Category: Health

Thursday, February 13, 2020

TherapeuticsMD Inc. (TXMD)

Pre-Q4 Overview: Adjusting Our Earnings Estimates

(current) TherapeuticsMD, Inc. is a women’s healthcare company focused on developing and commercializing products targeted exclusively for women. It manufactures and distributes branded and generic prescription prenatal vitamins, as well as over-the-counter vitamins and cosmetics, under our vitaMedMD’ and BocaGreenMD’ brands. The company is currently developing advanced hormone therapy pharmaceutical products designed to alleviate the symptoms of and reduce the health risks resulting from menopause-related hormone deficiencies. It is also evaluating various other potential indications for our hormone technology, including oral contraception, preterm birth, vulvar and vaginal atrophy, and premature ovarian failure.

Ahu Demir, Ph.D., Biotechnology Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Overview. Prior to fourth quarter earnings reporting, we are updating our estimates and wanted to convey our latest thoughts on the company. In this report, we disclose our estimates for each product, having previously reported total revenue numbers. Our investment thesis remains unchanged as we see healthy volume growth and believe all the products are well positioned in the women’s health space.

Our fourth-quarter estimates for the three commercial products. The company transitioned to commercial state following launches of three products (Imvexxy, Bijuva and Annovera) in 2018-2019. The total revenues from these products reached $10.9 mm in the 9-months of 2019; ($9.9 mm from Imvexxy, $0.6 mm from Bijuva, and $0.4mm from Annovera). We are forecasting $6.7 mm sales for Imvexxy, $1.1 mm for Bijuva and…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, February 12, 2020

Helix Biopharma (HBP: CA)

Pioneer in Cancer Therapy Targeting Tumor Microenvironment (TME)

Helix BioPharma Corp is a Canada-based clinical-stage biopharmaceutical company focused on cancer drug development. It develops therapies in the field of immuno-oncology based on its proprietary technology mainly in the areas of cancer prevention and treatment. The company has Tumor Defense Breakers (L-DOS47), and Tumor Attackers (CAR-T) product candidates in the pipeline.

Cosme Ordonez, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Unique Technology Targeting Tumor Microenvironment (TME). We view Helix Biopharma as a pioneer in the cancer area as the company is developing a platform technology targeting the tumor microenvironment. Helix’s technology is designed to reduce tumor acidity, an escape mechanism which cancer cells utilize to evade the anti-tumor immune response. Tumor acidity has been shown to correlate with resistance to anti-cancer treatment and poor prognosis for cancer patients.

Lead drug L-DOS47 for the Treatment of Cancer. Helix Biopharma’s lead drug, L-DOS47, is in Phase II clinical trials for the treatment of non-small cell lung cancer (NSCLC) and pancreatic cancer. In a clinical trial using L-DOS47 as a mono-therapy for the treatment of NSCLC, treated patients showed reductions in tumor size and…

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, February 12, 2020

Helix Biopharma (HBP: CA)

Pioneer in Cancer Therapy Targeting Tumor Microenvironment (TME)

Helix BioPharma Corp is a Canada-based clinical-stage biopharmaceutical company focused on cancer drug development. It develops therapies in the field of immuno-oncology based on its proprietary technology mainly in the areas of cancer prevention and treatment. The company has Tumor Defense Breakers (L-DOS47), and Tumor Attackers (CAR-T) product candidates in the pipeline.

Cosme Ordonez, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Unique Technology Targeting Tumor Microenvironment (TME). We view Helix Biopharma as a pioneer in the cancer area as the company is developing a platform technology targeting the tumor microenvironment. Helix’s technology is designed to reduce tumor acidity, an escape mechanism which cancer cells utilize to evade the anti-tumor immune response. Tumor acidity has been shown to correlate with resistance to anti-cancer treatment and poor prognosis for cancer patients.

Lead drug L-DOS47 for the Treatment of Cancer. Helix Biopharma’s lead drug, L-DOS47, is in Phase II clinical trials for the treatment of non-small cell lung cancer (NSCLC) and pancreatic cancer. In a clinical trial using L-DOS47 as a mono-therapy for the treatment of NSCLC, treated patients showed reductions in tumor size and…

Get the full report on Channelchek desktop.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Friday, February 7, 2020

DLH Holdings Corp. (DLHC)

Post Call Update; Positive Outlook, Although Waiting Outcome of 3 Major Contracts

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offers services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of Defense and other government agencies. It operates primarily through prime contracts and also derives its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q20. Basic blocking and tackling in the quarter. S3 ERP integration complete. Continue to see active bid pipeline. Legacy business growing, but modestly. S3 revenue down sequentially due to normal quarterly fluctuations. Management remains optimistic about the current business environment.

Major Contract Updates.  No new news on the two VA contracts and the HHS contract. We expect the pharmacy services contract to be decided this year, although it is unlikely to have any material impact on the Company’s results. The logistics part of the VA contract likely will follow the pharmacy award. HHS has yet to send out a RFP but is expected to…

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This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Friday, February 7, 2020

DLH Holdings Corp. (DLHC)

Post Call Update; Positive Outlook, Although Waiting Outcome of 3 Major Contracts

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offers services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of Defense and other government agencies. It operates primarily through prime contracts and also derives its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q20. Basic blocking and tackling in the quarter. S3 ERP integration complete. Continue to see active bid pipeline. Legacy business growing, but modestly. S3 revenue down sequentially due to normal quarterly fluctuations. Management remains optimistic about the current business environment.

Major Contract Updates.  No new news on the two VA contracts and the HHS contract. We expect the pharmacy services contract to be decided this year, although it is unlikely to have any material impact on the Company’s results. The logistics part of the VA contract likely will follow the pharmacy award. HHS has yet to send out a RFP but is expected to…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Thursday, February 6, 2020

DLH Holdings Corp. (DLHC)

1Q20: Solid Start to the Year

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offers services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of Defense and other government agencies. It operates primarily through prime contracts and also derives its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q20 Results. Revenue totaled $52.2 million, compared to $33.8 million last year and above our $51 million estimate. Operating income came in at $3.1 million, compared to $2.6 million last year and in-line with our $3.2 million estimate. Net income totaled $1.6 million, or $0.12 per share, compared to $1.7 million, or $0.13 per share last year and our $1.67 million/$0.13 per share estimate. Higher interest and amortization charges associated with the S3 acquisition impacted the bottom line.

S3 Remains the Driver. S3 generated revenue of $17.3 million in the quarter, This is down from $19.8 million in the fourth quarter of 2019 but we would remind readers that S3 revenues are prone to quarterly fluctuations due to…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Thursday, February 6, 2020

DLH Holdings Corp. (DLHC)

1Q20: Solid Start to the Year

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offers services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of Defense and other government agencies. It operates primarily through prime contracts and also derives its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q20 Results. Revenue totaled $52.2 million, compared to $33.8 million last year and above our $51 million estimate. Operating income came in at $3.1 million, compared to $2.6 million last year and in-line with our $3.2 million estimate. Net income totaled $1.6 million, or $0.12 per share, compared to $1.7 million, or $0.13 per share last year and our $1.67 million/$0.13 per share estimate. Higher interest and amortization charges associated with the S3 acquisition impacted the bottom line.

S3 Remains the Driver. S3 generated revenue of $17.3 million in the quarter, This is down from $19.8 million in the fourth quarter of 2019 but we would remind readers that S3 revenues are prone to quarterly fluctuations due to…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Are Oil Markets Overreacting to the Spread of Coronavirus?

(Note: companies that
could be impacted by the content of this article are listed at the base of the
story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)

The spread of the coronavirus continues to accelerate with China’s Health Commission reporting 361 deaths in mainland China which now surpasses the 249-death count associated with the SARS virus.  Globally, the coronavirus has resulted in more than 800 deaths and has affected more than 17,000 people. The virus is spreading to other nations and is now affecting industries beyond travel, vacation and health.  The energy industry has been hit especially hard with oil prices crashing.  West Texas Intermediate (WTI) oil prices began 2020 on a high note peaking above $63 per barrel on January 2^nd.  Since then, the price of oil has fallen 20% to a price near $50 per barrel.  Is the market overreacting to the impact of the virus or are market concerns warranted?

 

On the Bright Side

The drop in oil price is fear related, not demand
related.  Some analysts believe the drop in oil price is overblown.  Manish Raj, chief financial officer at Velandera Energy, for example, says that there is “no doubt that the actual oil-demand reduction resulting from the coronavirus will be temporary at best.”  Jay Park, chief executive officer at ReconAfrica, says there is “no visible impact to demand just yet” and believes the price movement is being driven by fear.

Oil prices are tracking the SARS outbreak, but this time
is different.  Oil price declined 20% during the SARS outbreak in 2003, a similar drop to that of the coronavirus.  However, Bandana Hari, founder and CEO of energy markets consultancy Vanda Insights, points out that the biggest reason for the decline in oil prices in 2003 was not SARS, but the U.S. invasion of Iraq.  Absent further issues in the Middle East, one could conclude that the impact on oil prices should not be a severe as in 2003.

A supply response may be coming.  OPEC responded to the drop in oil prices by scheduling an emergency meeting on February 4-5 to discuss a cut in production.  Analysts believe OPEC could cut as much as one million barrels per day of production.  This would have a significant impact on a market that produces 80 million barrels per day.

Governments are taking steps to contain the virus.  Nations are responding by limiting flights to and from China and quarantining new arrivals.  The United States, which has reported 11 cases of the virus, allows only a handful of airports to accept flights from China.  Other countries are following suit.  Should the virus be largely contained to China, the impact on oil demand could prove to be less than originally feared.

 

Cause for Concern

China is the world’s largest oil importer. China consumes approximately 20% of the 80 million barrels of oil consumed daily.  Chinese oil demand has dropped 3 million barrels of oil a day, or 20% of its total consumption in response to the coronavirus according to several sources within the Chinese energy industry.  According to Bloomberg, the impact is probably the largest demand shock the oil market has suffered since the financial crisis of 2008-09 and the most sudden since the attacks of September 11, 2001.

The virus is beginning to affect the entire China
economy.  The BBC reports that China’s central bank is prepared to pump 1.2 trillion yuan ($168 billion) into its economy.   One state media outlet estimates that the virus could reduce China’s already fragile economic growth rate by two percentage points, which would equate to $62 billion in lost growth.  Such a shock to China’s economy will undoubtedly have a significant impact on the country’s demand well beyond the virus’s containment.

Suppliers are less able to counter the drop in demand
than in the past.  OPEC has responded to past declines in oil prices by cutting supply and is attempting to do so again.  Unlike the past, however, OPEC’s influence on oil prices has decreased by the growth of the U.S. oil market.  OPEC currently produces approximately 40% of the world’s oil production.  Consequently, its ability to support oil prices by lowering production is questionable.

 

Big Picture

Whether the oil markets are overreacting to the spread of the coronavirus remains to be seen.  Analysts who say the markets are reacting to fears of the virus getting worse are probably right.  On the other hand, analysts who point out the importance of China as a consumer of oil are also right.  The actual impact on oil demand is small at this point but has the potential to grow exponentially, just like the virus.  And, if it does, there will be little producers can do to offset the drop in demand.

Suggested Reading:

C1
Technology’s Potential to Manufacture Candidate Vaccines Against Coronavirus

The Quick Spread of Coronavirus is
Impacting Global Economies and Markets

Sources

https://www.cnbc.com/2020/02/03/oil-falls-to-a-more-than-1-year-low-below-50-on-fears-the-coronavirus-will-slow-global-growth.html, Pippa Stevens, CNBC, February 3, 2020

https://www.cnbc.com/2020/01/28/ceo-coronavirus-impact-on-oil-prices-not-entirely-comparable-to-sars.html?recirc=taboolainternal, Abigail Ng, CNBC, January 28, 2020

https://www.cnn.com/2020/01/31/economy/china-economy-coronavirus/index.html, Laura He, CNN Business, January 31, 2020

https://www.bbc.com/news/business-51347497, BBC, February 2, 2020

https://www.ncbi.nlm.nih.gov/books/NBK92473/, Jong-Wha Lee and Warwick J. McKibbin, “Learning from SARS: Preparing for the Next Disease Outbreak, 2004

https://www.barrons.com/articles/oil-prices-slump-on-fears-the-worst-of-coronavirus-is-yet-to-come-51580468401, Myra P. Saefong, January 31, 2020

https://www.bloomberg.com/news/articles/2020-02-02/china-oil-demand-is-said-to-have-plunged-20-on-virus-lockdown, Alfred Cang, Javier Blas and Sharon Cho, Bloomberg, February 2, 2020

Tuesday, February 4, 2020

TherapeuticsMD Inc. (TXMD)

Low-dose Bijuva NDA filed, Approval is Anticipated in Q4 2020

(current) TherapeuticsMD, Inc. is a women’s healthcare company focused on developing and commercializing products targeted exclusively for women. It manufactures and distributes branded and generic prescription prenatal vitamins, as well as over-the-counter vitamins and cosmetics, under our vitaMedMD’ and BocaGreenMD’ brands. The company is currently developing advanced hormone therapy pharmaceutical products designed to alleviate the symptoms of and reduce the health risks resulting from menopause-related hormone deficiencies. It is also evaluating various other potential indications for our hormone technology, including oral contraception, preterm birth, vulvar and vaginal atrophy, and premature ovarian failure.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Supplement new drug application for Bijuva is submitted. Bijuva is the first and only FDA approved (on October 28 of 2018) hormone therapy of bio-identical estradiol in combination with bio-identical progesterone (P+E, 1 mg/100 mg) for the treatment of moderate to severe vasomotor symptoms due to menopause. The new drug application (NDA) prior-approval efficacy supplement was submitted to the U.S. Food and Drug Administration (FDA) for the lower dose (0.5 mg/100 mg) capsules of Bijuva. The company anticipates a decision by the FDA in Q4 2020. We think this will provide options and dose flexibility for patients.

Commercial uptake continues to grow.  The company has three commercial products, all launched within the past 1.5 years. The company is primarily focused on the first commercial product Imvexxy that reached $4.77 mm sales in Q3 2019, while Bijuva and Annovera reached $0.49mm and $0.40mm. We think the product uptake continues to grow for…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Tuesday, February 4, 2020

TherapeuticsMD Inc. (TXMD)

Low-dose Bijuva NDA filed, Approval is Anticipated in Q4 2020

(current) TherapeuticsMD, Inc. is a women’s healthcare company focused on developing and commercializing products targeted exclusively for women. It manufactures and distributes branded and generic prescription prenatal vitamins, as well as over-the-counter vitamins and cosmetics, under our vitaMedMD’ and BocaGreenMD’ brands. The company is currently developing advanced hormone therapy pharmaceutical products designed to alleviate the symptoms of and reduce the health risks resulting from menopause-related hormone deficiencies. It is also evaluating various other potential indications for our hormone technology, including oral contraception, preterm birth, vulvar and vaginal atrophy, and premature ovarian failure.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Supplement new drug application for Bijuva is submitted. Bijuva is the first and only FDA approved (on October 28 of 2018) hormone therapy of bio-identical estradiol in combination with bio-identical progesterone (P+E, 1 mg/100 mg) for the treatment of moderate to severe vasomotor symptoms due to menopause. The new drug application (NDA) prior-approval efficacy supplement was submitted to the U.S. Food and Drug Administration (FDA) for the lower dose (0.5 mg/100 mg) capsules of Bijuva. The company anticipates a decision by the FDA in Q4 2020. We think this will provide options and dose flexibility for patients.

Commercial uptake continues to grow.  The company has three commercial products, all launched within the past 1.5 years. The company is primarily focused on the first commercial product Imvexxy that reached $4.77 mm sales in Q3 2019, while Bijuva and Annovera reached $0.49mm and $0.40mm. We think the product uptake continues to grow for…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Friday, January 31, 2020

Biotechnology Industry Overview

Ahu Demir, Ph.D, Biotechnology Research Analyst, Noble Capital Markets, Inc.

Listen To The Analyst

Refer to end of report for Analyst Certification & Disclosures

• 2020 Outlook. The biotechnology sector has modestly underperformed the broader markets thus far in 2020. S&P 500 (SP50, +1.4%) and Russell 3000 (RUA, +1.4%) benchmark indices have outperformed both the NYSE Arca Biotechnology (BTK, -2.1%) and NASDAQ Biotechnology (NBI, -2.6%) indices in YTD-2020 (as of 1/28/2020).  We think the major catalysts in the biotechnology sector are the potential approval of Biogen’s aducanumab by the FDA. We think this may significantly impact biotech investors’ sentiment. We also think data updates from ongoing clinical trials with Amgen (AMGN)’s KRAS inhibitor AMG 510 and Forty Seven (FTSV)’s magrolimab are other key catalysts as both have been among compelling developments in the field. We anticipate another active year with M&A transactions as large-cap biotech/pharma still have strong balance sheets (Exhibit 17) and appetite for innovative products and technologies.
• 2019 OVERVIEW. 2019 was a good year for the stock market including the biotechnology sector. BTK (+19.6%) and NBI (+22.9%) indices performed well in 2019. However, they could not match the performance of the benchmark indices: SP50 (+29.8%) and RUA (+29.4%). The average IPO proceeds in 2019 ($143mm) exceeded 2018 numbers ($116mm) and Q1 2019 IPOs reached the record high median number (146.5mm, Exhibit 4). The total gross proceeds of M&A deals in 2019 also showed an uptick (+10%) exceeding the 2018 transactions, despite a modest decline (-3%) in the deal counts (Exhibit 6). Although drug approvals had a slower pace in 2019 with 48 drug approvals compared to a record-high number of 59 in 2018 (Exhibit 12). We think 2019 was a successful year for the biotechnology sector with innovative developments in gene therapies, targeted therapies, large M&A transactions, and strong financing.

Click ‘view previous report’ for company specific disclosures on Noble covered companies.

2019 biotech IPOs

Biotechnology initial public offerings (IPOs) experienced a boom in 2018. 2019 numbers could not match the record numbers of 2018. However, average IPO proceeds in 2019 ($143 million) exceeded 2018 numbers ($116 million). Although number of companies going public was lower in 2019 compared to 2018, the total venture capital backing of this cohort exceeded $9.1 billion (an average of $194 million for companies with disclosed private financings, 13 of which topped the $200 million mark).

54 biotechs went public on global exchanges during 2019, raising a total of nearly $7.6 billion in fresh capital, as of December 6th.

• In the U.S., the highest use of proceeds for IPOs include BridgeBio Pharma (BBIO, $349 million raised in June 2019); Adaptive Biotechnologies (ADPT, $300 million raised in June 2019) and Genmab (GMAB, 300 million raised in June 2019)
• Eight Chinese biopharmaceuticals raised a cumulative $2.3 billion in Hong Kong Stock Exchange (HKEX), nearly ten times the amount of capital raised by European biotechs listing for the first time over the same time period. Hansoh Pharmaceutical Group raised $1.0 billion in June 2019.

The demand for new public biotechnology issues remains strong. In 2019, the biotechnology sector IPO characteristics are shown in Figure 1. The companies were in all development stages, ages, corporate strategies, and modalities.

• The clinical stage of the company showed modest impact in the average proceeds of IPOs, but companies with already marketed products saw the highest proceeds.
• The majority of the companies were 10 years or older.
• Companies who in-licensed assets had the highest average IPO proceeds.
• Small molecule companies dominated the IPO market in 2019 (27%), followed by biologics (12%). Blooming cell therapy field comprises 4% of the IPOs in 2019.

Figure 1. IPO characteristics in 2019.

a) Average proceeds by development stage of lead asset. Hansoh’s $1 billion IPO skewed the average haul of companies in the commercial cohort.

b) Age of companies.

c) Average proceeds by corporate strategy.

d) Number of companies focused on different therapeutic modalities. Biologics includes monoclonal antibodies, peptides and related modalities. Oligos includes RNAi, antisense, and gene therapy and gene editing approaches. 

Source: Morrison et. al. Nature, January 2020, Volume 19

Table 1. Top ten 2019 IPOs by gross proceeds

Source: Morrison et. al. Nature, January 2020, Volume 19

Oncology companies continued to have the largest share of IPO dollars, with more than $2.5 billion in cumulative 2019 IPO capital (Fig. 2a). Among segments of the biotechnology sector, Oncology and Autoimmune areas saw the highest average IPO proceeds (Fig. 2b). Also, the post-IPO market performance of oncology companies (on average 41%) exceeded all therapeutic areas except CNS

Figure 2. IPOs by therapeutic area

Source: Morrison et. al. Nature, January 2020, Volume 19

Recent Sector News

• Epizyme (EPZM)’s tazemetostat (Tazverik) received FDA’s approval for the treatment of epithelioid sarcoma (January 24, 2020)
•  Applied Genetic Technologies (AGTC) lost 15% following data announcement from 22 patients participating in Phase 1/2 studies of its AAV gene therapy in patients with achromatopsia (color blindness) due to mutations in the ACHM CNGB3 or ACHM CNGA3 genes (January 23, 2020). AGTC stock price gained 123% following data readout from X-linked retinitis pigmentosa (XLRP) clinical program demonstrating durable improvement in visual function six months after dosing (January 9, 2020)
•  The FDA approved olaparib (Lynparza, a PARP inhibitor) as frontline maintenance treatment for pancreatic cancer patients with germline BRCA-mutations (December 30, 2019)
• Merck (MRK) acquired ArQule (ARQL) for $2.7 billion (December 9, 2019)
•  Forty Seven (FTSV)’s shares gained 333% after data presented at the American Society of Hematology conference showing 92% overall response rate in 24 high-risk myelodysplastic syndromes (MDS) patients who were treated by magrolimab (December 9, 2019)

Important upcoming catalysts in our SELECTED coverage universe

Dyadic International (DYAI), Outperform rating, $9 Price Target (PT, view previous report by Ahu Demir, Ph.D.)

• Accomplishment of C1 glyco-engineering (human-like glycosylation) in 2020
• Bio-comparability data from certolizumab biosimilar program in 2020

Onconova (ONTX), Outperform rating, $1.30 Price Target (PT, view previous report by Ahu Demir, Ph.D.)

• Presentation at the RAS-Targeted Drug Discovery Summit Europe on 25-27 February 2020
• IND submission for ON123300 in 3Q 2020
• Topline data for the registrational INSPIRE trial of rigosertib in 1H 2020

Trovagene (TROV), Outperform rating, $23 Price Target (PT,
view previous report by Cosme Ordonez, M.D., Ph.D.)

• Data update from Phase 2 mCRPC program at the Genitourinary Cancers Symposium (ASCO-GU) on February 13-15, 2020
• Data update from Phase 1b/2 AML study at the European Hematology Association (EHA) annual meeting on June 13-16, 2020

Promis Neurosciences (PMN), Outperform rating, $1.00 Price Target (PT, view previous report by Cosme Ordonez, M.D., Ph.D.)

• Data update from Alzheimer’s disease program targeting neurotoxic Tau at the Alzheimer’s Association Conference to be held in Washington D.C. on February 12-13, 2020

Market Dynamics

Exhibit 1-1: Biotechnology Relative Price Performance in 1 year (as of 01/28/2020)

Source:  Noble Life Science Research, Capital IQ

S&P 500 (SP50, +24.1%) and Russell 3000 (RUA, +23.0%) benchmark indices have outperformed the NYSE Arca Biotechnology (BTK, +4.2%) and NASDAQ Biotechnology (NBI, +9.2%) indices in 1 year (as of 1/28/2020). Notable stock price outperformance in the BTK index (in alphabetical order) include Acadia, (ACAD, +88.0%), Alnylam (ALNY, +49.6%), Bio-Techne (TECH, +33.2), Charles River Laboratories (CRL, +32.3%), and Seattle Genetics (SGEN, +76.4%).

Exhibit 1-2: Biotechnology Relative Price Performance 2019

Source:  Noble Life Science Research, Capital IQ

NYSE Arca Biotechnology (BTK, +19.6%) and NASDAQ Biotechnology (NBI, +22.9%) indices have performed well in 2019; however, they could not match the performance of the benchmark indices S&P 500 (SP50, +29.8%) and Russell 3000 (RUA, +29.4%).

Exhibit 2-1: Top/Bottom 5 Small Cap Stock Performance, 1 year (as of 1/27/2020)

Source:  Noble Life Science Research, Capital IQ

Top stock performers of NBI index for the year of 2019 include Axsome Therapeutics (AXSM, +3149.6%), Kodiak Sciences (KOD, +770.4%), XBiotech (XBIT, +353.4%), Achillion Pharmaceutics (ACHN, +300.6%), Eidos Therapeutics (EIDX, +310.7%); bottom performers include CymaBay (CBAY, -77.0%), AnaptysBio (ANAB, -77.8%), Wave Life Sciences (WVE,-81.7%), resTORbio (TORC, -84.5%) and Solid Biosciences (SLDB, -88.0%).

Exhibit 2-2: Top/Bottom 5 Small Cap Stock Performance 2019

Source:  Noble Life Science Research, Capital IQ

Top stock performers of NBI index for the year of 2019 include Axsome Therapeutics (AXSM, +3680.2%), Kodiak Sciences (KOD, +828.3.1%), ArQule (ARQL, +591.3%), Arrowhead Pharmaceutics (ARWR, +381.1%), Eidos Therapeutics (EIDX, +310.7%); bottom performers include AnaptysBio (ANAB, -75.1%) CymaBay (CBAY, -76.5%), Wave Life Sciences (WVE,-80.5%), resTORbio (TORC, -84.2%) and Solid Biosciences (SLDB, -84.7%).

Market Dynamics—Financing

 Exhibit 3: Biotech Financing in Q4 2019/YTD-2020 (between $50-$200mm)

Source:  Noble Life Science Research, Capital IQ

The largest transactions include Axsome Therapeutics (AXSM, $174mm), Clovis Oncology (CLVS, $164mm), and Heron Therapeutics (HRTX, $150mm).

Exhibit 4: Biotech Financings—IPO and Follow-on Capital Raised by Quarter

Source:  Noble Life Science Research, Capital IQ

The average IPO proceeds in 2019 ($143mm) exceeded 2018 numbers ($116mm). The median IPO transactions in Q1 2019 reached the record high median number ($146.5mm). There were multiple large IPOs including BridgeBio (BBIO, 401mm), Adaptive Biosciences (ADTP, 345mm) and Gossamer Bio (GOSS, 317mm) in 2019.

Exhibit 5: Biotech Licensing Deals

Note: The Q4 2019 numbers are not yet available

Source:  Noble Life Science Research, Bloomberg

The licensing deal transactions in the 9 months of 2019 showed a modest increase (1%, total licensing deals of 321 versus 318) compared to the 9-months in 2018.

Exhibit 6: Biotech M&A Deals

Source:  Noble Life Science Research, Bloomberg

The total gross proceeds of M&A deals in 2019 showed an uptick (+10%) exceeding the 2018 transaction volume number, despite a modest decline (-3%) in deal count. The transaction volume reached $62 billion with 914 deals in 2019 compared to $238 billion with 940 deals in 2018 in the U.S.

Lock-Up Expirations

 Exhibit 7: IPO and Follow-On Lock-Up Expirations for 2019-Q1 2020

Source:  Noble Life Science Research, CapIQ

Selected Industry Conferences

Exhibit 8: Medical, Scientific and Industry Conferences in H1 2020

Source:  Noble Life Science Research, Biomed Tracker

Exhibit 8: Medical, Scientific and Industry Conferences in H1 2020 Cont.

Source:  Noble Life Science Research, Biomed Tracker

FDA Approvals

Exhibit 9: Selected Pending Approvals of New Molecule Entities (NMEs) and Biologics in Q1 2020

Source: Biomed Tracker, FDA

Exhibit 10: Upcoming Advisory Committee Meeting Dates

Source: Noble Life Science Research, FDA

Exhibit 11: Selected Approved Drugs and Biologics in 2019

Source: Noble Life Science Research, Biomed Tracker, FDA

 In total, 48 drugs were approved in YTD-2019.

Three drugs were approved in 2020: Tazverik to treat epithelioid sarcoma; Tepezza to treat Thyroid eye disease, and Ayvakit to treat adults with unresectable or metastatic gastrointestinal stromal tumor (GIST).

Drug Landscape

Exhibit 12: New FDA Drug Approvals

Source: Noble Life Science Research, Bloomberg

48 drug approvals in 2019 demonstrated a low productive year following all-time record of 59 approvals in 2018.

Exhibit 13: Number of Drugs in the Pipeline

Source: Noble Life Science Research, Global Data Intelligence

Oncology continues to be the dominant development category, which we think has also been fueled of late by the 1000+ immuno-oncology clinical drug trials.

Appendix

Exhibit 14: Cash Analysis, sorted by E/P (as of 1/28/2020)

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 14: Cash Analysis, sorted by E/P Cont.

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 14: Cash Analysis cont., sorted by E/P Cont.

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 14: Cash Analysis cont., sorted by E/P Cont.

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 15: Large-cap Biotechnology and Pharmaceutical Cash Analysis sorted by EV/Cash

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 16: Catalyst Calendar in Q1 2020

Source: GlobalData

Ahu Demir, Ph.D.

Biotechnology Research Analyst

E: ademir@noblelsp.com
T: 561-994-5730

Dr. Ahu Demir, Ph.D. covers the small cap biotechnology sector. She joined Noble Capital Markets as a Biotechnology Research Analyst in 2018. Prior to that, she worked at Roth Capital as an Associate Biotechnology Analyst. Dr. Demir started her Wall Street and sell-side equity research career in biotechnology at Cantor Fitzgerald Research Division, where she served as Associate Biotechnology Analyst and followed a range of publicly traded biotechnology companies focused on the development of therapeutics in oncology, infectious disease and central nervous system diseases.  Prior to joining Wall Street, Dr. Demir was a Post-Doctoral Fellow at Columbia University and New York University. During her fellowship, she has also worked as a scientific consultant for the industry and as Marketing and Patentability Agent at the Technology Transfer Office of New York University. She holds a Ph.D. in Chemistry from University of Florida.

Cosme Ordoñez MD, PhD

Senior Life Sciences Analyst

E: cordonez@noblelsp.com
T: (561) 998-5487

Dr Ordoñez joined NOBLE Capital Markets in 2016. He has nineteen years of experience in various segments of the healthcare capital markets including equity research and investment banking. During his career, he has worked on various roles in Buy-side and Sell-Side Institutions, including Difference Capital Financial Inc., and GMP Securities Inc. in Canada, where he was highly ranked by Brendan Woods International and Starmine for quality of equity research. Dr Ordoñez has advised and helped raise funds for North American companies in drug development, medical device, specialty pharma and healthcare services areas. He is a Medical Doctor and obtained a Ph.D. in Experimental Medicine and Biochemistry from McGill University in Montreal, Canada. He also completed post-doctoral training at the Karolinska Institute/Hospital in Stockholm, Sweden.

 

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Ahu Demir
Equity Research Analyst focusing on the Life Sciences sector. 5 years of industry experience. PhD in Chemistry from University of Florida.Post-Doctoral training at Columbia University and New York University. Her scientific training focused on antiviral therapy, oncology and immuno-oncology.

FINRA licenses 7, 63, 86, 87.

Cosme Ordonez
Senior Equity Analyst focusing on Life Sciences. More than 16 years of experience in his field. Former President and co-founder of Ciclofilin Pharmaceuticals. Held various roles in Buy-side and Sell-Side specializing in drug development, medical device, specialty pharma and healthcare services areas. Medical Doctor with a Ph.D. in Experimental Medicine and Biochemistry from McGill University in Montreal, Canada. Completed post-doctoral training at the Karolinska Institute/Hospital in Stockholm, Sweden.

Holds FINRA licenses 7, 79, 86, 87.

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	86%	25%
Market Perform: potential return is -15% to 15% of the current price	14%	2%
Underperform: potential return is >15% below the current price	0%	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from “Buy” to “Outperform”, from “Hold” to “Market Perform” and from “Sell” to “Underperform.” The percentage relationships, as compared to current price (definitions), have remained the same. Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

Noble Capital Markets, Inc.
225 NE Mizner Blvd. Suite 150
Boca Raton, FL 33432
561-994-1191

Noble Capital Markets, Inc. is a FINRA (Financial Industry Regulatory Authority) registered broker/dealer.
Noble Capital Markets, Inc. is an MSRB (Municipal Securities Rulemaking Board) registered broker/dealer.
Member – SIPC (Securities Investor Protection Corporation)
Report ID: 11091

Friday, January 31, 2020

Biotechnology Industry Overview

Ahu Demir, Ph.D, Biotechnology Research Analyst, Noble Capital Markets, Inc.

Listen To The Analyst

Refer to end of report for Analyst Certification & Disclosures

• 2020 Outlook. The biotechnology sector has modestly underperformed the broader markets thus far in 2020. S&P 500 (SP50, +1.4%) and Russell 3000 (RUA, +1.4%) benchmark indices have outperformed both the NYSE Arca Biotechnology (BTK, -2.1%) and NASDAQ Biotechnology (NBI, -2.6%) indices in YTD-2020 (as of 1/28/2020).  We think the major catalysts in the biotechnology sector are the potential approval of Biogen’s aducanumab by the FDA. We think this may significantly impact biotech investors’ sentiment. We also think data updates from ongoing clinical trials with Amgen (AMGN)’s KRAS inhibitor AMG 510 and Forty Seven (FTSV)’s magrolimab are other key catalysts as both have been among compelling developments in the field. We anticipate another active year with M&A transactions as large-cap biotech/pharma still have strong balance sheets (Exhibit 17) and appetite for innovative products and technologies.
• 2019 OVERVIEW. 2019 was a good year for the stock market including the biotechnology sector. BTK (+19.6%) and NBI (+22.9%) indices performed well in 2019. However, they could not match the performance of the benchmark indices: SP50 (+29.8%) and RUA (+29.4%). The average IPO proceeds in 2019 ($143mm) exceeded 2018 numbers ($116mm) and Q1 2019 IPOs reached the record high median number (146.5mm, Exhibit 4). The total gross proceeds of M&A deals in 2019 also showed an uptick (+10%) exceeding the 2018 transactions, despite a modest decline (-3%) in the deal counts (Exhibit 6). Although drug approvals had a slower pace in 2019 with 48 drug approvals compared to a record-high number of 59 in 2018 (Exhibit 12). We think 2019 was a successful year for the biotechnology sector with innovative developments in gene therapies, targeted therapies, large M&A transactions, and strong financing.

Click ‘view previous report’ for company specific disclosures on Noble covered companies.

2019 biotech IPOs

Biotechnology initial public offerings (IPOs) experienced a boom in 2018. 2019 numbers could not match the record numbers of 2018. However, average IPO proceeds in 2019 ($143 million) exceeded 2018 numbers ($116 million). Although number of companies going public was lower in 2019 compared to 2018, the total venture capital backing of this cohort exceeded $9.1 billion (an average of $194 million for companies with disclosed private financings, 13 of which topped the $200 million mark).

54 biotechs went public on global exchanges during 2019, raising a total of nearly $7.6 billion in fresh capital, as of December 6th.

• In the U.S., the highest use of proceeds for IPOs include BridgeBio Pharma (BBIO, $349 million raised in June 2019); Adaptive Biotechnologies (ADPT, $300 million raised in June 2019) and Genmab (GMAB, 300 million raised in June 2019)
• Eight Chinese biopharmaceuticals raised a cumulative $2.3 billion in Hong Kong Stock Exchange (HKEX), nearly ten times the amount of capital raised by European biotechs listing for the first time over the same time period. Hansoh Pharmaceutical Group raised $1.0 billion in June 2019.

The demand for new public biotechnology issues remains strong. In 2019, the biotechnology sector IPO characteristics are shown in Figure 1. The companies were in all development stages, ages, corporate strategies, and modalities.

• The clinical stage of the company showed modest impact in the average proceeds of IPOs, but companies with already marketed products saw the highest proceeds.
• The majority of the companies were 10 years or older.
• Companies who in-licensed assets had the highest average IPO proceeds.
• Small molecule companies dominated the IPO market in 2019 (27%), followed by biologics (12%). Blooming cell therapy field comprises 4% of the IPOs in 2019.

Figure 1. IPO characteristics in 2019.

a) Average proceeds by development stage of lead asset. Hansoh’s $1 billion IPO skewed the average haul of companies in the commercial cohort.

b) Age of companies.

c) Average proceeds by corporate strategy.

d) Number of companies focused on different therapeutic modalities. Biologics includes monoclonal antibodies, peptides and related modalities. Oligos includes RNAi, antisense, and gene therapy and gene editing approaches. 

Source: Morrison et. al. Nature, January 2020, Volume 19

Table 1. Top ten 2019 IPOs by gross proceeds

Source: Morrison et. al. Nature, January 2020, Volume 19

Oncology companies continued to have the largest share of IPO dollars, with more than $2.5 billion in cumulative 2019 IPO capital (Fig. 2a). Among segments of the biotechnology sector, Oncology and Autoimmune areas saw the highest average IPO proceeds (Fig. 2b). Also, the post-IPO market performance of oncology companies (on average 41%) exceeded all therapeutic areas except CNS

Figure 2. IPOs by therapeutic area

Source: Morrison et. al. Nature, January 2020, Volume 19

Recent Sector News

• Epizyme (EPZM)’s tazemetostat (Tazverik) received FDA’s approval for the treatment of epithelioid sarcoma (January 24, 2020)
•  Applied Genetic Technologies (AGTC) lost 15% following data announcement from 22 patients participating in Phase 1/2 studies of its AAV gene therapy in patients with achromatopsia (color blindness) due to mutations in the ACHM CNGB3 or ACHM CNGA3 genes (January 23, 2020). AGTC stock price gained 123% following data readout from X-linked retinitis pigmentosa (XLRP) clinical program demonstrating durable improvement in visual function six months after dosing (January 9, 2020)
•  The FDA approved olaparib (Lynparza, a PARP inhibitor) as frontline maintenance treatment for pancreatic cancer patients with germline BRCA-mutations (December 30, 2019)
• Merck (MRK) acquired ArQule (ARQL) for $2.7 billion (December 9, 2019)
•  Forty Seven (FTSV)’s shares gained 333% after data presented at the American Society of Hematology conference showing 92% overall response rate in 24 high-risk myelodysplastic syndromes (MDS) patients who were treated by magrolimab (December 9, 2019)

Important upcoming catalysts in our SELECTED coverage universe

Dyadic International (DYAI), Outperform rating, $9 Price Target (PT, view previous report by Ahu Demir, Ph.D.)

• Accomplishment of C1 glyco-engineering (human-like glycosylation) in 2020
• Bio-comparability data from certolizumab biosimilar program in 2020

Onconova (ONTX), Outperform rating, $1.30 Price Target (PT, view previous report by Ahu Demir, Ph.D.)

• Presentation at the RAS-Targeted Drug Discovery Summit Europe on 25-27 February 2020
• IND submission for ON123300 in 3Q 2020
• Topline data for the registrational INSPIRE trial of rigosertib in 1H 2020

Trovagene (TROV), Outperform rating, $23 Price Target (PT,
view previous report by Cosme Ordonez, M.D., Ph.D.)

• Data update from Phase 2 mCRPC program at the Genitourinary Cancers Symposium (ASCO-GU) on February 13-15, 2020
• Data update from Phase 1b/2 AML study at the European Hematology Association (EHA) annual meeting on June 13-16, 2020

Promis Neurosciences (PMN), Outperform rating, $1.00 Price Target (PT, view previous report by Cosme Ordonez, M.D., Ph.D.)

• Data update from Alzheimer’s disease program targeting neurotoxic Tau at the Alzheimer’s Association Conference to be held in Washington D.C. on February 12-13, 2020

Market Dynamics

Exhibit 1-1: Biotechnology Relative Price Performance in 1 year (as of 01/28/2020)

Source:  Noble Life Science Research, Capital IQ

S&P 500 (SP50, +24.1%) and Russell 3000 (RUA, +23.0%) benchmark indices have outperformed the NYSE Arca Biotechnology (BTK, +4.2%) and NASDAQ Biotechnology (NBI, +9.2%) indices in 1 year (as of 1/28/2020). Notable stock price outperformance in the BTK index (in alphabetical order) include Acadia, (ACAD, +88.0%), Alnylam (ALNY, +49.6%), Bio-Techne (TECH, +33.2), Charles River Laboratories (CRL, +32.3%), and Seattle Genetics (SGEN, +76.4%).

Exhibit 1-2: Biotechnology Relative Price Performance 2019

Source:  Noble Life Science Research, Capital IQ

NYSE Arca Biotechnology (BTK, +19.6%) and NASDAQ Biotechnology (NBI, +22.9%) indices have performed well in 2019; however, they could not match the performance of the benchmark indices S&P 500 (SP50, +29.8%) and Russell 3000 (RUA, +29.4%).

Exhibit 2-1: Top/Bottom 5 Small Cap Stock Performance, 1 year (as of 1/27/2020)

Source:  Noble Life Science Research, Capital IQ

Top stock performers of NBI index for the year of 2019 include Axsome Therapeutics (AXSM, +3149.6%), Kodiak Sciences (KOD, +770.4%), XBiotech (XBIT, +353.4%), Achillion Pharmaceutics (ACHN, +300.6%), Eidos Therapeutics (EIDX, +310.7%); bottom performers include CymaBay (CBAY, -77.0%), AnaptysBio (ANAB, -77.8%), Wave Life Sciences (WVE,-81.7%), resTORbio (TORC, -84.5%) and Solid Biosciences (SLDB, -88.0%).

Exhibit 2-2: Top/Bottom 5 Small Cap Stock Performance 2019

Source:  Noble Life Science Research, Capital IQ

Top stock performers of NBI index for the year of 2019 include Axsome Therapeutics (AXSM, +3680.2%), Kodiak Sciences (KOD, +828.3.1%), ArQule (ARQL, +591.3%), Arrowhead Pharmaceutics (ARWR, +381.1%), Eidos Therapeutics (EIDX, +310.7%); bottom performers include AnaptysBio (ANAB, -75.1%) CymaBay (CBAY, -76.5%), Wave Life Sciences (WVE,-80.5%), resTORbio (TORC, -84.2%) and Solid Biosciences (SLDB, -84.7%).

Market Dynamics—Financing

 Exhibit 3: Biotech Financing in Q4 2019/YTD-2020 (between $50-$200mm)

Source:  Noble Life Science Research, Capital IQ

The largest transactions include Axsome Therapeutics (AXSM, $174mm), Clovis Oncology (CLVS, $164mm), and Heron Therapeutics (HRTX, $150mm).

Exhibit 4: Biotech Financings—IPO and Follow-on Capital Raised by Quarter

Source:  Noble Life Science Research, Capital IQ

The average IPO proceeds in 2019 ($143mm) exceeded 2018 numbers ($116mm). The median IPO transactions in Q1 2019 reached the record high median number ($146.5mm). There were multiple large IPOs including BridgeBio (BBIO, 401mm), Adaptive Biosciences (ADTP, 345mm) and Gossamer Bio (GOSS, 317mm) in 2019.

Exhibit 5: Biotech Licensing Deals

Note: The Q4 2019 numbers are not yet available

Source:  Noble Life Science Research, Bloomberg

The licensing deal transactions in the 9 months of 2019 showed a modest increase (1%, total licensing deals of 321 versus 318) compared to the 9-months in 2018.

Exhibit 6: Biotech M&A Deals

Source:  Noble Life Science Research, Bloomberg

The total gross proceeds of M&A deals in 2019 showed an uptick (+10%) exceeding the 2018 transaction volume number, despite a modest decline (-3%) in deal count. The transaction volume reached $62 billion with 914 deals in 2019 compared to $238 billion with 940 deals in 2018 in the U.S.

Lock-Up Expirations

 Exhibit 7: IPO and Follow-On Lock-Up Expirations for 2019-Q1 2020

Source:  Noble Life Science Research, CapIQ

Selected Industry Conferences

Exhibit 8: Medical, Scientific and Industry Conferences in H1 2020

Source:  Noble Life Science Research, Biomed Tracker

Exhibit 8: Medical, Scientific and Industry Conferences in H1 2020 Cont.

Source:  Noble Life Science Research, Biomed Tracker

FDA Approvals

Exhibit 9: Selected Pending Approvals of New Molecule Entities (NMEs) and Biologics in Q1 2020

Source: Biomed Tracker, FDA

Exhibit 10: Upcoming Advisory Committee Meeting Dates

Source: Noble Life Science Research, FDA

Exhibit 11: Selected Approved Drugs and Biologics in 2019

Source: Noble Life Science Research, Biomed Tracker, FDA

 In total, 48 drugs were approved in YTD-2019.

Three drugs were approved in 2020: Tazverik to treat epithelioid sarcoma; Tepezza to treat Thyroid eye disease, and Ayvakit to treat adults with unresectable or metastatic gastrointestinal stromal tumor (GIST).

Drug Landscape

Exhibit 12: New FDA Drug Approvals

Source: Noble Life Science Research, Bloomberg

48 drug approvals in 2019 demonstrated a low productive year following all-time record of 59 approvals in 2018.

Exhibit 13: Number of Drugs in the Pipeline

Source: Noble Life Science Research, Global Data Intelligence

Oncology continues to be the dominant development category, which we think has also been fueled of late by the 1000+ immuno-oncology clinical drug trials.

Appendix

Exhibit 14: Cash Analysis, sorted by E/P (as of 1/28/2020)

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 14: Cash Analysis, sorted by E/P Cont.

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 14: Cash Analysis cont., sorted by E/P Cont.

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 14: Cash Analysis cont., sorted by E/P Cont.

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 15: Large-cap Biotechnology and Pharmaceutical Cash Analysis sorted by EV/Cash

Note: Market cap as of 1/28/2020, Cash value for 3Q19

Source: Noble Life Science Research, Capital IQ

Exhibit 16: Catalyst Calendar in Q1 2020

Source: GlobalData

Ahu Demir, Ph.D.

Biotechnology Research Analyst

E: ademir@noblelsp.com
T: 561-994-5730

Dr. Ahu Demir, Ph.D. covers the small cap biotechnology sector. She joined Noble Capital Markets as a Biotechnology Research Analyst in 2018. Prior to that, she worked at Roth Capital as an Associate Biotechnology Analyst. Dr. Demir started her Wall Street and sell-side equity research career in biotechnology at Cantor Fitzgerald Research Division, where she served as Associate Biotechnology Analyst and followed a range of publicly traded biotechnology companies focused on the development of therapeutics in oncology, infectious disease and central nervous system diseases.  Prior to joining Wall Street, Dr. Demir was a Post-Doctoral Fellow at Columbia University and New York University. During her fellowship, she has also worked as a scientific consultant for the industry and as Marketing and Patentability Agent at the Technology Transfer Office of New York University. She holds a Ph.D. in Chemistry from University of Florida.

Cosme Ordoñez MD, PhD

Senior Life Sciences Analyst

E: cordonez@noblelsp.com
T: (561) 998-5487

Dr Ordoñez joined NOBLE Capital Markets in 2016. He has nineteen years of experience in various segments of the healthcare capital markets including equity research and investment banking. During his career, he has worked on various roles in Buy-side and Sell-Side Institutions, including Difference Capital Financial Inc., and GMP Securities Inc. in Canada, where he was highly ranked by Brendan Woods International and Starmine for quality of equity research. Dr Ordoñez has advised and helped raise funds for North American companies in drug development, medical device, specialty pharma and healthcare services areas. He is a Medical Doctor and obtained a Ph.D. in Experimental Medicine and Biochemistry from McGill University in Montreal, Canada. He also completed post-doctoral training at the Karolinska Institute/Hospital in Stockholm, Sweden.

 

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Ahu Demir
Equity Research Analyst focusing on the Life Sciences sector. 5 years of industry experience. PhD in Chemistry from University of Florida.Post-Doctoral training at Columbia University and New York University. Her scientific training focused on antiviral therapy, oncology and immuno-oncology.

FINRA licenses 7, 63, 86, 87.

Cosme Ordonez
Senior Equity Analyst focusing on Life Sciences. More than 16 years of experience in his field. Former President and co-founder of Ciclofilin Pharmaceuticals. Held various roles in Buy-side and Sell-Side specializing in drug development, medical device, specialty pharma and healthcare services areas. Medical Doctor with a Ph.D. in Experimental Medicine and Biochemistry from McGill University in Montreal, Canada. Completed post-doctoral training at the Karolinska Institute/Hospital in Stockholm, Sweden.

Holds FINRA licenses 7, 79, 86, 87.

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NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	86%	25%
Market Perform: potential return is -15% to 15% of the current price	14%	2%
Underperform: potential return is >15% below the current price	0%	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from “Buy” to “Outperform”, from “Hold” to “Market Perform” and from “Sell” to “Underperform.” The percentage relationships, as compared to current price (definitions), have remained the same. Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

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Report ID: 11091

Wednesday, January 29, 2020

Dyadic International Inc. (DYAI)

C1 Technology’s Potential to Manufacture Candidate Vaccines Against Coronavirus

Dyadic International, Inc. is a global biotechnology company which is developing what it believes will be a potentially significant biopharmaceutical gene expression platform based on the industrially proven hyper productive engineered fungus Thermothelomyces heterothallica (formerly Myceliophthora thermophila), named C1.
The C1 microorganism, which enables the development and large scale manufacture of low cost proteins, has the potential to be further developed into a safe and efficient expression system that may help speed up the development, lower production costs and improve the performance of biologic vaccines and drugs at flexible commercial scales. Dyadic is using the C1 technology and other technologies to conduct research, development and commercial activities for the development and manufacturing of human and animal vaccines and drugs, such as virus like particles (VLPs) and antigens, monoclonal antibodies, Fab antibody fragments, Fc-Fusion proteins, biosimilars and/or biobetters, and other therapeutic proteins. Dyadic pursues research and development collaborations, licensing arrangements and other commercial opportunities with its partners and collaborators to leverage the value and benefits of these technologies in development and manufacture of biopharmaceuticals. In particular, as the aging population grows in developed and undeveloped countries, Dyadic believes the C1 technology may help bring biologic vaccines, drugs and other biologic products to market faster, in greater volumes, at lower cost, and with new properties to drug developers and manufacturers, and improve access and cost to patients and the healthcare system, but most importantly save lives.

Ahu Demir, Ph.D., Biotechnology Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Rapidly growing epidemic and concerns on coronavirus outbreak. The deadly new virus, coronavirus, is a fast-growing epidemic in China. The number of confirmed cases increased from 2,835 on Monday (January 27) to 4,515 on Tuesday (January 28), according to the National Health Commission, jumping nearly 60 percent overnight. Epidemic is now expanding to other countries, including the United States. There are currently five cases in the U.S.

Potential higher rate of spread, but less deadly than SARS. Severe acute respiratory syndrome (SARS) is a related infectious disease, which erupted in China in 2002 and spread globally in 2003. SARS killed about 10% of the people it infected, while thus far coronavirus has killed about 3% of those infected. There are many unknowns regarding this new deadly strain of coronavirus; however,…

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

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NOTE: investment decisions should not be based upon the content of
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