March 04, 2022). Source: REFINITIV, Analysis by Kalkine Group
* The reference data in this report has been partly sourced from REFINITIV.
* All forecasted figures and industry information have been taken from REFINITIV.