Autolus Therapeutics (NASDAQ: AUTL) is a biopharmaceutical company. It engages in the development of cancer treatments.
The company was founded in 2018, and is headquartered in London, the United Kingdom.
I am bearish on AUTL stock. The clinical-stage biopharmaceutical company does not have any meaningful revenue, and as a result, it is unprofitable.
Autolus Therapeutics Biggest Risk
AUTL stock is very nearly trading among penny stocks.
First for its low market capitalization of less than $385 million, second for its poor fundamentals, third because biotech stocks tend to be volatile.
The pipeline of Autolus Therapeutics is in Phase 1 or preclinical trials now. This means that commercialization of its products for cancer treatment may be several quarters away, and in the worst-case scenario, several years away.
News that Blackstone Life Sciences “will provide up to $250 million in equity and product financing to support Autolus’ advancement of its CD19 CAR T cell investigational therapy product candidate,” was positive, sending AUTL stock to $7 a share in mid-November.
This rally was short-lived, with the stock currently trading close to $5.
What factors can move AUTL stock other than clinical trials, and positive developments? AUTL stock earnings will likely not be a catalyst, as the company does not generate meaningful revenue. For 2020 total revenue reported was $242,000.
Q3 2021 Results
Some key insights about Q3 2021 were that cash on September 30, 2021, was reported to be $173.1 million, compared to $216.4 million on June 30, 2021.
On a year-over-year basis, total operating expenses were $40.4 million compared to $42.7 million in Q3 2020.
Net loss attributable to ordinary shareholders was $34.0 million for the three months ended September 30, 2021, compared to $37.3 million for the same period in 2020. The reason for this is that shareholders have been diluted in the past year.
Weighted-average basic and diluted ordinary shares in Q3 2021 were 72,896,362 compared to 52,093,826 in Q3 2020. It is simply a mathematical calculation, a larger number of weighted average shares resulted in lower net losses.
Autolus estimates “that its current cash on hand will provide the Company with a cash runway into H1 2023.”
In the first nine months of 2021, Autolus Therapeutics reported a cumulative free cash flow of ($115.97 million). Things do not look rosy at all, and further stock dilution is a very likely scenario.
The stock has an Altman Z-score of 1.09, which places it in the distress zone. This implies bankruptcy possibility in the next two years.
Wall Street’s Take
Autolus Therapeutics has a Strong Buy consensus based on four Buys and one Hold. The average Autolus Therapeutics price target of $12.13 implies 132.8% upside potential.
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Disclosure: At the time of publication, Stavros Georgiadis, CFA did not have a position in any of the securities mentioned in this article.
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