The positive trends of the biotech industry witnessed during the pandemic years have been gradually ebbing away. Considering this, investors could avoid weak biotech stocks Day One Biopharmaceuticals, Inc. (DAWN), Northwest Biotherapeutics, Inc. (NWBO), and Ocugen, Inc. (OCGN) for the reasons mentioned in the article.
The biotech industry has diversified and thrived over the past couple of decades, especially during the pandemic, owing to the persistent demand and advanced innovations. However, given the headwinds it faces, the industry is anticipated to remain under some pressure.
To begin with, as per data compiled by BioPharma Dive, more than 5000 employees have lost their jobs from the dozens of biotech and pharmaceutical companies this year. In addition, according to a Fierce Biotech analysis, the staff laid off in the first quarter of 2023 was an 87% jump compared to 2022.
The reason for the layoffs could be attributed to the funding issues the companies face. The biotech companies’ constant research, discovery, development, and marketing of new innovations are risky and prone to losses. Most of them rely on a steady supply of funds from investors.
Additionally, the banking collapses and interest rate hikes have made funding supply more difficult. Furthermore, the Inflation Reduction Act, which included measures to prevent increases in drug prices from surpassing inflation and Medicare’s price negotiations, could have an impact on biotech companies.
Against this backdrop, it would be wise if investors avoid biotech stocks DAWN, NWBO, and OCGN, with bearish momentum in April.
Day One Biopharmaceuticals, Inc. (DAWN)
DAWN is a clinical-stage biopharmaceutical company, developing and commercializing targeted therapies for patients with genetically defined cancers. Its lead product candidate is DAY101, an oral brain-penetrant type II pan-rapidly accelerated fibrosarcoma kinase inhibitor in Phase II clinical trial for pediatric patients with relapsed/progressive low-grade glioma.
DAWN’s trailing-12-month ROCE, ROTC, and ROTA of negative 46.37%, 29.90%, and 40.73% compare to the industry averages of negative 40.90%, 22.05%, and 31.90%, respectively.
In terms of forward EV/Sales and Price/Sales, DAWN is trading at 1,185.76x and 1,876.13x, which are significantly higher than the 3.58x and 4.21x industry averages, respectively.
For the fiscal year that ended December 31, 2022, DAWN’s loss from operations widened 102% from the prior-year period to $146.91 million. Its net cash used in investing activities stood at $255.07 million compared to $8 million for the prior year period that ended December 31, 2021.
Also, its net loss increased 95.4% year-over-year to $142.18 million, while its net loss per share came in at $2.17 for the same period.
Analysts expect DAWN’s EPS to plunge 18.6% year-over-year to negative $0.63 for the fiscal third quarter ending September 2023. For the fiscal year ending December 2023, its EPS is expected to decline 16.9% year-over-year to negative $2.54, and revenue is expected to come at $494.60 thousand.
The stock has declined 44% over the past three months and 34.1% over the past six months to close its last trading session at $12.67. The stock is trading below its 50-day and 200-day moving averages of $16.76 and $19.99, respectively, indicating a downtrend.
DAWN’s poor prospects are reflected in its POWR Ratings. The stock has an overall rating of D, which translates to Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
DAWN is also rated a D for Growth and Momentum. It is ranked #301 in the F-rated 382-stock Biotech industry.
Beyond what we have mentioned above, one can see additional POWR Ratings for Value, Stability, Sentiment, and Quality for DAWN here.
Northwest Biotherapeutics, Inc. (NWBO)
NWBO is a biotechnology company that develops personalized immune therapies for cancer internationally. The company develops its products based on DCVax, a platform technology that uses activated dendritic cells to mobilize a patient's own immune system to attack cancer. Its lead product, DCVax-L, is used to treat Glioblastoma multiforme brain cancer.
NWBO’s trailing-12-month ROTA of negative 335.32% compares to the industry average of negative 31.90%. Likewise, its trailing-12-month asset turnover ratio of 0.05x is 86.5% lower than the industry average of 0.35x.
In terms of trailing-12-month EV/Sales, NWBO is trading at 380.01x, which is significantly higher than the 3.89x industry average. The stock’s trailing-12-month Price/Sales multiple of 333.15 is significantly higher than the industry average of 4.11.
For the fiscal year that ended December 31, 2022, NWBO’s loss from operations widened 27.5% from the prior-year period to $67.18 million. Its net cash used in operating activities stood at $52.78 million compared to $38.30 million for the prior-year period that ended December 31, 2021. Also, its net loss and net loss per share came in at $105.03 million and $0.10, respectively.
The stock has declined 46.4% over the past year and 22.4% over the past six months to close its last trading session at $0.52. The stock is trading below its 50-day and 200-day moving averages of $0.63 and $0.72, respectively.
NWBO’s POWR Ratings reflect its bleak prospects. The stock has an overall rating of D, which translates to Sell in our proprietary rating system.
NWBO is rated a D for Growth, Momentum, and Quality. It is ranked #305 within the same industry.
Click here to see additional POWR Ratings for Value, Stability, and Sentiment for NWBO.
Ocugen, Inc. (OCGN)
OCGN is a clinical-stage biopharmaceutical company that focuses on developing gene therapies to cure blindness diseases. The company's pipeline product includes OCU400, a novel gene therapy product candidate restoring retinal integrity.
OCGN’s trailing-12-month ROCE, ROTC, and ROTA of negative 90.46%, 55.97%, and 74.89% compare to the industry averages of negative 40.90%, 22.05%, and 31.90%, respectively.
In terms of forward EV/Sales, OCGN is trading at 8.73x, which is 144% higher than the 3.58x industry average. The stock’s forward Price/Sales multiple of 15.24 is 262% higher than the industry average of 4.21.
For the fiscal fourth quarter that ended December 31, 2022, OCGN’s loss from operations widened 65.7% from the prior-year quarter to $24.15 million. For the same quarter, its total current liabilities stood at $18.46 million compared to $7 million for the prior-year quarter that ended December 31, 2021. Also, its net loss and net loss per share came in at $21.94 million and $0.10, up 50.5% and 42.9% year-over-year, respectively.
Analysts expect OCGN’s revenue to come in at $5 million for the fiscal third quarter ending September 2023. For the same quarter, its EPS is expected to decline 14% year-over-year to negative $0.11. Moreover, OCGN failed to surpass consensus EPS estimates in three of the trailing four quarters.
The stock has declined 67.8% over the past year and 46.2% over the past six months to close its last trading session at $0.87. The stock is trading below its 50-day and 200-day moving averages of $0.94 and $1.66, respectively.
OCGN’s weak outlook is reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
OCGN is also rated an F for Stability and a D for Growth, Momentum, and Quality. It is ranked #376 within the same industry.
One can see additional POWR Ratings for Value and Sentiment for OCGN here.
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DAWN shares were trading at $13.22 per share on Thursday afternoon, up $0.55 (+4.34%). Year-to-date, DAWN has declined -38.57%, versus a 8.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
Stay Away From These 3 Stocks With Bearish Momentum in April StockNews.com
