On Tuesday, H.C. Wainwright adjusted its outlook on Genelux Corp. (NASDAQ:GNLX) shares, reducing the biopharmaceutical company's price target from $35.00 to $32.00 while maintaining a Buy rating. The adjustment follows Genelux's fourth-quarter financial report, which revealed an operating loss of $7.0 million and earnings per share (EPS) of ($0.25).
The company experienced a significant increase in operating expenses, approximately 30% higher in the fourth quarter compared to the third quarter, primarily due to costs associated with the initiation of a Phase 2 study for recurrent non-small cell lung cancer (NSCLC).
For the full year of 2023, Genelux reported an operating loss of $24.2 million and an EPS of ($1.22). The firm anticipates a slight increase in operating expenses for 2024, projecting them to be around $25.8 million, with an EPS of ($1.03).
This forecast is based on the commencement of the Phase 2 recurrent NSCLC study, which will be funded by Newsoara. However, the ongoing Phase 3 PRROC study is expected to complete enrollment within the year, potentially leading to a decrease in selling, general, and administrative (SG&A) expenses.
The company concluded the fourth quarter with $23.2 million in cash and equivalents. H.C. Wainwright's analysis suggests that these funds should be sufficient to support Genelux's operations into the first half of 2025.
The firm also revised its model, reducing the probability of success (POS) for the adjuvant NSCLC treatment from 15% to 5%, as Genelux does not intend to evaluate this opportunity in the near future. Additionally, the firm extended its discounted cash flow (DCF) estimates for Genelux to 2037, an additional year beyond the previous projection.
InvestingPro Insights
In light of the recent financial performance and market activity for Genelux Corp. (NASDAQ:GNLX), certain metrics and insights from InvestingPro can offer additional context. With a market capitalization of approximately $138.5 million, Genelux is navigating challenging financial waters, as reflected by its negative P/E ratios of -5.55 and an adjusted -4.96 for the last twelve months as of Q4 2023. This aligns with analysts' expectations that the company will not be profitable this year.
From an investment standpoint, two notable InvestingPro Tips for Genelux are that the company holds more cash than debt on its balance sheet, which is a positive sign of liquidity, and that its liquid assets exceed its short-term obligations. However, Genelux is quickly burning through cash and the stock has experienced a significant decline, trading near its 52-week low. This could indicate a potentially higher risk profile for investors, with the stock trading at a high revenue valuation multiple and a high Price/Book multiple of 7.11.
For those considering an investment in Genelux, there are additional InvestingPro Tips available, offering a deeper dive into the company's financial health and market performance. By using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable insights. There are 14 additional InvestingPro Tips listed for Genelux, which could help investors make a more informed decision.
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