Biotech stocks attracted investors’ attention last year due to their role in developing vaccines and therapies to save the world from the COVID-19 pandemic. However, several industry participants have delivered disappointing stock market performance this year due to uncertain macroeconomic conditions.
Earlier this year, biologics company ReForm Biologics, Inc. renamed itself Comera Life Sciences Holdings, Inc. (CMRA).
On January 31, 2022, CMRA and special purpose acquisition company OTR Acquisition Corp. (OTRAU) announced that they had entered into a business combination agreement through which CMRA would get access to the equity markets.
CMRA is a pre-clinical biotechnology company. The company is developing a new generation of bio-innovative biologic medicines to improve patient access, safety, and convenience. Its proprietary formulation platform, SQore, is designed to transform intravenous (IV) biologics into subcutaneous (SQ) versions that patients can self-administer in a single dose.
The platform optimizes current versions of subcutaneous biologics and produces biosimilar versions of existing subcutaneous products.
The stock has declined 75.5% in price year-to-date and 75.3% over the past year to close the last trading session at $2.48. It is trading 83.8% below its 52-week high of $15.30, which it hit on May 10, 2022.
Here’s what could influence CMRA’s performance in the upcoming months:
Weak Financials
CMRA’s total operating expenses increased 93.3% year-over-year to $3.70 million for the second quarter ended June 30, 2022. Its loss from operations widened 89.8% year-over-year to $3.61 million. In addition, its net loss widened 368.9% year-over-year to $9.28 million. The company’s loss per share widened 67.6% year-over-year to $1.14.
Stretched Valuation
In terms of trailing-12-month EV/S, CMRA’s 116.97x is significantly higher than the 4.21x industry average. Likewise, its 19.63x trailing-12-month P/S is 331% higher than the 4.55x industry average.
Weak Profitability
CMRA’s 53.77% trailing-12-month gross profit margin is 1% lower than the 54.31% industry average. Likewise, its 0.08% trailing-12-month asset turnover ratio is 76.6% lower than the industry average of 0.34%.
POWR Ratings Reflect Bleak Prospects
CMRA has an overall D rating, equating to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. CMRA has a D grade for Value, in sync with its stretched valuation. It also has a D grade for Quality, consistent with its weak profitability.
CMRA is ranked #374 out of 400 stocks in the F-rated Biotech industry. Click here to access CMRA’s ratings for Growth, Momentum, Stability, and Sentiment.
Bottom Line
CMRA entered into a purchase agreement with Arena Business Solutions for $15 million of the company’s common stock with an option to increase to $30 million. This will enable the company to invest in its product pipeline and strengthen its formulation platform, SQore. The agreement should bolster its balance sheet and help it achieve its near-term objectives.
Despite the agreement, the company might take significant time to turn profitable. Given its weak financials, stretched valuation, and weak profitability, it could be wise to avoid the stock now.
How Does Comera Life Sciences Holdings, Inc. (CMRA) Stack Up Against Its Peers?
CMRA has an overall POWR Rating of D, equating to a Sell rating. Therefore, one might want to consider investing in other Biotech stocks with an A (Strong Buy) or B (Buy) rating, such as Vertex Pharmaceuticals Incorporated (VRTX), Biogen Inc. (BIIB), and Genfit S.A. (GNFT).
CMRA shares were trading at $2.19 per share on Monday morning, down $0.29 (-11.69%). Year-to-date, CMRA has declined -75.25%, versus a -18.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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