VBI Vaccines Inc

Headquartered in Cambridge (Massachusetts), VBI Vaccines Inc (NASDAQ: VBIV) is a Biopharmaceutical Company, which develops vaccine candidates for fighting infectious diseases, such as cytomegalovirus, hepatitis B, and coronaviruses, and glioblastoma.

Investment Rationale – Speculative Buy at USD 2.71

• From a technical standpoint, 14-day RSI (36.74) is hovering around the oversold position, and therefore, a short-term surge can be anticipated.
• VBIV’s stock has yielded a return of nearly 70.44% in the last one year and has significantly outperformed the benchmark Nasdaq index.
• In the past two years, VBIV has invested heavily in research and development, particularly in the 3-antigen prophylactic HBV (hepatitis B virus) vaccine candidate, which holds significant growth potential.
• The Company’s prospects seem promising as it has been preparing for commercialization of HBV vaccine, seeking regulatory approval of VBI-2902 (monovalent Covid-19-specific vaccine), and entered a partnership with Syneos Health and National Research Council of Canada.

Risk Assessments

• The Covid-19 pandemic continued to impact research programs, clinical studies, regulatory review, and site inspections.
• The Company has a history of losses, and it requires additional equity or debt to fund operations in the future.

Recent News

12 April 2021: VBIV affirmed that the Phase 1b/2a study of Hepatitis B Immunotherapeutic Candidate demonstrated T cell responses in more than or equals to 50% of evaluable patients, while the VBI-2601 (therapeutic vaccine candidate) was well-tolerated in both low and high dose levels.

Financial Highlights for the year ended 31 December 2020 (as on 2 March 2021)

 (Source: Company Website)

• During FY20, losses from operations and net losses significantly declined against FY19 despite the decrease in revenue.
• In December 2020, the Company announced the partnership with Syneos Health for the commercialization of 3-antigen HBV vaccine.
• As of 31 December 2020, VBIV had stockholders’ equity of nearly USD$171.7 million and an accumulated deficit of around US$308.6 million.
• At the end of FY20, the Company had cash and cash equivalent of US$93.8 million and nearly US$114.7 million of net working capital.

One Year Share Price Chart    

 (Source: Refinitiv, Thomson Reuters)

Conclusion

Given the significant unmet medical need of GBM (Glioblastoma Management), therapeutic HBV space and Covid-19 vaccine space, the Company has great potential for future growth. Moreover, the Company has invested heavily in R&D, which may bring additional pipeline candidates and other vaccine opportunities. Furthermore, the progress of Hepatitis B immunotherapeutic candidate shown in recent Phase 1b/2a study is boosting the confidence of the Company. The stock made a 52-week High and Low of USD 6.93 and USD 1.02, respectively.

Based on the operational achievement and business capabilities, we have given a “Speculative Buy” stance on VBI Vaccines Inc at the closing price of USD 2.71 (as on 16 April 2021).

Rigel Pharmaceuticals Inc

Rigel Pharmaceuticals Inc (NASDAQ: RIGL) is a biotechnology entity that develops small molecule drugs for cancer, virus, and autoimmune-related diseases.

Investment Rationale – Speculative Buy at USD 3.58

• From a technical standpoint, 200-day EMA (USD 3.23) indicating an upward trend in the stock.
• On 11 March 2021, Rigel completed the patient enrolment in a Phase 2 trial to evaluate the safety of fostamatinib. The National Heart, Lung, and Blood Institute sponsored the study. In the United States, the Fostamatinib is getting marketed as TAVALISSE®.
• Over the past two years (FY18 to FY20), revenue and gross profit have surged at a CAGR of 56.22% and 56.10%, respectively.
• Encouraged by the positive response of phase 2 trial in Covid-19 hospitalised patients of fostamatinib, while the Company has already launched phase 3 trial as well.

Risk Assessments

• The Company prospects are dependent upon its first commercial product, TAVALISSE, and the evolving conditions of the Covid-19 can adversely impact its performance.
• Intense competition, unfavourable regulatory updates, and challenges related to the distribution facilities can also impact business performance.

Recent News

13 April 2021: RIGL unveiled positive results of Phase 2 trial of fostamatinib in hospitalized patients with COVID-19.

7 April 2021: RIGL announced the closing of its licence agreement with Eli Lilly and Company, whereby it will receive US$125 million as upfront cash payment for supporting Rigel's RIP1 inhibitor program.

Financial Highlights for the year ended 31 December 2020 (as 2 March 2021)

 (Source: Company Website)

• For Q4 FY20, RIGL reported a net loss of US$19.2 million from US$17.2 million in Q4 FY19.
• During FY20, net sales for TAVALISSE was US$61.7 million, representing 41% growth on FY19.
• As of 31 December 2020, Rigel had nearly US$57.3 million in short-term investments, cash, and cash equivalents.
• The Company also received US$16.5 million from the US DOD’s (Department of Defense) to support the Phase 3 trial of fostamatinib, to check its effectiveness in the hospitalized Covid-19 patients.

One Year Share Price Chart   

 

 (Source: Refinitiv, Thomson Reuters)

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

Conclusion

Rigel’s phase 2 clinical trial established significant progress for the Covid-19 drug development in extreme cases, which boosted the investor sentiments. Moreover, the FY20 results demonstrated a considerable decline in net loss per share with improved revenue generation. Adjacently, the annual price increase of TAVALISSE shall support the Company’s growth in the future as well. However, there are uncertainties in the short-term as patient-doctor interactions and fewer patient visits during Covid-19 conditions can impact business performance. However, the Company has substantial financial resources to navigate through this challenging phase and manage its project funding requirement and create a significant value for shareholders. The stock made a 52-week High and Low of USD 5.50 and USD 1.45, respectively.

Based on the positive Phase 2 clinical trial (fostamatinib), improved financials, business capabilities and valuation conducted above, we have given a “Speculative Buy” stance on Rigel Pharmaceuticals Inc at the closing price of USD 3.58 (as on 16 April 2021), with a lower double-digit upside potential based on 4.80x EV/NTM Sales (approx.) on FY21E Sales (approx.).

 

*All forecasted figures and Peer/Industry Information have been taken from Refinitiv, Thomson Reuters.