Jefferies sees opportunity in biotech stocks trading below cash level

Gracell Biotechnologies

03/01/2023 13:40

** Brokerage Jefferies sees opportunity this year for
investors in some biotech stocks trading below their cash
levels, with cos also seeing some recovery in access to capital
    ** Brokerage expects investors to look for companies that
are disciplined around capital spending and focused on
developing lead programs
    ** "We also believe companies should think creatively of
raising capital, such as reverse mergers, sales of
rights/royalties" - brokerage
    ** Brokerage lists Novavax  NVAX.O , Chimerix  CMRX.O  and
U.S.-listed shares of Chinese firms I-Mab  IMAB.O  and Gracell
Biotechnologies  GRCL.O  among record number of companies
trading with negative enterprise value (EV)
    ** "This could also be an opportunity, as assets are already
below $0 EV" - Jefferies
    ** Negative EV means co's combined equity and debt is below
their cash level, indicating investors' pessimism about their
prospects
    ** In 2022, the Nasdaq Biotechnology Index  .NBI  declined
~11%, while SPDR S&P Biotech ETF  XBI.P  slumped ~26%
    ** NVAX, CMRX, IMAB and GRCL had plunged 62-93% in 2022
 (Reporting by Leroy Leo in Bengaluru)
 ((Leroy.Dsouza@thomsonreuters.com ; Twitter: https://twitter.com/LeroyLeo7;))