Applied TherapeuticsAPLT2,05 $
Applied Therapeutics (Nasdaq: APLT) American pharmaceutical company based in New York, which develops new drugs to cover the unmet needs of patients with diseases of the cardiovascular system, galactosemia and diabetes. Business established in 2016 and 14 May 2019 went public after listing shares on Nasdaq.
What he earns
The company conducts research and develops new drugs, who will help patients with specific diagnoses, who have unmet need for treatment. Applied Therapeutics drugs are in various stages of research:
- AT-007 - a flagship drug for several groups of diseases. In Phase 3 clinical trials for use in patients with galactosemia and a type of neuropathy. Also, the drug has moved to the second stage of clinical trials for use in the treatment of rare congenital phosphomanmutase deficiency..
- AT-001 - the drug is undergoing the third phase of clinical trials for the treatment of diabetic cardiomyopathy and is completing the second phase of trials for use in the treatment of diabetic peripheral neuropathy.
- AT-003 drug for the treatment of diabetic retinopathy, which should move to the first stage of clinical trials in 2022.
- AT-104 is a drug for the treatment of certain forms of leukemia and lymphoma, which is in the preclinical stages of development.
What's wrong
Assets are shrinking, commitments are growing. In 2021, the company systematically reduced equity and increased liabilities, the growth of the latter slowed down only in the fourth quarter.
Until the successful entry of one of the drugs into the market, the issuer needs to constantly maintain its activities and spend money, including loans. This is a normal process of development of biotechnology startups, but at the same time, if the company does not start making money in the next year or two, the negative dynamics of the ratio of its liabilities to equity capital will put more and more pressure on the business.
Dramatic stock plunge. Applied Therapeutics has experienced a "classic" story for many IPOs: in the first year after its public offering, the company's share price soared more than sixfold from 9,5 to 57 $, but then she could not keep the height and began a rapid fall from it, which, seems, finally stopped at a minimum in 1,45 $ per share in 2022 only.
Now the issuer's securities are traded at an attractive price slightly higher 2 $, but a potential investor should remember, how events have developed on the APLT chart over the past few years.
Constant dilution of shareholders' shares. Applied Therapeutics stock has almost tripled since 2017: with 9 to 26 million securities. On the one side, systemic additional issues of biotechnology companies no longer surprise anyone, as this is one of the main legal ways to raise funds for business development, until he earns.
But on the other hand,, this fact cannot please both old investors, who suffer from the depreciation of their share in the company more than others, and potential new shareholders, who see the dynamics of the dilution of shares in shares and draw disappointing conclusions about the prospects for investing in a company.
What good
Some of the clinical trials are nearing completion. Several developments of the company have reached the finish line of clinical trials and, if successfully approved by regulators in the United States and other countries, may well enter the market within a couple of years..
Such prerequisites create real prospects for the, that on the horizon of several years, Applied Therapeutics will start making money on its own. This will be the best proof of a successful investment for investors..
Have money and almost no debt. The company has a small, but sufficient for normal operation the amount of 81 million dollars, which even with negative cash flow allows it to stay afloat.
In addition, the total debt, that is, the sum of all debts on short-term and long-term loans and borrowings, is only 790 thousand dollars and is covered by a cash position with a large margin.
Diversified shareholder structure. The company's securities are held in their portfolios by more than twenty funds and other institutional investors, among which are the giants BlackRock and Vanguard.
Plus insiders keep more 20% Shares, which show confidence in the success of the business, for which they work. Such diverse interest and confidence of employees in the bright future of the organization make a positive impression on investors.
What's the bottom line?
Applied Therapeutics compares favorably with many biotech startups with a strong portfolio of drugs in development, some of which may tentatively enter the market as early as 2023-2025.
The company has a good supply of cash and no outstanding debts, and its shares are held by managers of dozens of large funds. At the same time, shareholder equity is systematically diluted by new share issues, and the securities themselves lost a lot in price in two years. Now you can invest in the company with relatively little risk., but even the low price of the shares does not prevent them from falling again by three, five or ten times.
